Exhibit 10.35

 

VERITY, INC.

 

1995 EMPLOYEE STOCK PURCHASE PLAN

 

(As Amended and Adjusted through September 30, 2004)

 

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1 Establishment. The Verity, Inc. 1995 Employee Stock Purchase Plan (the
“Plan”) is hereby established effective as of the effective date of the initial
registration by the Company of its Stock under Section 12 of the Exchange Act
(the “Effective Date”).

 

1.2 Purpose. The purpose of the Plan to provide Eligible Employees of the
Participating Company Group with an opportunity to acquire a proprietary
interest in the Company through the purchase of Stock. The Company intends that
the Plan shall qualify as an “employee stock purchase plan” under Section 423 of
the Code (including any amendments or replacements of such section), and the
Plan shall be so construed.

 

1.3 Term of Plan. The Plan shall continue in effect until the earlier of its
termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued.

 

2. DEFINITIONS AND CONSTRUCTION.

 

2.1 Definitions. Any term not expressly defined in the Plan but defined for
purposes of Section 423 of the Code shall have the same definition herein.
Whenever used herein, the following terms shall have their respective meanings
set forth below:

 

(a) “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer the Plan, “Board” also
means such Committee(s).

 

(b) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

 

(c) “Committee” means a committee of the Board duly appointed to administer the
Plan and having such powers as shall be specified by the Board. Unless the
powers of the Committee have been specifically limited, the Committee shall have
all of the powers of the Board granted herein, including, without limitation,
the power to amend or terminate the Plan at any time, subject to the terms of
the Plan and any applicable limitations imposed by law.

 

(d) “Company” means Verity, Inc., a Delaware corporation, or any successor
corporation thereto.

 

(e) “Compensation” means, with respect to an Offering Period under the Plan, all
amounts paid in cash in the forms of base salary, commissions, overtime,
bonuses, annual awards, other incentive payments, shift premiums, and all other
compensation paid in cash during such Offering Period before deduction for any
contributions to any plan maintained by a Participating Company and described in
Section 401(k) or Section 125 of the Code. Compensation shall not include
reimbursements of expenses, allowances, long-term disability, workers’
compensation or any amount deemed received without the actual transfer of cash
or any amounts directly or indirectly paid pursuant to the Plan or any other
stock purchase or stock option plan.

 

(f) “Eligible Employee” means an Employee who meets the requirements set forth
in Section 5 for eligibility to participate in the Plan.

 

(g) “Employee” means any person treated as an employee of a Participating
Company for purposes of Section 423 of the Code (including an officer or a
Director who is also treated as an employee); provided, however, that neither
service as a Director nor payment of a director’s fee shall be sufficient to

 

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constitute employment for purposes of the Plan. A Participant shall be deemed to
have ceased to be an Employee either upon an actual termination of employment or
upon the corporation employing the Participant ceasing to be a Participating
Company. For purposes of the Plan, an individual shall not be deemed to have
ceased to be an Employee while such individual is on a military leave, sick
leave or other bona fide leave of absence approved by the Company of ninety (90)
days or less. In the event an individual’s leave of absence exceeds ninety (90)
days, the individual shall be deemed to have ceased to be an Employee on the
ninety-first (91st) day of such leave unless the individual’s right to
reemployment with the Participating Company Group is guaranteed either by
statute or by contract. The Company shall determine in good faith and in the
exercise of its discretion whether an individual has become or has ceased to be
an Employee and the effective date of such individual’s employment or
termination of employment, as the case may be. All such determinations by the
Company shall be, for purposes of an individual’s participation in or other
rights under the Plan as of the time of the Company’s determination, final,
binding and conclusive, notwithstanding that the Company or any governmental
agency subsequently makes a contrary determination.

 

(h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(i) “Fair Market Value” means, as of any date, if there is then a public market
for the Stock, the closing sale price of a share of Stock (or the mean of the
closing bid and asked prices if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, the Nasdaq Small-Cap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Board, in its sole discretion. If there is
then no public market for the Stock, the Fair Market Value on any relevant date
shall be as determined by the Board without regard to any restriction other than
a restriction which, by its terms, will never lapse. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date shall
be deemed to be the public offering price set forth in the final prospectus
filed with the Securities and Exchange Commission in connection with the initial
public offering of the Stock.

