Exhibit 10.1

 

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2007 Employee Stock Purchase Plan

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SHORETEL, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

ADOPTED BY THE BOARD OF DIRECTORS ON SEPTEMBER 18, 20071

AND AMENDED NOVEMBER 2, 2010

1.     Establishment of Plan. ShoreTel, Inc. (the “Company”) proposes to grant
options for purchase of the Company’s Common Stock to eligible employees of the
Company and its Participating Corporations (as hereinafter defined) pursuant to
this Employee Stock Purchase Plan (this “Plan”). For purposes of this Plan,
“Parent” and “Subsidiary” shall have the same meanings as “parent corporation”
and “subsidiary corporation” in Sections 424(e) and 424(f), respectively, of the
Internal Revenue Code of 1986, as amended (the “Code”), and “Corporate Group”
shall refer collectively to the Company and all its Parents and Subsidiaries.
“Participating Corporations” are the Company and any Parents or Subsidiaries
that the Board of Directors of the Company (the “Board”) designates from time to
time as corporations that shall participate in this Plan. The Company intends
this Plan to qualify as an “employee stock purchase plan” under Section 423 of
the Code (including any amendments to or replacements of such Section), and this
Plan shall be so construed. Any term not expressly defined in this Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. A total of five hundred thousand (500,000) shares of the Company’s
Common Stock is reserved for issuance under this Plan. In addition, on each
January 1 after the first Offering Date, the aggregate number of shares of the
Company’s Common Stock reserved for issuance under the Plan shall be increased
automatically by the number of shares equal to one percent (1%) of the total
number of outstanding shares of the Company Common Stock on the immediately
preceding December 31 (rounded down to the nearest whole share); provided, that
the Board or the Committee may, in its sole discretion, reduce the amount of the
increase in any particular year; and, provided further, that the aggregate
number of shares issued over the term of this Plan shall not exceed five million
(5,000,000) shares of Common Stock. The number of shares reserved for issuance
under this Plan and the maximum number of shares that may be issued under this
Plan shall be subject to adjustments effected in accordance with Section 14 of
this Plan.

2.     Purpose. The purpose of this Plan is to provide eligible employees of the
Company and Participating Corporations with a means of acquiring an equity
interest in the Company through payroll deductions, to enhance such employees’
sense of participation in the affairs of the Company and Participating
Corporations, and to provide an incentive for continued employment.

3.     Administration. This Plan shall be administered by the Compensation
Committee of the Board or by the Board (either referred to herein as the
“Committee”). Subject to the provisions of this Plan and the limitations of
Section 423 of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Committee
and its decisions shall be final and binding upon all Participants. Members of
the Committee shall receive no compensation for their services in connection
with the administration of this Plan, other than standard fees as established
from time to time by the Board for services rendered by Board members serving on
Board committees. All expenses incurred in connection with the administration of
this Plan shall be paid by the Company.

4.     Eligibility. Any employee of the Company or the Participating
Corporations is eligible to participate in an Offering Period (as hereinafter
defined) under this Plan except the following:

(a) employees who are not employed by the Company or a Participating Corporation
at the beginning of such Offering Period or at such other time period as
specified by the Committee;

(b) employees who are customarily employed for twenty (20) hours or less per
week;

 

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Share amounts herein have been adjusted to reflect a 1-for-10 reverse stock
split approved by the Board in June 2007, following stockholder approval.

 

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(c) employees who are customarily employed for five (5) months or less in a
calendar year;

(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Participating Corporations or who, as a result of being granted an option
under this Plan with respect to such Offering Period, would own stock or hold
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Participating Corporations;

(e) employees who do not meet any other eligibility requirements that the
Committee may choose to impose (within the limits permitted by the Code); and

(f) individuals who provide services to the Company or any of its Participating
Corporations as independent contractors who are reclassified as common law
employees for any reason except for federal income and employment tax purposes.

