Exhibit 10.3

 

TRANS1 INC.

AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

 

(originally adopted July 19, 2007, amended and restated December 15, 2010,

and subsequently amended and restated as of May 1, 2013)

 

ARTICLE 1.

 

Purpose, commencement and history of the plan

 

Section 1.1.          Purpose. The purpose of the Plan is to provide employees
of the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock through accumulated payroll deductions. The Company’s intention is
to have the Plan qualify as an “employee stock purchase plan” under Section 423
of the Code. The provisions of the Plan, accordingly, will be construed so as to
extend and limit Plan participation in a uniform and nondiscriminatory basis
consistent with the requirements of Section 423 of the Code.

 

Section 1.2           Commencement and History.

 

The Plan was adopted by the Company’s Board of Directors on July 19, 2007 and by
the stockholders of the Company on August 29, 2007. The Plan initially became
effective on October 16, 2007, the effective date of the Company’s first
Registration Statement filed with the Securities and Exchange Commission
registering the Company’s Common Stock. The Compensation Committee of the Board
of Directors serves as the Administrator of the Plan. The Plan initially
authorized the issuance of up to an aggregate of 250,000 shares of Common Stock
to Participants during the term of the Plan subject to increases in available
shares on the first day of each fiscal year beginning in 2008, equal to the
lesser of: (i) two percent (2%) of the outstanding shares of Common Stock on the
first day of such fiscal year or (ii) an amount determined by the Administrator.

 

Pursuant to the authority granted the Administrator under Section 20.1 of the
Plan, the Administrator elected to indefinitely suspend operation of the Plan
immediately following the effective date of the Registration Statement such that
no offerings were made under the Plan and no shares were issued to Participants
under the Plan during the fiscal years ended December 31, 2007, 2008, 2009, and
2010. In addition, pursuant to the authority granted the Administrator under
Section 13.1 of the Plan, the Administrator elected not to reserve any
additional shares for issuance under the Plan as of the first day of each fiscal
year beginning January 1, 2008, 2009, 2010, and 2011.

 

On December 15, 2010, the Administrator amended and restated the Plan in order
to change the discount at which Participants could purchase Common Stock
pursuant to the Plan from five percent (5%) to fifteen percent (15%) and confirm
the 500,000 share cap on Common Stock issuable under the Plan. The
Administrator, pursuant to Section 20.1 authorized commencement of offerings
under the Plan effective with an initial offering period effective January 15,
2011. The Administrator, pursuant to Section 13.1, elected not to increase the
shares reserved for issuance under the Plan as of January 1, 2011 but did
increase the shares available for issuance under the Plan on January 1, 2012 by
250,000, the maximum additional shares permitted under the Plan.

 

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On May 1, 2013, the Administrator further amended and restated the Plan in order
to add a “look-back” feature such that the Purchase Price under the Plan is the
lesser of eighty-five percent (85%) of the fair market value of the Company’s
Common Stock on either the first day or the last day of each Offering Period
effective with the first Offering Period commencing on or following June 1, 2013
and to clarify the cap on the maximum number of shares of Common Stock available
for issuance under the Plan. (Prior to this amendment and restatement, the
Purchase Price was set at eighty-five percent (85%) of the fair market value of
the Company’s Common Stock on the last day of each Offering Period.) As of the
May 1, 2013 restatement, the Plan had a total of 398,966 shares available for
issuance after taking into account the shares issued in Fiscal Years ending
December 31, 2011 and 2012 and the additional shares reserved under the Plan on
January 1, 2012.

 

ARTICLE 2.

 

Definitions

 

Section 2.1.          “Administrator” means the Board or any Committee
designated by the Board to administer the Plan pursuant to Section 14.

 

Section 2.2.          “Applicable Laws” means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where options are, or will be, granted under
the Plan.

 

Section 2.3.          “Board” means the Board of Directors of the Company.