 

(j) “Offering” means an offering of Stock as provided in Section 6.

 

(k) “Offering Date” means, for any Offering Period, the first day of such
Offering Period.

 

(l) “Offering Period” means a period determined in accordance with Section 6.1.

 

(m) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

 

(n) “Participant” means an Eligible Employee participating in the Plan.

 

(o) “Participating Company” means the Company or any Parent Corporation or
Subsidiary Corporation which the Board determines should be included in the
Plan. The Board shall have the sole and absolute discretion to determine from
time to time what Parent Corporations or Subsidiary Corporations shall be
Participating Companies.

 

(p) “Participating Company Group” means, at any point in time, the Company and
all other corporations collectively which are then Participating Companies.

 

(q) “Purchase Date” means, for any Purchase Period, the last day of such
Purchase Period.

 

(r) “Purchase Period” means a period determined in accordance with Section 6.2.

 

(s) “Purchase Price” means the price at which a share of Stock may be purchased
pursuant to the Plan, as determined in accordance with Section 9.

 

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(t) “Purchase Right” means an option granted to a Participant pursuant to the
Plan to purchase such shares of Stock as provided in Section 8, which the
Participant may or may not exercise during the Offering Period in which such
option is outstanding. Such option arises from the right of a Participant to
withdraw any accumulated payroll deductions of the Participant not previously
applied to the purchase of Stock under the Plan and to terminate participation
in the Plan or any Offering at any time during an Offering Period.

 

(u) “Stock” means the common stock, par value $0.001, of the Company, as
adjusted from time to time in accordance with Section 4.2.

 

(v) “Subscription Agreement” means a written agreement in such form as specified
by the Company, stating an Employee’s election to participate in the Plan and
authorizing payroll deductions under the Plan from the Employee’s Compensation.

 

(w) “Subscription Date” means the last business day prior to the Offering Date
of an Offering Period or such earlier date as the Company shall establish.

 

(x) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

2.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

 

3. ADMINISTRATION.

 

3.1 Administration by the Board. The Plan shall be administered by the Board,
including any duly appointed Committee of the Board. All questions of
interpretation of the Plan or of any Purchase Right shall be determined by the
Board and shall be final and binding upon all persons having an interest in the
Plan or such Purchase Right. Subject to the provisions of the Plan, the Board
shall determine all of the relevant terms and conditions of Purchase Rights
granted pursuant to the Plan; provided, however, that all Participants granted
Purchase Rights pursuant to the Plan shall have the same rights and privileges
within the meaning of Section 423(b)(5) of the Code. All expenses incurred in
connection with the administration of the Plan shall be paid by the Company.

 

3.2 Authority of Officers. Any officer of the Company shall have the authority
to act on behalf of the Company with respect to any matter, right, obligation,
determination or election that is the responsibility of or that is allocated to
the Company herein, provided that the officer has apparent authority with
respect to such matter, right, obligation, determination or election.

 

3.3 Policies and Procedures Established by the Company. The Company may, from
time to time, consistent with the Plan and the requirements of Section 423 of
the Code, establish, change or terminate such rules, guidelines, policies,
procedures, limitations, or adjustments as deemed advisable by the Company, in
its sole discretion, for the proper administration of the Plan, including,
without limitation, (a) a minimum payroll deduction amount required for
participation in an Offering, (b) a limitation on the frequency or number of
changes permitted in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency other than United
States dollars, (d) a payroll deduction greater than or less than the amount
designated by a Participant in order to adjust for the Company’s delay or
mistake in processing a Subscription Agreement or in otherwise effecting a
Participant’s election under the Plan or as advisable to comply with the
requirements of Section 423 of the Code, and (e) determination of the date and
manner by which the Fair Market Value of a share of Stock is determined for
purposes of administration of the Plan.