5.     Offering Dates.

(a) The offering periods of this Plan (each, an “Offering Period”) may be of up
to twenty-four (24) months duration and shall commence and end at the times
designated by the Committee during which payroll deductions of Participants are
accumulated under this Plan.

(b) The initial Offering Period shall commence on November 1, 2007, and shall
end with the Purchase Date that occurs on or prior to April 30, 2008.
Thereafter, a six-month Offering Period shall commence on each May 1 (ending
with the Purchase Date that occurs on or prior to the next October 31) and
November 1 (ending with the Purchase Date that occurs on or prior to the next
April 30).

(c) The first business day of each Offering Period is referred to as the
“Offering Date.” The last business day of each Offering Period is referred to as
the “Purchase Date.” The Committee shall have the power to change these terms as
provided in Section 25 below.

6.     Participation in this Plan.

Eligible employees may become participants (a “Participant” or collectively,
“Participants”) in an Offering Period under this Plan on the Offering Date by
delivering a subscription agreement to the Company prior to such Offering Date,
or such other time period as specified by the Committee, and timely satisfying
any other eligibility requirements for participating in such Offering Period.
Notwithstanding the foregoing, the Committee may set a later time for filing the
subscription agreement authorizing payroll deductions for all eligible employees
with respect to a given Offering Period. Once an employee becomes a participant
in an Offering Period, then such employee will automatically participate in the
Offering Period commencing immediately following the last day of such prior
Offering Period unless the employee withdraws or is deemed to withdraw from this
Plan or terminates further participation in the Offering Period as set forth in
Section 11 below. Such participant is not required to file any additional
subscription agreement in order to continue participation in this Plan.

7.     Grant of Option on Enrollment. Becoming a Participant with respect to an
Offering Period will constitute the grant (as of the Offering Date) by the
Company to such Participant of an option to purchase on the Purchase Date up to
that number of shares of Common Stock of the Company determined by a fraction,
the numerator of which is the amount accumulated in such Participant’s payroll
deduction account during such Offering Period and the denominator of which
is the lower of (i) ninety percent (90%) of the fair market value of a share of
the Company’s Common Stock on the Offering Date (but in no event less than the
par value of a share of the Company’s Common Stock), or (ii) ninety percent
(90%) of the fair market value of a share of the Company’s Common Stock on the
Purchase Date (but in no event less than the par value of a share of the
Company’s Common Stock) provided, however,

 

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that the number of shares of the Company’s Common Stock subject to any option
granted pursuant to this Plan shall not exceed the lesser of (x) the maximum
number of shares set by the Committee pursuant to Section 10(b) below with
respect to the applicable Purchase Date, or (y) the maximum number of shares
which may be purchased pursuant to Section 10(a) below with respect to the
applicable Purchase Date. The fair market value of a share of the Company’s
Common Stock shall be determined as provided in Section 8 below.

Effective for the offering period commencing on and after May 1, 2011, the
paragraph immediately foregoing shall be amended and restated in its entirety as
follows:

Grant of Option on Enrollment. Becoming a Participant with respect to an
Offering Period will constitute the grant (as of the Offering Date) by the
Company to such Participant of an option to purchase on the Purchase Date up to
that number of shares of Common Stock of the Company determined by a fraction,
the numerator of which is the amount accumulated in such Participant’s payroll
deduction account during such Offering Period and the denominator of which is
the lower of (i) eighty-five percent (85%) of the fair market value of a share
of the Company’s Common Stock on the Offering Date (but in no event less than
the par value of a share of the Company’s Common Stock), or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company’s Common Stock
on the Purchase Date (but in no event less than the par value of a share of the
Company’s Common Stock) provided, however, that the number of shares of the
Company’s Common Stock subject to any option granted pursuant to this Plan shall
not exceed the lesser of (x) the maximum number of shares set by the Committee
pursuant to Section 10(b) below with respect to the applicable Purchase Date, or
(y) the maximum number of shares which may be purchased pursuant to
Section 10(a) below with respect to the applicable Purchase Date. The fair
market value of a share of the Company’s Common Stock shall be determined as
provided in Section 8 below.