 

Section 2.4.          “Change in Control” means (i) the acquisition, directly or
indirectly, by any person or group (within the meaning of Section 13(d)(3) of
the Exchange Act) of the beneficial ownership of securities of the Company
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding securities of the Company; (ii) a merger or consolidation in
which the Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the state in which the Company is
incorporated; (iii) a reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities are
transferred to or acquired by a person or persons different from the persons
holding those securities immediately prior to such merger; (iv) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company; or (v) a complete liquidation or dissolution of the Company.

 

Section 2.5.          “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

 

Section 2.6.          “Committee” means a committee of two or more members of
the Board appointed to administer the Plan, as set forth in Section 14 hereof.

 

Section 2.7.          “Common Stock” means the common stock of the Company.

 

Section 2.8.          “Company” means TranS1 Inc., a Delaware corporation, or
any entity that is a successor to the Company.

 

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Section 2.9.          “Compensation” means an Employee’s base straight time
gross earnings, commissions (to the extent such commissions are an integral,
recurring part of compensation), overtime and shift premium, but exclusive of
payments for incentive compensation, bonuses and other compensation.

 

Section 2.10.         “Designated Subsidiary” means any Subsidiary that has been
designated by the Administrator from time to time in its sole discretion as
eligible to participate in the Plan.

 

Section 2.11.         “Director” means a member of the Board.

 

Section 2.12.         “Eligible Employee” means any individual who is a common
law employee of an Employer and is customarily employed for at least twenty (20)
hours per week and more than five (5) months in any calendar year by the
Employer. For purposes of the Plan, the employment relationship will be treated
as continuing intact while the individual is on sick leave or other leave of
absence that the Employer approves. Where the period of leave exceeds ninety
(90) days and the individual’s right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the ninety-first (91st) day of such leave. The Administrator, in
its discretion, from time to time may, prior to an Offering Date for all options
to be granted on such Offering Date, determine (on a uniform and
nondiscriminatory basis) that the definition of Eligible Employee will or will
not include an individual if he or she: (i) has not completed at least two years
of service since his or her last hire date (or such lesser period of time as may
be determined by the Administrator in its discretion), (ii) customarily works
not more than twenty (20) hours per week (or such lesser period of time as may
be determined by the Administrator in its discretion), (iii) customarily works
not more than five (5) months per calendar year (or such lesser period of time
as may be determined by the Administrator in its discretion), (iv) is an officer
or other manager, or (v) is a highly compensated employee under Section 414(q)
of the Code.

 

Section 2.13.         “Employer” means any one or all of the Company and its
Designated Subsidiaries.

 

Section 2.14.         “Exchange Act” means the Securities Exchange Act of 1934,
as amended, including the rules and regulations promulgated thereunder.

 

Section 2.15.         “Exercise Date” means the last day of each Offering
Period.

 

Section 2.16.         “Fair Market Value” means, as of any date and unless the
Administrator determines otherwise the value of Common Stock determined as
follows:

 

(a)          If the Common Stock is then listed or admitted to trading on a
stock exchange which reports closing sale prices, the Fair Market Value shall be
the closing sale price on the date of valuation on such principal stock exchange
on which the Common Stock is then listed or admitted to trading, or, if no
closing sale price is quoted on such day, then the Fair Market Value shall be
the closing sale price of the Common Stock on such exchange on the next
preceding day on which a closing sale price is reported;

 

(b)          If the Common Stock is not then listed or admitted to trading on a
stock exchange which reports closing sale prices, the Fair Market Value shall be
the average of the closing bid and asked prices of the Common Stock in the over
the counter market on the date of valuation; or

 

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(c)          If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.

 

Section 2.17.         “Fiscal Year” means the fiscal year of the Company.

 

Section 2.18.         “Offering Date means the first day of each Offering
Period.

