EXHIBIT 10.1
ATS MEDICAL, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED THROUGH SEPTEMBER 25, 2006
ARTICLE I.
INTRODUCTION
SECTION 1.01 Purpose. The purpose of the ATS Medical, Inc. Employee Stock
Purchase Plan (the "Plan") is to provide employees of ATS Medical, Inc., a
Minnesota corporation (the "Company"), and its Affiliates with an opportunity to
share in the ownership of the Company by providing them with a convenient means
for regular and systematic purchases of the Company's Common Stock and, thus, to
develop a stronger incentive to work for the continued success of the Company.
SECTION 1.02 Rules of Interpretation. It is intended that the Plan be an
"employee stock purchase plan" as defined in Section 423(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Accordingly, the Plan shall be interpreted and
administered in a manner consistent therewith if so approved. All Participants
in the Plan will have the same rights and privileges consistent with the
provisions of the Plan.
SECTION 1.03 Definitions. For purposes of the Plan, the following terms
will have the meanings set forth below:
(a) "Acceleration Date" means the earlier of the date of shareholder
approval or approval by the Company's Board of Directors of (i) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company
Common Stock would be converted into cash, securities or other property,
other than a merger of the Company in which shareholders of the Company
immediately prior to the merger have the same proportionate ownership of
stock in the surviving corporation immediately after the merger; (ii) any
sale, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or
(iii) any plan of liquidation or dissolution of the Company.
(b) "Affiliate" means any subsidiary corporation of the Company, as
defined in Section 424(f) of the Code, whether now or hereafter acquired or
established.
(c) "Committee" means the committee described in Section 10.01.
(d) "Company" means ATS Medical, Inc., a Minnesota corporation, and
its successors by merger or consolidation as contemplated by Article XI
herein.
(e) "Current Compensation" means all regular wage, salary and
commission payments paid by the Company to a Participant in accordance with
the terms of his or her employment, but excluding annual bonus payments and
all other forms of special compensation.
(f) "Fair Market Value" as of a given date means such value of the
Common Stock as reasonably determined by the Committee, but shall not be
less than (i) the closing price of the Common Stock as reported for
composite transactions if the Common Stock is then traded on a national
securities exchange, or (ii) the average of the closing representative bid
and asked prices of the Common Stock as reported on the Nasdaq National
Market System on the date as of which the fair market value is being
determined. If on the date of grant of any option hereunder the Common
Stock is not traded on an established securities market, the Committee
shall make a good faith attempt to satisfy the requirements of this Section
1.03 and in connection therewith shall take such action as it deems
necessary or advisable.
(g) "Participant" means a Permanent Full-Time Employee who is eligible
to participate in the Plan under Section 2.01 and who has elected to
participate in the Plan.
(h) "Participating Affiliate" means an Affiliate which has been
designated by the Committee in advance of the Purchase Period in question
as a corporation whose eligible Permanent Full- Time Employees may
participate in the Plan.
(i) "Permanent Full-Time Employee" means an employee of the Company or
a Participating Affiliate as of the first day of a Purchase Period,
including an officer or director who is also an employee, but excluding (i)
an employee whose customary employment is less than twenty (20) hours per
week and (ii) an employee who has been employed by the Company for less
than thirty (30) days.
(j) "Plan" means the ATS Medical, Inc. 1998 Employee Stock Purchase
Plan, as amended, the provisions of which are set forth herein.
(k) "Purchase Period" means the approximate three-month periods
beginning (i) on the first business day in May and ending on the last
business day in July of each year; (ii) on the first business day in August
and ending on the last business day in October of each year; (iii) on the
first business day in November of one year and ending on the last business
day in January of the following year; and (iv) on the first business day in
February and ending on the last business day in April of each year;
provided, however, that the initial Purchase Period will commence on May 3,
1998 and will terminate on the last business day in July 1998, and provided
further that the then current Purchase Period will end upon the occurrence
of an Acceleration Date.
(l) "Common Stock" means the Company's Common Stock, $.01 par value,
as such stock may be adjusted for changes in the stock or the Company as
contemplated by Article XI herein.
(m) "Stock Purchase Account" means the account maintained on the books
and records of the Company recording the amount received from each
Participant through payroll deductions made under the Plan and from the
Company through matching contributions.
ARTICLE II.
ELIGIBILITY AND PARTICIPATION
SECTION 2.01 Eligible Employees. All Permanent Full-Time Employees shall
be eligible to participate in the Plan beginning on the first day of the first
Purchase Period to commence after such person becomes a Permanent Full-Time
Employee. Subject to the provisions of Article VI, each such employee will
continue to be eligible to participate in the Plan so long as such employee
remains a Permanent Full-Time Employee.