 

4. SHARES SUBJECT TO PLAN.

 

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be issued
under the Plan shall be six million (6,000,000) and shall consist of authorized
but unissued or reacquired shares of the Stock, or any combination

 

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thereof. If an outstanding Purchase Right for any reason expires or is
terminated or canceled, the shares of Stock allocable to the unexercised portion
of such Purchase Right shall again be available for issuance under the Plan.

 

4.2 Adjustments for Changes in Capital Structure. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company, or
in the event of any merger (including a merger effected for the purpose of
changing the Company’s domicile), sale of assets or other reorganization in
which the Company is a party, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and the limitation in Section 8.1
and to each Purchase Right and in the Purchase Price. If a majority of the
shares which are of the same class as the shares that are subject to outstanding
Purchase Rights are exchanged for, converted into, or otherwise become (whether
or not pursuant to an Ownership Change Event) shares of another corporation (the
“New Shares”), the Board may unilaterally amend the outstanding Purchase Rights
to provide that such Purchase Rights are exercisable for New Shares. In the
event of any such amendment, the number of shares subject to, and the Purchase
Price of, the outstanding Purchase Rights shall be adjusted in a fair and
equitable manner, as determined by the Board, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the Purchase Price be decreased to an amount less than the
par value, if any, of the stock subject to the Purchase Right. The adjustments
determined by the Board pursuant to this Section 4.2 shall be final, binding and
conclusive.

 

5. ELIGIBILITY.

 

5.1 Employees Eligible to Participate. Any Employee of a Participating Company
is eligible to participate in the Plan except the following:

 

(a) Employees who are customarily employed by the Participating Company Group
for twenty (20) hours or less per week; or

 

(b) Employees who are customarily employed by the Participating Company Group
for not more than five (5) months in any calendar year.

 

5.2 Exclusion of Certain Shareholders. Notwithstanding any provision of the Plan
to the contrary, no Employee shall be granted a Purchase Right under the Plan
if, immediately after such grant, such Employee would own or hold options to
purchase stock of the Company or of any Parent Corporation or Subsidiary
Corporation possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of such corporation, as determined in
accordance with Section 423(b)(3) of the Code. For purposes of this Section 5.2,
the attribution rules of Section 424(d) of the Code shall apply in determining
the stock ownership of such Employee.

 

5.3 Exclusion of Leased Employees. Notwithstanding anything herein to the
contrary, any individual performing services for a Participating Company solely
through a leasing agency or employment agency shall not be deemed an “Employee”
of such Participating Company.

 

6. OFFERINGS.

 

6.1 Offering Periods. Except as otherwise set forth below, the Plan shall be
implemented by sequential Offerings of approximately twelve (12) months duration
or such other duration as the Board shall determine (an “Offering Period”);
provided, however that the first Offering Period shall commence on the Effective
Date and end on September 30, 1997 (the “Initial Offering Period”. Subsequent
Offerings shall commence on the first days of April and October of each year and
end on the last days of the first March and September, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board may establish a different
term for one or more Offerings or different commencing or ending dates for such
Offerings; provided, however, that no Offering may exceed a term of twenty-seven
(27) months. If the first or last day of an Offering Period is not a day on
which the national securities exchanges or Nasdaq Stock Market are open for
trading, the Company shall specify the trading day that will be deemed the first
or last day, as the case may be, of the Offering Period.

 

6.2 Purchase Periods. Each Offering Period shall consist of two (2) consecutive
purchase periods of approximately six (6) months duration (except the Initial
Offering Period which consisted of four (4)

 

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purchase periods (Effective Date to March 31, 1996; April 1, 1996 to September
30, 1996; October 1, 1996 to March 31, 1997; and April 1, 1997 to September 30,
1997)) or such other number or duration as the Board shall determine
(individually, a “Purchase Period”). A Purchase Period commencing on the first
day of April shall end on the last day of the next following September. A
Purchase Period commencing on the first day of October shall end on the last day
of the next following March. Notwithstanding the foregoing, the Board may
establish a different term for one or more Purchase Periods or different
commencing or ending dates for such Purchase Periods. If the first or last day
of a Purchase Period is not a day on which the national securities exchanges or
Nasdaq Stock Market are open for trading, the Company shall specify the trading
day that will be deemed the first or last day, as the case may be, of the
Purchase Period.