 

Section 2.19.         “Offering Periods” means the periods of approximately six
months during which an option granted pursuant to the Plan may be exercised,
(i) commencing on the first Trading Day on or after June 1 of each year and
terminating on the first Trading Day on or following November 30, approximately
six months later, and (ii) commencing on the first Trading Day on or after
December 1 of each year and terminating on the first Trading Day on or following
May 31, approximately six months later. The duration and timing of Offering
Periods may be changed pursuant to Sections 4 and 20.

 

Section 2.20.         “Parent” means a “parent corporation,” whether now or
hereafter existing, as defined in Section 424(e) of the Code.

 

Section 2.21.         “Plan” means this Amended and Restated TranS1 Inc.
Employee Stock Purchase Plan.

 

Section 2.22.         “Purchase Price” for Offering Periods commencing before
June 1, 2013 means an amount equal to eighty-five percent (85%) of the Fair
Market Value of a share of Common Stock on the Exercise Date. The term “Purchase
Price” for Offering Periods commencing on or after June 1, 2013 shall mean an
amount equal to eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the Offering Date or on the Exercise Date, whichever is lower;
provided, however, that the Purchase Price may be determined for subsequent
Offering Periods by the Administrator subject to compliance with Section 423 of
the Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule) or pursuant to Section 20.

 

Section 2.23.         “Subsidiary” means a “subsidiary corporation,” whether now
or hereafter existing, as defined in Section 424(f) of the Code.

 

Section 2.24.         “Trading Day” means a day on which the national stock
exchange upon which the Common Stock is listed is open for trading.

 

ARTICLE 3.

 

Eligibility

 

Section 3.1.          Each Employee of the Company or any of its operating
subsidiaries, who, on the Offering Date, is an Eligible Employee may become a
participant in the Plan on the Offering Date coincident with or next following
his satisfaction of the requirements of becoming an Eligible Employee.

 

Section 3.2.          Any Eligible Employee on a given Offering Date will be
eligible to participate in the Plan, subject to the requirements of Section 5.

 

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Section 3.3.          Any provisions of the Plan to the contrary
notwithstanding, no Eligible Employee will be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Eligible Employee (or
any other person whose stock would be attributed to such Eligible Employee
pursuant to Section 424(d) of the Code) would own capital stock of the Company
or any Parent or Subsidiary of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Parent or Subsidiary of the Company, or (ii) to the extent that his or her
rights to purchase stock under all employee stock purchase plans (as defined in
Section 423 of the Code) of the Company or any Parent or Subsidiary of the
Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000)
worth of stock (determined at the Fair Market Value of the stock at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.

 

ARTICLE 4.

 

Offering Periods

 

Section 4.1.          The Plan will be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after June 1 and December 1 each year, or on such other date as the
Administrator will determine; provided, however, that the first Offering Period
for which this Plan as amended and restated is implemented shall commence on the
first Trading Day on or after June 1, 2013. The Administrator will have the
power to change the duration of Offering Periods (including the commencement
dates thereof) with respect to future offerings without stockholder approval if
such change is announced prior to the scheduled beginning of the first Offering
Period to be affected thereafter.

 

ARTICLE 5.

 

Participation

 

Section 5.1.          An Eligible Employee will be entitled to continue to
participate in an Offering Period pursuant to Section 3.1 only if such
individual submits a subscription agreement authorizing payroll deductions in a
form determined by the Administrator (which may be similar to the form attached
hereto as Exhibit A) to the Company’s designated plan administrator (i) no
earlier than the effective date of the Form S-8 registration statement with
respect to the issuance of Common Stock under this Plan and (ii) no later than
five (5) business days following the effective date of such S-8 registration
statement or such other period of time as the Administrator may determine (the
“Enrollment Window”).

 

Section 5.2.          An Eligible Employee may participate in the Plan pursuant
to Section 3(b) by (i) submitting to the Company’s payroll office (or its
designee), on or before a date prescribed by the Administrator prior to an
applicable Offering Date, a properly completed subscription agreement
authorizing payroll deductions in the form provided by the Administrator for
such purpose, or (ii) following an electronic or other enrollment procedure
prescribed by the Administrator.