8.     Purchase Price. The purchase price per share at which a share of Common
Stock will be sold in any Offering Period shall be ninety percent (90%) of the
lesser of:

(a) The fair market value on the Offering Date; or

(b) The fair market value on the Purchase Date.

The term “fair market value” means, as of any date, the value of a share of the
Company’s Common Stock determined as follows:

(i) if such Common Stock is then listed on a national securities exchange, its
closing price on the date of determination on the principal national securities
exchange on which the Common Stock is listed or admitted to trading as reported
in The Wall Street Journal or such other source as the Committee deems reliable;
or

(ii) if such Common Stock is publicly traded but is not admitted to trading on a
national securities exchange, the average of the closing bid and asked prices on
the date of determination as reported in The Wall Street Journal or such other
source as the Committee deems reliable.

Effective for the offering period commencing on and after May 1, 2011, the
paragraph immediately foregoing shall be amended and restated in its entirety as
follows:

Purchase Price. The purchase price per share at which a share of Common Stock
will be sold in any Offering Period shall be eighty-five percent (85%) of the
lesser of:

(a) The fair market value on the Offering Date; or

(b) The fair market value on the Purchase Date.

 

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The term “fair market value” means, as of any date, the value of a share of the
Company’s Common Stock determined as follows:

(i) if such Common Stock is then listed on a national securities exchange, its
closing price on the date of determination on the principal national securities
exchange on which the Common Stock is listed or admitted to trading as reported
in The Wall Street Journal or such other source as the Committee deems reliable;
or

(ii) if such Common Stock is publicly traded but is not admitted to trading on a
national securities exchange, the average of the closing bid and asked prices on
the date of determination as reported in The Wall Street Journal or such other
source as the Committee deems reliable.

9.     Payment Of Purchase Price; Payroll Deduction Changes; Share Issuances.

(a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Offering Period. The deductions are made as a
percentage of the Participant’s compensation in one percent (1%) increments not
less than one percent (1%), nor greater than fifteen percent (15%) or such
higher or lower limit as may be set by the Committee for a particular Offering
Period. Compensation shall mean all W-2 cash compensation categorized by the
Company as base salary or regular hourly wages, bonuses, overtime pay,
commissions, and shift premiums, provided, however, that for purposes of
determining a Participant’s compensation, any election by such Participant to
reduce his or her regular cash remuneration under Sections 125 or 401(k) of the
Code shall be treated as if the Participant did not make such election. Payroll
deductions shall commence on the first payday following the first day of the
Offering Period and shall continue to the last payday at or prior to the
Purchase Date of such Offering Period unless altered or terminated as provided
in this Plan.

(b) A Participant may decrease the rate of payroll deductions during an Offering
Period by filing with the Company a new authorization for payroll deductions,
with the new rate to become effective for the next payroll period commencing
after the Company’s receipt of the authorization and continuing for the
remainder of the Offering Period unless changed as described below. Such change
in the rate of payroll deductions may be made at any time during an Offering
Period, but not more than one (1) decrease may be made effective during any
Offering Period. A Participant may increase or decrease the rate of payroll
deductions for any subsequent Offering Period by filing with the Company a new
authorization for payroll deductions prior to the beginning of such Offering
Period, or such other time period as specified by the Committee.

(c) A Participant may reduce his or her payroll deduction percentage to zero
during an Offering Period by filing with the Company a request for cessation of
payroll deductions. Such reduction shall be effective beginning with the next
payroll period after the Company’s receipt of the request and no further payroll
deductions will be made for the duration of the Offering Period. Payroll
deductions credited to the Participant’s account prior to the effective date of
the request shall be used to purchase shares of Common Stock of the Company in
accordance with Section (e) below. A reduction of the payroll deduction
percentage to zero shall be treated as such Participant’s withdrawal from such
Offering Period, and the Plan, effective as of the day after the next Purchase
Date following the filing date of such request with the Company.