 

6.3 Governmental Approval; Stockholder Approval. Notwithstanding any other
provision of the Plan to the contrary, any Purchase Right granted pursuant to
the Plan shall be subject to (a) obtaining all necessary governmental approvals
or qualifications of the sale or issuance of the Purchase Rights or the shares
of Stock and (b) obtaining stockholder approval of the Plan. Notwithstanding the
foregoing, stockholder approval shall not be necessary in order to grant any
Purchase Right granted in the Plan’s Initial Offering Period; provided, however,
that the exercise of any such Purchase Right shall be subject to obtaining
stockholder approval of the Plan.

 

7. PARTICIPATION IN THE PLAN.

 

7.1 Initial Participation. An Eligible Employee may become a Participant in an
Offering Period by delivering a properly completed Subscription Agreement to the
office designated by the Company not later than the close of business for such
office on the Subscription Date established by the Company for such Offering
Period. An Eligible Employee who does not deliver a properly completed
Subscription Agreement to the Company’s designated office on or before the
Subscription Date for an Offering Period shall not participate in the Plan for
that Offering Period or for any subsequent Offering Period unless such Eligible
Employee subsequently delivers a properly completed Subscription Agreement to
the appropriate office of the Company on or before the Subscription Date for
such subsequent Offering Period. An Employee who becomes an Eligible Employee
after the Offering Date of an Offering Period shall not be eligible to
participate in such Offering Period but may participate in any subsequent
Offering Period provided such Employee is still an Eligible Employee as of the
Offering Date of such subsequent Offering Period.

 

7.2 Continued Participation. A Participant shall automatically participate in
the next Offering Period commencing immediately after the final Purchase Date of
each Offering Period in which the Participant participates provided that such
Participant remains an Eligible Employee on the Offering Date of the new
Offering Period and has not either (a) withdrawn from the Plan pursuant to
Section 12.1 or (b) terminated employment as provided in Section 13. A
Participant who may automatically participate in a subsequent Offering Period,
as provided in this Section 7.2, is not required to deliver any additional
Subscription Agreement for the subsequent Offering Period in order to continue
participation in the Plan. However, a Participant may deliver a new Subscription
Agreement for a subsequent Offering Period in accordance with the procedures set
forth in Section 7.1 if the Participant desires to change any of the elections
contained in the Participant’s then effective Subscription Agreement. Eligible
Employees may not participate simultaneously in more than one Offering.

 

8. RIGHT TO PURCHASE SHARES.

 

8.1 Grant of Purchase Right on or after October 1, 2001. Except as set forth
below, on the Offering Date of each Offering Period that commences on or after
October 1, 2001, each Participant in such Offering Period shall be granted
automatically a Purchase Right consisting of an option to purchase a number of
shares of Stock equal to the product of 416.66 shares and the number of months
in the Offering Period with the resulting product rounded to the nearest whole
share. For purposes of the preceding sentence, fractional months shall be
rounded to the nearest whole month and no effect shall be given to the
termination of the Offering Period pursuant to the provisions of Section 12.3 or
Section 14. No Purchase Right shall be granted on an Offering Date to any person
who is not, on such Offering Date, an Eligible Employee. Shares of Stock may
only be purchased through a Participant’s payroll deductions pursuant to Section
10.

 

8.2 Calendar Year Purchase Limitation. Notwithstanding any provision of the Plan
to the contrary, no Purchase Right shall entitle a Participant to purchase
shares of Stock under the Plan at a rate which, when aggregated with such
Participant’s rights to purchase shares under all other employee stock purchase
plans of a

 

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Participating Company intended to meet the requirements of Section 423 of the
Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or
such other limit, if any, as may be imposed by the Code) for each calendar year
in which such Purchase Right has been outstanding at any time. For purposes of
the preceding sentence, the Fair Market Value of shares purchased during a given
Offering Period shall be determined as of the Offering Date for such Offering
Period. The limitation described in this Section 8.2 shall be applied in
conformance with applicable regulations under Section 423(b)(8) of the Code.