 

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ARTICLE 6.

 

Payroll Deductions

 

Section 6.1.          At the time a participant enrolls in the Plan pursuant to
Section 5, he or she will elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period; provided, however, that should a pay day occur on an Exercise Date, a
participant will have the payroll deductions made on such day applied to his or
her account under the subsequent Offering Period. A participant’s subscription
agreement will remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof.

 

Section 6.2.          Payroll deductions for a participant will commence on the
first pay day following the Offering Date and will end on the last pay day prior
to the Exercise Date of such Offering Period to which such authorization is
applicable, unless sooner terminated by the participant as provided in
Section 10 hereof, provided, however, that for the first Offering Period,
payroll deductions will commence on the first pay day on or following the end of
the Enrollment Window.

 

Section 6.3.          All payroll deductions made for a participant will be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.

 

Section 6.4.          A participant may discontinue his or her participation in
the Plan as provided in Section 10, or may increase or decrease the rate of his
or her payroll deductions during the Offering Period by (i) properly completing
and submitting to the Company’s payroll office (or its designee), on or before a
date prescribed by the Administrator prior to an applicable Exercise Date, a new
subscription agreement authorizing the change in payroll deduction rate in the
form provided by the Administrator for such purpose, or (ii) following an
electronic or other procedure prescribed by the Administrator; provided,
however, that a participant may only make one payroll deduction change during
each Offering Period. If a participant has not followed such procedures to
change the rate of payroll deductions, the rate of his or her payroll deductions
will continue at the originally elected rate throughout the Offering Period and
future Offering Periods (unless terminated as provided in Section 10). The
Administrator may, in its sole discretion, limit the nature and/or number of
payroll deduction rate changes that may be made by participants during any
Offering Period. Any change in payroll deduction rate made pursuant to this
Section 6.4 will be effective as of the first full payroll period following five
(5) business days after the date on which the change is made by the participant
(unless the Administrator, in its sole discretion, elects to process a given
change in payroll deduction rate more quickly).

 

Section 6.5.          Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3.3, a participant’s
payroll deductions may be decreased to zero percent (0%) at any time during an
Offering Period. Subject to Section 423(b)(8) of the Code and Section 3.3
hereof, payroll deductions will recommence at the rate originally elected by the
participant effective as of the beginning of the first Offering Period in which
the employee first participates in the Plan which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in
Section 10.

 

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Section 6.6.          At the time the option is exercised, in whole or in part,
or at the time some or all of the Common Stock issued under the Plan is disposed
of, the participant must make adequate provision for the Company’s or Employer’s
federal, state, or any other tax liability payable to any authority, national
insurance, social security or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company or the Employer may, but will not be obligated to,
withhold from the participant’s compensation the amount necessary for the
Company or the Employer to meet applicable withholding obligations, including
any withholding required to make available to the Company or the Employer any
tax deductions or benefits attributable to a sale or early disposition of Common
Stock by the Eligible Employee.

 

ARTICLE 7.

 

Grant of Option

 

Section 7.1.          On the Offering Date of each Offering Period, each
Eligible Employee participating in such Offering Period will be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Eligible Employee’s payroll deductions accumulated prior to
such Exercise Date and retained in the Eligible Employee’s account as of the
Exercise Date by the applicable Purchase Price; provided that in no event will
an Eligible Employee be permitted to purchase during each Offering Period more
than 10,000 shares of the Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase will be subject to the
limitations set forth in Sections 3.3 and 13. The Eligible Employee may accept
the grant of such option with respect to the first Offering Period by submitting
a properly completed subscription agreement in accordance with the requirements
of Section 5.1 on or before the last day of the Enrollment Window, and (ii) with
respect to any future Offering Period under the Plan, by electing to participate
in the Plan in accordance with the requirements of Section 5.2. The
Administrator may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of Common Stock that an
Eligible Employee may purchase during each Offering Period of an Offering
Period. Exercise of the option will occur as provided in Section 8, unless the
participant has withdrawn pursuant to Section 10. The option will expire on the
last day of the Offering Period.