(d) All payroll deductions made for a Participant are credited to his or her
account under this Plan and are deposited with the general funds of the Company.
No interest accrues on the payroll deductions. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

(e) On each Purchase Date, so long as this Plan remains in effect and provided
that the Participant has not submitted a signed and completed withdrawal form
before that date which notifies the

 

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Company that the Participant wishes to withdraw from that Offering Period under
this Plan and have all payroll deductions accumulated in the account maintained
on behalf of the Participant as of that date returned to the Participant, the
Company shall apply the funds then in the Participant’s account to the purchase
of whole shares of Common Stock reserved under the option granted to such
Participant with respect to the Offering Period to the extent that such option
is exercisable on the Purchase Date. The purchase price per share shall be as
specified in Section 8 of this Plan. Any amount remaining in a Participant’s
account on a Purchase Date which is less than the amount necessary to purchase a
full share of the Company’s Common Stock shall be carried forward, without
interest, into the next Offering Period, as the case may be. In the event that
this Plan has been oversubscribed, all funds not used to purchase shares on the
Purchase Date shall be returned to the Participant, without interest. No Common
Stock shall be purchased on a Purchase Date on behalf of any employee whose
participation in this Plan has terminated prior to such Purchase Date.

(f) As promptly as practicable after the Purchase Date, the Company shall issue
shares for the Participant’s benefit representing the shares purchased upon
exercise of his or her option.

(g) During a Participant’s lifetime, his or her option to purchase shares
hereunder is exercisable only by him or her. The Participant will have no
interest or voting right in shares covered by his or her option until such
option has been exercised.

10.     Limitations on Shares to be Purchased.

(a) No Participant shall be entitled to purchase stock under any Offering Period
at a rate which, when aggregated with such Participant’s rights to purchase
stock, that are also outstanding in the same calendar year(s) (whether under
other Offering Periods or other employee stock purchase plans of the Corporate
Group), exceeds $25,000 in fair market value, determined as of the Offering
Date, (or such other limit as may be imposed by the Code) for each calendar year
in which such Offering Period is in effect (hereinafter the “Maximum Share
Amount”). The Company shall automatically suspend the payroll deductions of any
Participant as necessary to enforce such limit provided that when the Company
automatically resumes such payroll deductions, the Company must apply the rate
in effect immediately prior to such suspension.

(b) The Committee may, in its sole discretion, set a lower maximum number of
shares which may be purchased by any Participant during any Offering Period than
that determined under Section 10(a) above, which shall then be the Maximum Share
Amount for subsequent Offering Periods. If a new Maximum Share Amount is set,
then all Participants must be notified of such Maximum Share Amount prior to the
commencement of the next Offering Period for which it is to be effective. The
Maximum Share Amount shall continue to apply with respect to all succeeding
Offering Periods unless revised by the Committee as set forth above.

(c) If the number of shares to be purchased on a Purchase Date by all
Participants exceeds the number of shares then available for issuance under this
Plan, then the Company will make a pro rata allocation of the remaining shares
in as uniform a manner as shall be reasonably practicable and as the Committee
shall determine to be equitable. In such event, the Company shall give written
notice of such reduction of the number of shares to be purchased under a
Participant’s option to each Participant affected.

(d) Any payroll deductions accumulated in a Participant’s account which are not
used to purchase stock due to the limitations in this Section 10, and not
covered by Section 9(e), shall be returned to the Participant as soon as
practicable after the end of the applicable Offering Period, without interest.

11.     Withdrawal.

(a) Each Participant may withdraw from an Offering Period under this Plan by
signing and delivering to the Company a written notice to that effect on a form
provided for such purpose by the Company. Such withdrawal may be elected at any
time prior to the end of an Offering Period, or such other time period as
specified by the Committee.