SECTION 2.02 Election to Participate. An eligible Permanent Full-Time
Employee may elect to participate in the Plan for a given Purchase Period by
filing with the Company, in advance of that Purchase Period and in accordance
with such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company for such purpose (which authorizes
regular payroll deductions from Current Compensation beginning with the first
payday in that Purchase Period and continuing until the employee withdraws from
the Plan or ceases to be eligible to participate in the Plan).
SECTION 2.03 Limits on Stock Purchase. No employee shall be granted any
right to purchase Common Stock hereunder if such employee, immediately after
such a right to purchase is granted, would own, directly or indirectly, within
the meaning of Section 423(b)(3) and Section 424(d) of the Code, Common Stock
possessing 5% or more of the total combined voting power or value of all the
classes of the capital stock of the Company or of all Affiliates.
SECTION 2.04 Voluntary Participation. Participation in the Plan on the
part of a Participant is voluntary and such participation is not a condition of
employment nor does participation in the Plan entitle a Participant to be
retained as an employee.
ARTICLE III.
PAYROLL DEDUCTIONS AND STOCK PURCHASE ACCOUNT
SECTION 3.01 Deduction from Pay. The form described in Section 2.02 will
permit a Participant to elect payroll deductions of any multiple of 1%, but not
less than 1% or more than 10% of such Participant's Current Compensation for
each pay period, subject to such other limitations as the Committee in its sole
discretion may impose. A Participant may cease making payroll deductions at any
time, subject to such limitations as the Committee in its sole discretion may
impose. In the event that during a Purchase Period the entire credit balance in
a Participant's Stock Purchase Account exceeds the product of (i) 85% of the
Fair Market Value of the Common Stock on the first business day of that Purchase
Period, and (ii) 10,000 then payroll deductions for such Participant shall
automatically cease, and shall resume on the first pay period of the next
Purchase Period.
SECTION 3.02 Credit to Account. Payroll deductions will be credited to
the Participant's Stock Purchase Account on each payday.
SECTION 3.03 Interest. No interest will be paid upon payroll deductions
or on any amount credited to, or on deposit in, a Participant's Stock Purchase
Account.
SECTION 3.04 Nature of Account. The Stock Purchase Account is established
solely for accounting purposes, and all amounts credited to the Stock Purchase
Account will remain part of the general assets of the Company or the
Participating Affiliate (as the case may be).
SECTION 3.05 No Additional Contributions. A Participant may not make any
payment into the Stock Purchase Account other than the payroll deductions made
pursuant to the Plan.
ARTICLE IV.
RIGHT TO PURCHASE SHARES
SECTION 4.01 Number of Shares. Each Participant will have the right to
purchase on the last business day of the Purchase Period up to the largest
number of whole shares of Common Stock that can be purchased at the price
specified in Section 4.02 with up to the entire credit balance in the
Participant's Stock Purchase Account, subject to the limitations that (i) no
more than 10,000 shares of Common Stock may be purchased under the Plan by any
one Participant for a given Purchase Period, (ii) in accordance with Section
423(b)(8) of the Code, no more than $25,000 in Fair Market Value (determined at
the beginning of each Purchase Period) of Common Stock and other stock may be
purchased under the Plan and all other employee stock purchase plans (if any) of
the Company and the Affiliates by any one Participant for any calendar year and
(iii) the Committee may reasonably impose. If the purchases for all Participants
would otherwise cause the aggregate number of shares of Common Stock to be sold
under the Plan to exceed the number specified in Section 10.03, each Participant
shall be allocated a pro rata portion of the Common Stock to be sold.
SECTION 4.02 Purchase Price. Except as provided in Section 6.03, the
purchase price for any Purchase Period shall be the lesser of (i) 85% of the
Fair Market Value of the Common Stock on the first business day of that Purchase
Period or (ii) 85% of the Fair Market Value of the Common Stock on the last
business day of that Purchase Period, in each case rounded up to the next higher
full cent.
ARTICLE V.
EXERCISE OF RIGHT
SECTION 5.01 Purchase of Stock. On the last business day of a Purchase
Period, the entire credit balance in each Participant's Stock Purchase Account
will be used to purchase the largest number of whole shares of Common Stock
purchasable with such amount (subject to the limitations of Section 4.01),
unless the Participant has filed with the Company, in advance of that date and
subject to such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company which requests the distribution of part
or all of the credit balance in cash.