 

ARTICLE 8.

 

Exercise of Option

 

Section 8.1.          Unless a participant withdraws from the Plan as provided
in Section 10, his or her option for the purchase of shares of Common Stock will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option will be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares of Common Stock will be purchased; any payroll
deductions accumulated in a participant’s account which are not sufficient to
purchase a full share will be retained in the participant’s account for the
subsequent Offering Period, subject to earlier withdrawal by the participant as
provided in Section 10. Any other funds left over in a participant’s account
after the Exercise Date will be returned to the participant. During a
participant’s lifetime, a participant’s option to purchase shares hereunder is
exercisable only by him or her.

 

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Section 8.2.          If the Administrator determines that, on a given Exercise
Date, the number of shares of Common Stock with respect to which options are to
be exercised may exceed the number of shares of Common Stock available for sale
under the Plan on such Exercise Date, the Administrator may in its sole
discretion provide that the Company will make a pro rata allocation of the
shares of Common Stock available for purchase on such Exercise Date, in as
uniform a manner as will be practicable and as it will determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and continue all Offering Periods then in
effect or terminate all Offering Periods then in effect pursuant to Section 20.
The Company may make a pro rata allocation of the shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional shares for issuance
under the Plan by the Company’s stockholders subsequent to such Offering Date.

 

ARTICLE 9.

 

Delivery

 

Section 9.1.          As soon as reasonably practicable after each Exercise Date
on which a purchase of shares of Common Stock occurs, the Company will arrange
the delivery to each participant the shares purchased upon exercise of his or
her option in a form determined by the Administrator (in its sole discretion)
and pursuant to rules established by the Administrator. The Company may permit
or require that shares be deposited directly with a broker designated by the
Company or to a designated agent of the Company, and the Company may utilize
electronic or automated methods of share transfer. The Company may require that
shares be retained with such broker or agent for a designated period of time
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares. No participant will have any voting, dividend, or
other stockholder rights with respect to shares of Common Stock subject to any
option granted under the Plan until such shares have been purchased and
delivered to the participant as provided in this Section 9.1.

 

ARTICLE 10.

 

Withdrawal

 

Section 10.1.          A participant may withdraw all but not less than all of
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by (i) submitting to the
Company’s payroll office (or its designee) a written notice of withdrawal in the
form prescribed by the Administrator for such purpose, or (ii) following an
electronic or other withdrawal procedure prescribed by the Administrator. All of
the participant’s payroll deductions credited to his or her account will be paid
to such participant promptly after receipt of notice of withdrawal and such
participant’s option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions will not resume at the beginning of the succeeding Offering
Period, unless the participant re-enrolls in the Plan in accordance with the
provisions of Section 5.

 

Section 10.2.          A participant’s withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.

 

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ARTICLE 11.

 

Termination of Employment

 

Section 11.1.          Upon a participant’s ceasing to be an Eligible Employee,
for any reason, he or she will be deemed to have elected to withdraw from the
Plan and the payroll deductions credited to such participant’s account during
the Offering Period but not yet used to purchase shares of Common Stock under
the Plan will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 15, and such
participant’s option will be automatically terminated.

 

ARTICLE 12.

 

Interest

 

Section 12.1.          No interest will accrue on the payroll deductions of a
participant in the Plan.

 

ARTICLE 13.