 

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(b) Upon withdrawal from this Plan, the accumulated payroll deductions shall be
returned to the withdrawn Participant, without interest, and his or her interest
in this Plan shall terminate. In the event a Participant voluntarily elects to
withdraw from this Plan, he or she may not resume his or her participation in
this Plan during the same Offering Period, but he or she may participate in any
Offering Period under this Plan which commences on a date subsequent to such
withdrawal by filing a new authorization for payroll deductions in the same
manner as set forth in Section 6 above for initial participation in this Plan.

12.     Termination of Employment. Termination of a Participant’s employment for
any reason, including retirement, death, disability, or the failure of a
Participant to remain an eligible employee of the Company or of a Participating
Corporation, immediately terminates his or her participation in this Plan. In
such event, accumulated payroll deductions credited to the Participant’s account
will be returned to him or her or, in the case of his or her death, to his or
her legal representative, without interest. For purposes of this Section 12, an
employee will not be deemed to have terminated employment or failed to remain in
the continuous employ of the Company or of a Participating Corporation in the
case of sick leave, military leave, or any other leave of absence approved by
the Company; provided that such leave is for a period of not more than ninety
(90) days or reemployment upon the expiration of such leave is guaranteed by
contract or statute.

13.     Return of Payroll Deductions. In the event a Participant’s interest in
this Plan is terminated by withdrawal, termination of employment or otherwise,
or in the event this Plan is terminated by the Board, the Company shall deliver
to the Participant all accumulated payroll deductions credited to such
Participant’s account. No interest shall accrue on the payroll deductions of a
Participant in this Plan.

14.     Capital Changes. In the event that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Company, or other change in the
corporate structure of the Company affecting the Common Stock the Committee
shall make such adjustment as it determines (in its sole discretion) to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, including
without limitation, the number and class of Common Stock which may be delivered
under the Plan, the purchase price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised,
and the numerical limits of Sections 1 and 10 shall be proportionately adjusted.

15.     Nonassignability. Neither payroll deductions credited to a Participant’s
account nor any rights with regard to the exercise of an option or to receive
shares under this Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 22 below) by the Participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be void and without
effect.

16.     Reports. Individual accounts will be maintained for each Participant in
this Plan. Each Participant shall receive promptly after the end of each
Offering Period a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Offering Period.

17.     Notice of Disposition. Each Participant shall notify the Company in
writing if the Participant disposes of any of the shares purchased in any
Offering Period pursuant to this Plan if such disposition occurs within two
(2) years from the Offering Date or within one (1) year from the Purchase Date
on which such shares were purchased (the “Notice Period”). The Company may, at
any time during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to

 

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this Plan requesting the Company’s transfer agent to notify the Company of any
transfer of the shares. The obligation of the Participant to provide such notice
shall continue notwithstanding the placement of any such legend on the
certificates.

18.     No Rights to Continued Employment. Neither this Plan nor the grant of
any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Participating Corporation, or restrict the right of
the Company or any Participating Corporation to terminate such employee’s
employment.

19.     Equal Rights And Privileges. All eligible employees shall have equal
rights and privileges with respect to this Plan so that this Plan qualifies as
an “employee stock purchase plan” within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
this Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company, the Committee
or the Board, be reformed to comply with the requirements of Section 423. This
Section 19 shall take precedence over all other provisions in this Plan.

20.     Notices. All notices or other communications by a Participant to the
Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

21.     Term; Stockholder Approval. This Plan will become effective on
November 1, 2007. This Plan was approved by the stockholders of the Company
within twelve (12) months before or after the date this Plan was adopted by the
Board. No purchase of shares that are subject to such stockholder approval
before becoming available under this Plan shall occur prior to stockholder
approval of such shares and the Board or Committee may delay any Purchase Date
and postpone the commencement of any Offering Period subsequent to such Purchase
Date as deemed necessary or desirable to obtain such approval (provided that if
a Purchase Date would occur more than twenty-four (24) months after commencement
of the Offering Period to which it relates, then such Purchase Date shall not
occur and instead such Offering Period shall terminate without the purchase of
such shares and Participants in such Offering Period shall be refunded their
contributions without interest). This Plan shall continue until the earlier to
occur of (a) termination of this Plan by the Board (which termination may be
effected by the Board at any time pursuant to Section 25 below), (b) issuance of
all of the shares of Common Stock reserved for issuance under this Plan, or
(c) the tenth anniversary of the first Purchase Date under the Plan.

