Exhibit 10.12

 

DEPOMED, INC.
2004 EMPLOYEE STOCK PURCHASE PLAN

 

As Amended February 19, 2014

 

1.                                      Establishment of Plan.

 

Depomed, Inc. (the “Company”) proposes to grant options for purchase of the
Company’s common stock (the “Common Stock”) to eligible employees of the Company
and its Participating Subsidiaries (as hereinafter defined) pursuant to this
2004 Employee Stock Purchase Plan (this “Plan”).  For the purposes of this Plan,
“Parent Corporation” 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”). 
“Participating Subsidiaries” are Parent Corporations 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.

 

2.                                      Number of Shares.

 

The total number of shares of Common Stock reserved and available for issuance
pursuant to this Plan shall be 2,500,000 (the “Share Limit”), subject to
adjustments effected in accordance with Section 15 of this Plan. Shares issued
under this Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares reacquired in private transactions or open market
purchases, but all shares issued under this Plan shall be counted against the
Share Limit.

 

3.                                      Purpose.

 

The purpose of this Plan is to provide eligible employees of the Company and
Participating Subsidiaries with a convenient 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
Subsidiaries, and to provide an incentive for continued employment.  For the
purposes of this Plan, “employee” shall mean any individual who is an employee
of the Company or a Participating Subsidiary. Whether an individual qualifies as
an employee shall be determined by the Committee (as hereinafter defined), in
its sole discretion. The Committee shall be guided by the provisions of Treasury
Regulation Section 1.421-7 and Section 3401(c) of the Code and the Treasury
Regulations thereunder, with the intent that the Plan cover all “employees”
within the meaning of those provisions other than those who are not eligible to
participate in the Plan, provided, however, that any determinations regarding
whether an individual is an “employee” shall be prospective only, unless
otherwise determined by the Committee. Unless the Committee makes a contrary
determination, the employees of the Company shall, for all purposes of this
Plan, be those individuals who are carried as employees of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to
participate in the Plan shall be directed to the Committee, whose decision shall
be final.

 

4.                                      Administration.

 

This Plan shall be administered by the Compensation Committee of the Board (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

 

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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.

 

5.                                      Eligibility.

 

Any employee of the Company or the Participating Subsidiaries 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
Subsidiary prior to the beginning of such Offering Period or prior to such other
time period as specified by the Committee;

 

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

 

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 Subsidiaries 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 Subsidiaries;

 

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

 

f)               employees who reside in countries for whom such employees’
participation in the Plan would result in a violation under any corporate or
securities laws of such country of residence.

 

6.                                      Offering Dates.

 

The offering periods of this Plan (each, an “Offering Period”) shall be of
twenty-four (24) months duration commencing on December 1 and June 1 of each
year (or at such time or times as may be determined by the Committee).  Each
Offering Period shall consist of four (4) six (6) month purchase periods
(individually, a “Purchase Period”) during which payroll deductions of the
participants are accumulated under this Plan.  The first business day of each
Offering Period is referred to as the “Offering Date.”  The last business day of
each Purchase Period is referred to as the “Purchase Date.”

 

Notwithstanding the immediately preceding paragraph, beginning with the Offering
Period commencing on June 1, 2012, each Offering Period shall be of six
(6) months duration commencing on December 1 and June 1 of each year (or at such
time or times as may be determined by the Committee).  Each Offering Period
shall consist of a six (6) month Purchase Period during which payroll deductions
of the participants are accumulated under this Plan.

 

For clarity, eligible employees who are participants under the Plan in any
Offering Period that commenced on or before December 1, 2011, if the provisions
of Section 12(c) regarding enrollment in a subsequent Offering Period apply, any
eligible employee will be enrolled in a subsequent six (6) month Offering
Period.

 

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The Committee shall have the power to change the Offering Dates, the Purchase
Dates and the duration of Offering Periods or Purchase Periods without
shareholder approval if such change is announced prior to the relevant Offering
Period or prior to such other time period as specified by the Committee.