 

Stock

 

Section 13.1.          Subject to adjustment upon changes in capitalization of
the Company as provided in Section 19 hereof, the maximum number of shares of
Common Stock which will be made available for sale under the Plan will be
250,000 shares, plus an annual increase to be added on the first day of each
Fiscal Year beginning with the 2011 Fiscal Year, equal to the least of (i) two
percent (2%) of the outstanding shares of Common Stock on such date or (ii) an
amount determined by the Administrator; provided, however, that the maximum
number of shares of Common Stock available for issuance under the Plan
(including the initial amount and any annual adjustments) shall not exceed
500,000 shares.

 

Section 13.2.          Until the shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), a participant will only have the rights of an unsecured
creditor with respect to such shares, and no right to vote or receive dividends
or any other rights as a stockholder will exist with respect to such shares.

 

Section 13.3.          Shares of Common Stock to be delivered to a participant
under the Plan will be registered in the name of the participant or in the name
of the participant and his or her spouse.

 

ARTICLE 14.

 

Administration

 

Section 14.1.          The Plan will be administered by the Board or a Committee
appointed by the Board, which Committee will be constituted to comply with
Applicable Laws. The Administrator will have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the Plan. Every
finding, decision and determination made by the Administrator will, to the full
extent permitted by law, be final and binding upon all parties. Notwithstanding
any provision to the contrary in this Plan, the Administrator may adopt rules or
procedures relating to the operation and administration of the Plan to
accommodate the specific requirements of local laws and procedures for
jurisdictions outside of the United States. Without limiting the generality of
the foregoing, the Administrator is specifically authorized to adopt rules and
procedures regarding eligibility to participate, the definition of Compensation,
handling of payroll deductions, making of contributions to the Plan (including,
without limitation, in forms other than payroll deductions), establishment of
bank or trust accounts to hold payroll deductions, payment of interest,
conversion of local currency, obligations to pay payroll tax, determination of
beneficiary designation requirements, withholding procedures and handling of
stock certificates which vary with local requirements.

 

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ARTICLE 15.

 

Designation of Beneficiary

 

Section 15.1.          A participant may file a designation of a beneficiary who
is to receive any shares of Common Stock and cash, if any, from the
participant’s account under the Plan in the event of such participant’s death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a designation of a beneficiary who is to receive any cash from the
participant’s account under the Plan in the event of such participant’s death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent will be required for such
designation to be effective.

 

Section 15.2.          Such designation of beneficiary may be changed by the
participant at any time by notice in a form determined by the Administrator. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant’s death, the Company will deliver such shares and/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 and/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.

 

Section 15.3.          All beneficiary designations will be in such form and
manner as the Administrator may designate from time to time.

 

ARTICLE 16.

 

Transferability

 

Section 16.1.          Neither payroll deductions credited to a participant’s
account nor any rights with regard to the exercise of an option or to receive
shares of Common Stock under the 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 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition will be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

 

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ARTICLE 17.

 

Use of Funds

 

Section 17.1.          The Company may use all payroll deductions received or
held by it under the Plan for any corporate purpose, and the Company will not be
obligated to segregate such payroll deductions. Until shares of Common Stock are
issued, participants will only have the rights of an unsecured creditor with
respect to such shares.

 

ARTICLE 18.

 

Reports

 

Section 18.1.          Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Eligible Employees at least annually, which statements will set forth the
amounts of payroll deductions, the Purchase Price, the number of shares of
Common Stock purchased and the remaining cash balance, if any.

 

ARTICLE 19.

 

Adjustments, Dissolution, Liquidation,

Merger or Change in Control

 

Section 19.1.          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 such that an
adjustment is determined by the Administrator (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, then the
Administrator will, in such manner as it may deem equitable, adjust 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 7 and 13.

 

Section 19.2.          In the event of the proposed dissolution or liquidation
of the Company, any Offering Period then in progress will be shortened by
setting a new Exercise Date (the “New Exercise Date”), and will terminate
immediately prior to the consummation of such proposed dissolution or
liquidation, unless provided otherwise by the Administrator. The New Exercise
Date will be before the date of the Company’s proposed dissolution or
liquidation. The Administrator will notify each participant in writing, at least
ten (10) business days prior to the New Exercise Date, that the Exercise Date
for the participant’s option has been changed to the New Exercise Date and that
the participant’s option will be exercised automatically on the New Exercise
Date, unless prior to such date the participant has withdrawn from the Offering
Period as provided in Section 10 hereof.