22.     Designation of Beneficiary.

(a) A Participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant’s account under this
Plan in the event of such Participant’s death subsequent to the end of an
Offering Period but prior to delivery to him of such shares and cash. In
addition, a Participant may file a written designation of a beneficiary who is
to receive any cash from the Participant’s account under this Plan in the event
of such Participant’s death prior to a Purchase Date.

(b) Such designation of beneficiary may be changed by the Participant at any
time by written notice. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under this Plan who is living at the
time of such Participant’s death, the Company shall deliver such shares or cash
to the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares or cash to the spouse or
to any one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.

23.     Conditions Upon Issuance of Shares; Limitation on Sale of Shares. Shares
shall not be issued with respect to an option unless the exercise of such option
and the issuance and delivery of

 

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such shares pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange or automated
quotation system upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

24.     Applicable Law. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of Delaware.

25.     Amendment or Termination. The Committee, in its sole discretion, may
amend, suspend, or terminate the Plan, or any part thereof, at any time and for
any reason. If the Plan is terminated, the Committee, in its discretion, may
elect to terminate all outstanding Offering Periods either immediately or upon
completion of the purchase of shares of Common Stock on the next Purchase Date
(which may be sooner than originally scheduled, if determined by the Committee
in its discretion), or may elect to permit Offering Periods to expire in
accordance with their terms (and subject to any adjustment pursuant to
Section 14). If an Offering Period is terminated prior to its
previously-scheduled expiration, all amounts then credited to Participants’
accounts for such Offering Period, which have not been used to purchase shares
of the Company’s Common Stock, shall be returned to those Participants (without
interest thereon, except as otherwise required under local laws) as soon as
administratively practicable. Further, the Committee will be entitled to change
the Offering Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a Participant in order to
adjust for delays or mistakes in the administration of the Plan, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of the Company’s
Common Stock for each Participant properly correspond with amounts withheld from
the Participant’s base salary or regular hourly wages, and establish such other
limitations or procedures as the Committee determines in its sole discretion
advisable which are consistent with the Plan. Such actions will not require
stockholder approval or the consent of any Participants. However, no amendment
shall be made without approval of the stockholders of the Company within twelve
(12) months of the adoption of such amendment if such amendment would:
(a) increase the number of shares that may be issued under this Plan; or
(b) change the designation of the employees (or class of employees) eligible for
participation in this Plan.

26.     Corporate Transactions.

(a) In the event of a Corporate Transaction (as defined below), each outstanding
right to purchase Company Common Stock will be assumed or an equivalent option
substituted by the successor corporation or a parent or a subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the purchase right, the Offering Period with respect to
which such purchase right relates will be shortened by setting a new Purchase
Date (the “New Purchase Date” and will end on the New Purchase Date. The New
Purchase Date shall occur on or prior to the consummation of the Corporate
Transaction.

(b) “Corporate Transaction” means the occurrence of any of the following events:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company’s then outstanding voting securities; or (ii) the consummation of the
sale or disposition by the Company of all or substantially all of the Company’s
assets; or (iii) the consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its parent) at least
fifty percent (50%) of the total voting power represented by the voting

 

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securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation or (iv) any other transaction
which qualifies as a “corporate transaction” under 424(a) of the Code wherein
the stockholders of the Company give up all of their equity interest in the
Company (except for the acquisition, sale or transfer of all or substantially
all of the outstanding shares of the Company).

 

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