 

9. PURCHASE PRICE. The Purchase Price at which each share of Stock may be
acquired in an Offering Period upon the exercise of all or any portion of a
Purchase Right granted with respect to such Offering Period shall be established
by the Board; provided, however, that the Purchase Price shall not be less than
eighty five percent (85%) of the lesser of (a) the Fair Market Value of a share
of Stock on the Offering Date of the Offering Period or (b) the Fair Market
Value of a share of Stock on the Purchase Date. Unless otherwise provided by the
Board prior to the commencement of an Offering Period, the Purchase Price for
that Offering Period shall be eighty five percent (85%) of the lesser of (a) the
Fair Market Value of a share of Stock on the Offering Date of the Offering
Period, or (b) the Fair Market Value of a share of Stock on the Purchase Date.

 

10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION. Shares of Stock
which are acquired pursuant to the exercise of all or any portion of a Purchase
Right for an Offering Period may be paid for only by means of payroll deductions
from the Participant’s Compensation accumulated during the Offering Period.

 

10.1 Amount of Payroll Deductions. Except as otherwise provided herein, the
amount to be deducted under the Plan from a Participant’s Compensation on each
payday during an Offering Period shall be determined by the Participant’s
Subscription Agreement. The Subscription Agreement shall set forth the
percentage (in a whole number percentage) of the Participant’s Compensation to
be deducted on each payday during an Offering Period, which, except as a result
of an election pursuant to Section 10.3 to stop payroll deductions, shall be not
less than zero percent (0%) nor more than twenty percent (20%) of the
Participant’s Compensation otherwise payable on such payday. Notwithstanding the
foregoing, the Board may change the limits on payroll deductions effective as of
any future Offering Date.

 

10.2 Commencement of Payroll Deductions. Payroll deductions shall commence on
the first payday following the Offering Date and shall continue to the end of
the Offering Period unless sooner altered or terminated as provided in the Plan.

 

10.3 Election to Change or Stop Payroll Deductions. A Participant may elect to
increase or decrease the rate of payroll deductions during a Purchase Period by
delivering a new Subscription Agreement to the person designated by the Company.
For a Purchase Period that commences on or after October 1, 2001, the new
Subscription Agreement shall become effective as soon as practicable, but not
later than the first payroll period that commences more than fifteen (15) days
after receipt of the Subscription Agreement and shall continue for the remainder
of the Offering Period unless changed as described below. A Participant may
increase or decrease the rate of payroll deductions for any subsequent Offering
Period by filing a new Subscription Agreement with the person designated by the
Company. This new Subscription Agreement shall become effective with the first
payroll period in such subsequent Offering Period. A Participant who elects to
decrease the rate of his or her payroll deductions to zero percent (0%) shall
nevertheless remain a Participant in the current Offering Period unless such
Participant subsequently withdraws from the Offering or the Plan as provided in
Sections 12.1 and 12.2, respectively, or is automatically withdrawn from the
Offering as provided in Section 12.3.

 

10.4 Participant Accounts. Individual Plan bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a Participant’s
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.

 

10.5 No Interest Paid. Interest shall not be paid on sums deducted from a
Participant’s Compensation pursuant to the Plan.

 

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11. PURCHASE OF SHARES.

 

11.1 Exercise of Purchase Right. On each Purchase Date of an Offering Period,
each Participant who has not withdrawn from the Offering or the Plan or whose
participation in the Offering has not terminated on or before such Purchase Date
shall automatically acquire pursuant to the exercise of the Participant’s
Purchase Right the number of whole shares of Stock determined by dividing (a)
the total amount of the Participant’s payroll deductions accumulated in the
Participant’s Plan account during the Offering Period and not previously applied
toward the purchase of Stock by (b) the Purchase Price. However, in no event
shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant’s Purchase Right.
No shares of Stock shall be purchased on a Purchase Date by a Participant whose
participation in the Offering or the Plan has terminated on or before such
Purchase Date.