SECTION 5.02 Cash Distributions. Any amount remaining in a Participant's
Stock Purchase Account after the last business day of a Purchase Period will be
paid to the Participant in cash within thirty (30) days after the end of that
Purchase Period.
SECTION 5.03 Notice of Acceleration Date. The Company shall use its best
efforts to notify each Participant in writing at least ten days prior to any
Acceleration Date that the then current Purchase Period will end on such
Acceleration Date.
ARTICLE VI.
WITHDRAWAL FROM PLAN; SALE OF STOCK
SECTION 6.01 Voluntary Withdrawal. A Participant may, in accordance with
such terms and conditions as the Committee in its sole discretion may impose,
withdraw from the Plan and cease making payroll deductions by filing with the
Company a form provided for this purpose. In such event, the entire credit
balance in the Participant's Stock Purchase Account will be paid to the
Participant in cash within thirty (30) days. A Participant who withdraws from
the Plan will not be eligible to reenter the Plan until the beginning of the
next Purchase Period following the date of such withdrawal.
SECTION 6.02 Death. Subject to such terms and conditions as the Committee
in its sole discretion may impose, upon the death of a Participant, no further
amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's death occurred and in accordance with Section 5.01, the entire
credit balance in such Participant's Stock Purchase Account will be used to
purchase Common Stock, unless such Participant's estate has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to have the entire credit balance in such Participant's Stock
Account distributed in cash within thirty (30) days after the end of that
Purchase Period or at such earlier time as the Committee in its sole discretion
may decide. Each Participant, however, may designate one or more beneficiaries
who, upon death, are to receive the Common Stock or the amount that otherwise
would have been distributed or paid to the Participant's estate and may change
or revoke any such designation from time to time. No such designation, change or
revocation will be effective unless made by the Participant in writing and filed
with the Company during the Participant's lifetime. Unless the Participant has
otherwise specified the beneficiary designation, the beneficiary or
beneficiaries so designated will become fixed as of the date of the death of the
Participant so that, if a beneficiary survives the Participant but dies before
the receipt of the payment due such beneficiary, the payment will be made to
such beneficiary's estate.
SECTION 6.03 Termination of Employment. Subject to such terms and
conditions as the Committee in its sole discretion may impose, upon a
Participant's normal or early retirement with the consent of the Company under
any pension or retirement plan of the Company or Participating Affiliate, no
further amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's approved retirement occurred and in accordance with Section 5.01,
the entire credit balance in such Participant's Stock Purchase Account will be
used to purchase Common Stock at the Fair Market Value of the Common Stock on
such date, unless such Participant has filed with the Company, in advance of
that day and subject to such terms and conditions as the Committee in its sole
discretion may impose, a form provided by the Company which elects to receive
the entire credit balance in such Participant's Stock Purchase Account in cash
within thirty (30) days after the end of that Purchase Period, provided that
such Participant shall have no right to purchase Common Stock in the event that
the last day of such a Purchase Period occurs more than three months following
the termination of such Participant's employment with the Company by reason of
such an approved retirement. In the event of any other termination of employment
(other than death) with the Company or a Participating Affiliate, participation
in the Plan will cease on the date the Participant ceases to be a Permanent
Full-Time Employee for any reason. In such event, the entire credit balance in
such Participant's Stock Purchase Account will be paid to the Participant in
cash within thirty (30) days. For purposes of this Section 6.03, a transfer of
employment to any Affiliate, or a leave of absence which has been approved by
the Committee, will not be deemed a termination of employment as a Permanent
Full-Time Employee.
ARTICLE VII.
NONTRANSFERABILITY
SECTION 7.01 Nontransferable Right to Purchase. The right to purchase
Common Stock hereunder may not be assigned, transferred, pledged or hypothecated
(whether by operation of law or otherwise), except as provided in Section 6.02,
and will not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition or
levy of attachment or similar process upon the right to purchase will be null
and void and without effect.
SECTION 7.02 Nontransferable Account. Except as provided in Section 6.02,
the amounts credited to a Stock Purchase Account may not be assigned,
transferred, pledged or hypothecated in any way, and any attempted assignment,
transfer, pledge, hypothecation or other disposition of such amounts will be
null and void and without effect.
ARTICLE VIII.
STOCK CERTIFICATES
SECTION 8.01 Delivery. Promptly after the last day of each Purchase
Period and subject to such terms and conditions as the Committee in its sole
discretion may impose, the Company will cause to be delivered to or for the
benefit of the Participant a certificate representing the Common Stock purchased
on the last business day of such Purchase Period.