 

7.                                      Participation in this Plan.

 

Eligible employees may become participants in an Offering Period under this Plan
on the Offering Date, after satisfying the eligibility requirements, by
delivering a subscription agreement to the Company prior to such Offering Date,
or such other time period as specified by the Committee.  An eligible employee
who does not deliver a subscription agreement to the Company after becoming
eligible to participate in an Offering Period shall not participate in that
Offering Period or any subsequent Offering Period unless such employee enrolls
in this Plan by filing a subscription agreement with the Company prior to such
Offering Period, or such other time period as specified by the Committee.  Once
an employee becomes a participant in an Offering Period by filing a subscription
agreement, such employee shall automatically participate in the Offering Period
commencing immediately following the last day of the 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 12 below.  Such participant is not required to file any additional
subscription agreement in order to continue participation in this Plan.

 

8.                                      Grant of Option on Enrollment.

 

Enrollment by an eligible employee in this Plan with respect to an Offering
Period shall constitute the grant (as of the Offering Date) by the Company to
such employee of an option to purchase on the Purchase Date up to that number of
shares of Common Stock determined by a fraction, the numerator of which is the
amount accumulated in such employee’s payroll deduction account during such
Purchase Period and the denominator of which is the lower of (i) eighty-five
percent (85%) of the fair market value of a share of Common Stock on the
Offering Date (but in no event less than the par value of a share of Common
Stock), or (ii) eighty-five percent (85%) of the fair market value of a share of
Common Stock on the Purchase Date (but in no event less than the par value of a
share of Common Stock), provided, however, that the number of shares of 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 11(c) below with respect to the applicable Purchase Date, or (y) the
maximum number of shares which may be purchased pursuant to Section 11(b) below
with respect to the applicable Purchase Date.  The fair market value of a share
of Common Stock shall be determined as provided in Section 9 below.

 

9.                                      Purchase Price.

 

The purchase price per share at which a share of Common Stock shall 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.

 

For the purposes of this Plan, the term “fair market value” means, as of any
date, the value of a share of the Common Stock determined as follows:

 

a)             If the Common Stock is traded on any established stock exchange
or quoted on a national market system, fair market value shall be the closing
sales price for the Common Stock as quoted on that stock exchange or system for
the date the value is to be determined (the “Value Date”) as reported by such
stock exchange or national market system, or, if not reported by such stock
exchange or national market system, as reported in The Wall Street Journal or a
similar publication.  If no sales are reported as having occurred on the

 

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Value Date, fair market value shall be that closing sales price for the last
preceding trading day on which sales of Common Stock are reported as having
occurred.  If no sales are reported as having occurred during the five trading
days before the Value Date, Fair Market Value shall be the closing bid for
Common Stock on the Value Date.  If the Common Stock is listed on multiple
exchanges or systems, fair market value shall be based on sales or bid prices on
the primary exchange or system on which the Common Stock is traded or quoted;

 

b)             If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported on any established stock
exchange or quoted on a national market system, fair market value shall be the
mean between the high bid and low asked prices on the Value Date.  If no prices
are quoted for the Value Date, fair market value shall be the mean between the
high bid and low asked prices on the last preceding trading day on which any bid
and asked prices were quoted; or

 

c)              If the Common Stock is not traded on any established stock
exchange or quoted on a national market system and are not quoted by a
recognized securities dealer, the Board or Committee will determine fair market
value in good faith.  The Board or Committee will consider the following
factors, and any others it considers significant, in determining fair market
value: (i) the price at which other securities of the Company have been issued
to purchasers other than employees, directors, or consultants, (ii) the
Company’s shareholder’s equity, prospective earning power, dividend-paying
capacity, and non-operating assets, if any, and (iii) any other relevant
factors, including the economic outlook for the Company and the Company’s
industry, the Company’s position in that industry, the Company’s goodwill and
other intellectual property, and the values of securities of other businesses in
the same industry.