 

11.2 Pro Rata Allocation of Shares. In the event the number of shares of Stock
which might be purchased by all Participants in the Plan on a Purchase Date
exceeds the number of shares of Stock available in the Plan as provided in
Section 4.1, the Company shall make a pro rata allocation of the remaining
shares in as uniform a manner as shall be practicable and as the Company shall
determine to be equitable. Any fractional share resulting from such pro rata
allocation to any Participant shall be disregarded.

 

11.3 Delivery of Shares. As soon as practicable after each Purchase Date, the
Company shall deliver the shares acquired by the Participant on such Purchase
Date to a broker designated by the Company to hold such shares in street name
for the benefit of the Participant. Shares to be delivered to a Participant
under the Plan shall be registered in the name of the Participant.

 

11.4 Return of Cash Balance. Any cash balance remaining in a Participant’s Plan
account following any Purchase Date shall be refunded to the Participant as soon
as practicable after such Purchase Date. However, if the cash to be returned to
a Participant pursuant to the preceding sentence is an amount less than the
amount that would have been necessary to purchase an additional whole share of
Stock on such Purchase Date, the Company may retain such amount in the
Participant’s Plan account to be applied toward the purchase of shares of Stock
in the subsequent Purchase Period or Offering Period, as the case may be.

 

11.5 Tax Withholding. At the time a Participant’s Purchase Right is exercised,
in whole or in part, or at the time a Participant disposes of some or all of the
shares of Stock he or she acquires under the Plan, the Participant shall make
adequate provision for the foreign, federal, state and local tax withholding
obligations of the Participating Company Group, if any, which arise upon
exercise of the Purchase Right or upon such disposition of shares, respectively.
The Participating Company Group may, but shall not be obligated to, withhold
from the Participant’s compensation the amount necessary to meet such
withholding obligations.

 

11.6 Expiration of Purchase Right. Any portion of a Participant’s Purchase Right
remaining unexercised after the end of the Offering Period to which such
Purchase Right relates shall expire immediately upon the end of such Offering
Period.

 

11.7 Reports to Participants. Each Participant who has exercised all or part of
his or her Purchase Right shall receive, as soon as practicable after the
Purchase Date, a report of such Participant’s Plan account setting forth the
total payroll deductions accumulated prior to such exercise, the number of
shares of Stock purchased, the Purchase Price for such shares, the Fair Market
Value of such shares, the date of purchase and cash balance, if any, remaining
immediately after such purchase that is to be refunded or retained in the
Participant’s Plan account pursuant to Section 11.4. The report required by this
Section may be delivered in such form and by such means, including by electronic
transmission, as the Company may determine. Each Participant shall be provided
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.

 

12. WITHDRAWAL FROM OFFERING OR PLAN.

 

12.1 Withdrawal From an Offering. This Section 12.1 shall apply only to
Offerings that commenced prior to October 1, 2001. A Participant may withdraw
from an Offering by signing and delivering to the Company’s designated office a
written notice of withdrawal on a form provided by the Company for such purpose.
Such withdrawal may be elected at any time prior to the end of an Offering
Period; provided, however, if a

 

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Participant withdraws after the Purchase Date of a Purchase Period during the
Offering, the withdrawal shall not affect shares of Stock acquired by the
Participant on such Purchase Date. Unless otherwise elected by the Participant,
withdrawal from an Offering shall not result in the Participant’s withdrawal
from the Plan or any succeeding Offering therein. By withdrawing from an
Offering effective as of the close of a given Purchase Date, a Participant may
have shares of Stock purchased on such Purchase Date and immediately commence
participation in the new Offering commencing immediately after such Purchase
Date. A Participant is prohibited from again participating in an Offering at any
time following withdrawal from such Offering. The Company may impose, from time
to time, a requirement that the notice of withdrawal from the Offering be on
file with the Company’s designated office for a reasonable period prior to the
effectiveness of the Participant’s withdrawal from an Offering.