SECTION 8.02 Securities Laws. The Company shall not be required to issue
or deliver any certificate representing Common Stock prior to registration under
the Securities Act of 1933, as amended, or registration or qualification under
any state law if such registration is required. The Company shall use its best
efforts to accomplish such registration (if and to the extent required) not
later than a reasonable time following the Purchase Period, and delivery of
certificates may be deferred until such registration is accomplished.
SECTION 8.03 Completion of Purchase. A Participant shall have no interest
in the Common Stock purchased until a certificate representing the same is
issued to or for the benefit of the Participant.
SECTION 8.04 Form of Ownership. The certificates representing Common
Stock issued under the Plan will be registered in the name of the Participant or
jointly in the name of the Participant and another person, as the Participant
may direct on a form provided by the Company.
ARTICLE IX.
EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN
SECTION 9.01 Effective Date. The Plan was approved by the Board of
Directors on January 28, 1998 and shall be approved by the shareholders of the
Company within twelve (12) months thereof.
SECTION 9.02 Plan Commencement. The initial Purchase Period under the
Plan will commence on May 3, 1998. Thereafter, each succeeding Purchase Period
will commence and terminate in accordance with Section 1.03(k).
SECTION 9.03 Powers of Board. The Board of Directors may amend or
discontinue the Plan at any time. No amendment or discontinuation of the Plan,
however, shall without shareholder approval be made that: (i) absent such
shareholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become unavailable with respect to the Plan,
(ii) requires shareholder approval under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company, (iii) permit the issuance of Common Stock before
payment therefor in full or, (iv) other than as provided in Article XI,
increases the number of shares of Common Stock available for issuance under the
Plan.
SECTION 9.04 Automatic Termination. The Plan shall automatically
terminate when all of the shares of Common Stock provided for in Section 10.03
have been sold.
ARTICLE X.
ADMINISTRATION
SECTION 10.01 The Committee. The Plan shall be administered by a
committee (the "Committee") of two or more directors of the Company, each of
whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under
the Act. The members of the Committee shall be appointed by and serve at the
pleasure of the Board of Directors.
SECTION 10.02 Powers of Committee. Subject to the provisions of the Plan,
the Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan, to establish
deadlines by which the various administrative forms must be received in order to
be effective, and to adopt such other rules and regulations for administering
the Plan as it may deem appropriate. The Committee shall have full and complete
authority to determine whether all or any part of the Common Stock acquired
pursuant to the Plan shall be subject to restrictions on the transferability
thereof or any other restrictions affecting in any manner a Participant's rights
with respect thereto but any such restrictions shall be contained in the form by
which a Participant elects to participate in the Plan pursuant to Section 2.02.
Decisions of the Committee will be final and binding on all parties who have an
interest in the Plan.
SECTION 10.03 Stock to be Sold. The Common Stock to be issued and sold
under the Plan may be treasury shares or authorized but unissued shares, or the
Company may purchase Common Stock in the market for sale under the Plan. Except
as provided in Section 11.01, the aggregate number of shares of Common Stock to
be sold under the Plan will not exceed 1,000,000 shares.
SECTION 10.04 Notices. Notices to the Committee should be addressed as
follows:
ATS Medical Inc.
Attn: John H. Jungbauer
Chief Financial Officer
3905 Annapolis Lane
Minneapolis, Minnesota, 55447
ARTICLE XI.
ADJUSTMENT FOR CHANGES IN STOCK OR COMPANY
SECTION 11.01 Stock Dividend or Reclassification. If the outstanding
shares of Common Stock are increased, decreased, changed into or exchanged for a
different number or kind of securities of the Company, or shares of a different
par value or without par value, through reorganization, recapitalization,
reclassification, stock dividend, stock split, amendment to the Company's
Articles of Incorporation, reverse stock split or otherwise, an appropriate
adjustment shall be made in the maximum numbers and kind of securities to be
purchased under the Plan with a corresponding adjustment in the purchase price
to be paid therefor.
SECTION 11.02 Merger or Consolidation. If the Company is merged into or
consolidated with one or more corporations during the term of the Plan,
appropriate adjustments will be made to give effect thereto on an equitable
basis in terms of issuance of shares of the corporation surviving the merger or
of the consolidated corporation, as the case may be.
ARTICLE XII.
APPLICABLE LAW
Rights to purchase Common Stock granted under the Plan shall be construed
and shall take effect in accordance with the laws of the State of Minnesota.