 

10.                               Payment of Purchase Price; Changes in Payroll
Deductions; Issuance of Shares.

 

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
lower limit set by the Committee.  Compensation shall mean all regular
straight-time gross earnings, and shall not include payments for overtime, shift
premium, incentive compensation or payments, bonuses, commissions or other
compensation.  Payroll deductions shall commence on the first payday of the
Offering Period and shall continue to the end of the Offering Period unless
sooner altered or terminated as provided in this Plan.

 

b)             A participant may increase or decrease the rate of payroll
deductions during an Offering Period by filing with the Company a new
authorization for payroll deductions, in which case the new rate shall become
effective for the next payroll period commencing after the Company’s timely
receipt of the authorization and shall continue 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) change may be made effective during any Purchase 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 timely receipt of the request
and no further payroll deductions shall be made for the duration of the Offering
Period.  Payroll deductions credited to the participant’s

 

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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
participant may not resume making payroll deductions during the Offering Period
in which he or she reduced his or her payroll deductions to zero.

 

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, for 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 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 9 of this Plan.  Any cash remaining in a participant’s
account after such purchase of shares shall be refunded to such participant in
cash, without interest, provided, however, that any amount remaining in such
participant’s account on a Purchase Date which is less than the amount necessary
to purchase a full share of Common Stock shall be carried forward, without
interest, into the next Purchase Period or 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 soon 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 shall have
no interest or voting rights in shares covered by his or her option until such
option has been exercised.

 

11.                               Limitations on Shares to be Purchased.

 

a)    No participant shall be entitled to purchase stock under this Plan at a
rate which, when aggregated with his or her rights to purchase stock under all
other employee stock purchase plans of the Company or any Subsidiary, 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 the
employee participates in this Plan.  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)             No participant shall be entitled to purchase more than 3,000
shares of Common Stock (the “Maximum Share Amount”) on any single Purchase
Date.  Prior to the commencement of any Offering Period or prior to such time
period as specified by the Committee, the Committee may, in its sole discretion,
set a new Maximum Share Amount.  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.

 

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The Maximum Share Amount shall continue to apply with respect to all succeeding
Purchase Dates and 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 employees participating in this Plan exceeds the number of shares then
available for issuance under this Plan, then the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be reasonably
practicable or 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 11
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.

 

12.                               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.  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.

 

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 7 above for initial
participation in this Plan.

 

c)              If the fair market value on the first day of the current
Offering Period in which a participant is enrolled is higher than the fair
market value on the first day of any subsequent Offering Period, the Company
shall automatically enroll such participant in the subsequent Offering Period. 
Any funds accumulated in a participant’s account prior to the first day of such
subsequent Offering Period shall be applied to the purchase of shares on the
Purchase Date immediately prior to the first day of such subsequent Offering
Period, if any.

 

13.                               Termination of Employment.

 

Termination of a participant’s employment for any reason, including retirement,
death or the failure of a participant to remain an eligible employee of the
Company or of a Participating Subsidiary, shall immediately terminate his or her
participation in this Plan.  In such event, the payroll deductions credited to
the participant’s account shall 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 13, an employee shall not be deemed to have terminated
employment or failed to remain in the continuous employ of the Company or of a
Participating Subsidiary in the case of sick leave, military leave, or any other
leave of absence approved by the Committee, provided, however 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.

 

14.                               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

 

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the participant all payroll deductions credited to such participant’s account. 
No interest shall accrue on the payroll deductions of a participant in this
Plan.