 

12.2 Withdrawal from the Plan. A Participant may withdraw from the Plan (and
thereby all Offerings) by signing and delivering to the Company’s designated
office a written notice of withdrawal on a form provided by the Company for such
purpose. Such withdrawal may be elected at any time prior to the end of an
Offering Period (with an effective date as specified in the election pursuant to
procedures established by the Company). For Offerings that commence on or after
October 1, 2001, however, if a Participant withdraws from the Plan less than
fifteen (15) days prior to the Purchase Date of a Purchase Period, such
withdrawal shall not affect the purchase of shares of Stock for the Participant
on such Purchase Date. A Participant who voluntarily elects to withdraw from the
Plan is prohibited from resuming participation in the Plan in the same Offering
from which he or she withdrew, but may participate in any subsequent Offering
under the Plan by again satisfying the requirements of Sections 5 and 7.1. The
Company may impose, from time to time, a requirement that the notice of
withdrawal from the Plan be on file with the Company’s designated office for a
reasonable period prior to the effectiveness of the Participant’s withdrawal
from the Plan.

 

12.3 Automatic Withdrawal From an Offering. If the Fair Market Value of a share
of Stock on a Purchase Date other than the final Purchase Date of an Offering is
less than the Fair Market Value of a share of Stock on the Offering Date of the
Offering, then every Participant automatically shall be (a) withdrawn from such
Offering at the close of such Purchase Date and after the acquisition of shares
of Stock for the Purchase Period and (b) enrolled in the Offering commencing on
the first business day subsequent to such Purchase Date. A Participant may elect
not to be automatically withdrawn from an Offering pursuant to this Section 12.3
by delivering to the Company’s designated office not later than the close of
business on the Purchase Date a written notice indicating such election.

 

12.4 Return of Payroll Deductions. Upon a Participant’s voluntary withdrawal
from an Offering or the Plan pursuant to Sections 12.1 or 12.2, respectively, or
automatic withdrawal from an Offering pursuant to Section 12.3, the
Participant’s accumulated payroll deductions which have not been applied toward
the purchase of shares of Stock (except, in the case of an automatic withdrawal
pursuant to Section 12.3, for an amount necessary to purchase an additional
whole share as provided in Section 11.4) shall be returned as soon as
practicable after the withdrawal, without the payment of any interest, to the
Participant, and the Participant’s interest in the Offering or the Plan, as
applicable, shall terminate. Such accumulated payroll deductions may not be
applied to any other Offering under the Plan.

 

13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY. Termination of a Participant’s
employment with the Company for any reason, including retirement, disability or
death or the failure of a Participant to remain an Eligible Employee, shall
terminate the Participant’s participation in the Plan immediately. In such
event, the payroll deductions credited to the Participant’s Plan account since
the last Purchase Date shall, as soon as practicable, be returned to the
Participant or, in the case of the Participant’s death, to the Participant’s
legal representative, and all of the Participant’s rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a Participant pursuant
to this Section 13. A Participant whose participation has been so terminated may
again become eligible to participate in the Plan by again satisfying the
requirements of Sections 5 and 7.1.

 

14. TRANSFER OF CONTROL.

 

14.1 Definitions.

 

(a) An “Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the

 

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Company; (ii) a merger or consolidation in which the Company a party; (iii) the
sale, exchange, or transfer of all or substantially all of the assets of the
Company; or (iv) a liquidation or dissolution of the Company.

 

(b) A “Transfer of Control” shall mean an Ownership Change Event or a series of
related Ownership Change Events (collectively, the “Transaction”) wherein the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the “Transferee Corporation(s)”), as the case may be. For
purposes of the preceding sentence, indirect beneficial ownership shall include,
without limitation, an interest resulting from ownership of the voting stock of
one or more corporations which, as a result of the Transaction, own the Company
or the Transferee Corporation(s), as the case may be, either directly or through
one or more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

 

(c) Effect of Transfer of Control on Purchase Rights. In the event of a Transfer
of Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the “Acquiring Corporation”),
may assume the Company’s rights and obligations under the Plan or substitute
substantially equivalent Purchase Rights for stock of the Acquiring Corporation.
If the Acquiring Corporation elects not to assume or substitute for the
outstanding Purchase Rights, the Board may, in its sole discretion and
notwithstanding any other provision herein to the contrary, adjust the Purchase
Date of the then current Purchase Period to a date on or before the date of the
Transfer of Control, but shall not adjust the number of shares of Stock subject
to any Purchase Right. All Purchase Rights which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer of
Control nor exercised as of the date of the Transfer of Control shall terminate
and cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Purchase Rights immediately prior to an Ownership Change
Event described in Section 15.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of section 1504(a) of the Code
without regard to the provisions of section 1504(b) of the Code, the outstanding
Purchase Rights shall not terminate unless the Board otherwise provides in its
sole discretion.