 

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Section 19.3.          In the event of a Change in Control, each outstanding
option will be assumed or an equivalent option substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the option,
the Offering Period with respect to which such option relates will be shortened
by setting a New Exercise Date and will end on the New Exercise Date. The New
Exercise Date will occur before the date of the Company’s proposed Change in
Control. The Administrator will notify each participant in writing prior to the
New Exercise Date, that the Exercise Date for the participant’s option has been
changed to the New Exercise Date and that the participant’s option will be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.

 

ARTICLE 20.

 

Amendment or Termination

 

Section 20.1.          The Administrator, 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 Administrator, in its discretion, may
elect to terminate the outstanding Offering Period either immediately or upon
completion of the purchase of shares of Common Stock on the next Exercise Date
(which may be sooner than originally scheduled, if determined by the
Administrator in its discretion), or may elect to permit the Offering Period to
expire in accordance with its terms (and subject to any adjustment pursuant to
Section 19). If the Offering Period is terminated prior to expiration, all
amounts then credited to participants’ accounts which have not been used to
purchase shares of Common Stock will be returned to the participants (without
interest thereon, except as otherwise required under local laws) as soon as
administratively practicable.

 

Section 20.2.          Without stockholder consent and without limiting
Section 20.1, the Administrator 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 Company’s processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant’s Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion advisable which are
consistent with the Plan.

 

Section 20.3.          In the event the Administrator determines that the
ongoing operation of the Plan may result in unfavorable financial accounting
consequences, the Administrator may, in its discretion and, to the extent
necessary or desirable, modify, amend or terminate the Plan to reduce or
eliminate such accounting consequence including, but not limited to:

 

(a)          amending the Plan to conform with the safe harbor definition under
FASB Accounting Standards Codification (ASC) Topic 718 (formerly Statement of
Financial Accounting Standards (SFAS) No.123(R)), including with respect to an
Offering Period underway at the time;

 

(b)          altering the Purchase Price for any Offering Period including an
Offering Period underway at the time of the change in Purchase Price;

 

(c)          shortening any Offering Period so that Offering Period ends on a
New Exercise Date, including an Offering Period underway at the time of the
Board action;

 

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(d)          reducing the maximum percentage of Compensation a participant may
elect to set aside as payroll deductions; and

 

(e)          reducing the maximum number of Shares a participant may purchase
during any Offering Period.

 

Such modifications or amendments will not require stockholder approval or the
consent of any Plan participants.

 

ARTICLE 21.

 

Notices

 

Section 21.1.          All notices or other communications by a participant to
the Company under or in connection with the Plan will be deemed to have been
duly given when received in the form and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof

 

ARTICLE 22.

 

Conditions Upon on Issuance of Shares

 

Section 22.1.          Shares of Common Stock will not be issued with respect to
an option unless the exercise of such option and the issuance and delivery of
such shares pursuant thereto will comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and will be further subject to the approval of counsel for the Company
with respect to such compliance.

 

Section 22.2.          As a condition to the exercise of an option, the Company
may require the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned applicable provisions of law.

 

ARTICLE 23.

 

Term of Plan

 

Section 23.1.          The Plan will become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company.
It will continue in effect for a term of twenty (20) years, unless sooner
terminated under Section 20.

 

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ARTICLE 24.

 

Stockholder Approval

 

Section 24.1.          The Plan will be subject to approval by the stockholders
of the Company within twelve (12) months after the date the Plan is adopted by
the Board. Such stockholder approval will be obtained in the manner and to the
degree required under Applicable Laws.

 

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