 

15.                               Capital Changes.

 

a)             Subject to any required action by the shareholders of the
Company, the number and type of shares of Common Stock covered by each option
under this Plan which has not yet been exercised and the number and type of
shares of Common Stock which have been authorized for issuance under this Plan
but have not yet been placed under option (collectively, the “Reserves”), as
well as the price per share of Common Stock covered by each option under this
Plan which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of Common
Stock resulting from a stock split, stock dividend, combination or
reclassification of the Common Stock or any other increase or decrease in the
number of issued and outstanding shares of Common Stock effected without receipt
of any consideration by the Company, provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive.  Except
as expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.

 

b)             In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. 
In the event of (i) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
shall be binding on all participants), (ii) a merger in which the Company is the
surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company,
(iii) the sale of all or substantially all of the assets of the Company, or
(iv) the acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction, each option under
this Plan shall be assumed or an equivalent option shall be substituted by the
successor corporation or a parent or subsidiary of the successor corporation,
unless the successor corporation does not agree to assume the option or to
substitute an equivalent option, in which case the Board may determine, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offering Period then in progress by setting a new Purchase Date
(the “New Purchase Date”).  If the Board shortens the Offering Period then in
progress, the Board shall notify each participant in writing, at least ten
(10) days prior to the New Purchase Date, that the Purchase Date for his or her
option has been changed to the New Purchase Date and that his or her option will
be exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 12.

 

c)              The Committee may, if it so determines in the exercise of its
sole discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the event
that the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being

 

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consolidated with or merged into any other corporation.

 

16.                               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 the laws of descent and distribution or as provided in Section 23 below)
by the participant.  Any such attempt at assignment, transfer, pledge or other
disposition shall be void and without effect.

 

17.                               Reports.

 

Individual accounts shall be maintained for each participant in this Plan.  Each
participant shall receive, as soon as practicable after the end of each Purchase
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
Purchase Period or Offering Period, as the case may be.

 

18.                               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
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.

 

19.                               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
Subsidiary, or restrict the right of the Company or any Participating Subsidiary
to terminate such employee’s employment.

 

20.                               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 20 shall take precedence over all
other provisions in this Plan.

 

21.                               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.

 

22.                               Term; Shareholder Approval.

 

This Plan shall be approved by the shareholders of the Company, in any manner
permitted by applicable corporate law, within twelve (12) months after the date
this Plan is adopted by the Board.  No

 

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purchase of shares pursuant to this Plan shall occur prior to such shareholder
approval.  This Plan shall continue until the earliest to occur of
(a) termination of this Plan by the Board (which termination may be effected by
the Board at any time), or (b) issuance of all of the shares of Common Stock
reserved for issuance under this Plan.

 

23.                               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 a
Purchase Period but prior to delivery to him of such shares and cash.  The
participant shall deliver along with such designation a written acknowledgment
of the participant’s spouse, if any, consenting to the designation.  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.  The participant shall deliver along with such
designation a written acknowledgment of the participant’s spouse, if any,
consenting to the designation.  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.

 

24.                               Conditions upon Issuance of Shares.

 

Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, 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.

 

25.                               Applicable Law.

 

The Plan shall be governed by the substantive laws (excluding the conflict of
laws rules) of the State of California.

 

26.                               Amendment or Termination.

 

The Board may at any time amend, terminate or extend the term of this Plan;
provided, however, that:  (i) any such termination cannot affect options
previously granted under this Plan; (ii) no amendment may make any change in an
option previously granted which would adversely affect the right of any
participant, nor may any amendment be made without approval of the shareholders
of the Company obtained in accordance with Section 22 above 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.

 

Notwithstanding the foregoing, the Board may make such amendments to the Plan as
the Board determines to be advisable, if the continuation of the Plan or any
Offering Period would result in financial accounting treatment for the Plan that
is different from the financial accounting treatment in effect on the date this
Plan is adopted by the Board.

 

Adopted by the Board on:  March 19, 2004

Approved by the shareholders on:  May 27, 2004

Effective date of this Plan:  May 27, 2004

Amended by the Board on:  March 22, 2007, March 25, 2010, March 22, 2012,
May 15, 2012 and February 19, 2014

 

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