 

15. NONTRANSFERABILITY OF PURCHASE RIGHTS. A Purchase Right may not be
transferred in any manner otherwise than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. The Company, in its absolute discretion, may impose
such restrictions on the transferability of the shares purchasable upon the
exercise of a Purchase Right as it deems appropriate and any such restriction
shall be set forth in the respective Subscription Agreement and may be referred
to on the certificates evidencing such shares.

 

16. RESTRICTION ON ISSUANCE OF SHARES. The issuance of shares under the Plan
shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities. A Purchase Right may not
be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable foreign, federal or state securities laws or other
law or regulations. In addition, no Purchase Right may be exercised unless (a) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.

 

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17. RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall have no rights as
a stockholder by virtue of the Participant’s participation in the Plan until the
date of the issuance of a stock certificate for the shares of Stock being
purchased pursuant to the exercise of the Participant’s Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate is issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Participating Company Group or interfere in any way with any right
of the Participating Company Group to terminate the Participant’s employment at
any time.

 

18. LEGENDS. The Company may at any time place legends or other identifying
symbols referencing any applicable foreign, federal or state securities law
restrictions or any provision convenient in the administration of the Plan on
some or all of the certificates representing shares of Stock issued under the
Plan. The Participant shall, at the request of the Company, promptly present to
the Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section. Unless otherwise specified by the Company, legends
placed on such certificates may include but shall not be limited to the
following:

 

“THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE
REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE
PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION
IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF MADE
ON OR BEFORE                ,         , THE REGISTERED HOLDER SHALL HOLD ALL
SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE
NAME OF ANY NOMINEE) PRIOR TO THIS DATE.”

 

19. NOTIFICATION OF SALE OF SHARES. The Company may require the Participant to
give the Company prompt notice of any disposition of shares acquired by exercise
of a Purchase Right within two years from the date of granting such Purchase
Right or one year from the date of exercise of such Purchase Right. The Company
may require that until such time as a Participant disposes of shares acquired
upon exercise of a Purchase Right, the Participant shall hold all such shares in
the Participant’s name (and not in the name of any nominee) until the lapse of
the time periods with respect to such Purchase Right referred to in the
preceding sentence. The Company may direct that the certificates evidencing
shares acquired by exercise of a Purchase Right refer to such requirement to
give prompt notice of disposition.

 

20. NOTICES. All notices or other communications by a Participant to the Company
under or in connection with the 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. INDEMNIFICATION. In addition to such other rights of indemnification as they
may have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys’ fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.

 

22. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time amend or
terminate the Plan, except that (a) such termination shall not affect Purchase
Rights previously granted under the Plan, except as permitted under the Plan,
and (b) no amendment may adversely affect a Purchase Right previously granted
under the Plan (except to the extent permitted by the Plan or as may be
necessary to qualify the Plan as an employee stock purchase plan pursuant to
Section 423 of the Code or to obtain qualification or registration of the

 

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shares of Stock under applicable foreign, federal or state securities laws). In
addition, an amendment to the Plan must be approved by the stockholders of the
Company within twelve (12) months of the adoption of such amendment if such
amendment would authorize the sale of more shares than are authorized for
issuance under the Plan or would change the definition of the corporations that
may be designated by the Board as Participating Companies.

 

23. CONTINUATION OF INITIAL PLAN AS TO OUTSTANDING PURCHASE RIGHTS. Any other
provision of the Plan to the contrary notwithstanding, the terms of the Plan as
in effect prior to its amendment on September 25,1997 shall remain in effect and
apply to all Purchase Rights granted pursuant to the Plan prior to such
amendment.

 

B-11.