Exhibit 10.2

 

2007 EMPLOYEE STOCK PURCHASE PLAN

 

Accuray Incorporated hereby adopts the Accuray Incorporated 2007 Employee Stock
Purchase Plan (the “Plan”), effective as of the Effective Date (as defined
herein).

 

1.                                      Purpose.  The purposes of the Plan are
as follows:

 

(a)                                 To assist employees of the Company and its
Designated Subsidiaries (as defined below) in acquiring a stock ownership
interest in the Company pursuant to a plan which is intended to qualify as an
“employee stock purchase plan” within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended.

 

(b)                                 To help employees provide for their future
security and to encourage them to remain in the employment of the Company and
its Designated Subsidiaries.

 

2.                                      Definitions.

 

(a)                                 “Administrator” shall mean the administrator
of the Plan, as determined pursuant to Section 14 hereof.

 

(b)                                 “Board” shall mean the Board of Directors of
the Company.

 

(c)                                  “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(d)                                 “Committee” shall mean the committee
appointed to administer the Plan pursuant to Section 14 hereof.

 

(e)                                  “Common Stock” shall mean the common stock
of the Company, no par value per share.  “Common Stock” shall also include
(i) the common stock of the surviving corporation in any consolidation, merger
or reincorporation effected exclusively to change the domicile of the Company
and (ii) such other securities of the Company that may be substituted for Common
Stock pursuant to Section 19 hereof.

 

(f)                                   “Company” shall mean Accuray Incorporated,
a California corporation, or any successor corporation (including, without
limitation, the surviving corporation in any consolidation, merger or
reincorporation effected exclusively to change the domicile of the Company).

 

(g)                                  “Compensation” shall mean all base straight
time gross earnings and commissions, exclusive of payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses, expense
reimbursements, fringe benefits and other compensation.

 

(h)                                 “Designated Subsidiary” shall mean any
Subsidiary which has been designated by the Administrator from time to time in
its sole discretion as eligible to participate in the Plan.  The Administrator
may designate, or terminate the designation of, a subsidiary as a Designated
Subsidiary without the approval of the stockholders of the Company.

 

--------------------------------------------------------------------------------

 

(i)                                     “Effective Date” shall mean the date on
which the Company’s Registration Statement on Form S-1 filed with respect to the
Company’s initial public offering becomes effective.

 

(j)                                    “Eligible Employee” shall mean an
Employee of the Company or a Designated Subsidiary: (i) who does not,
immediately after the option is granted, own stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company, a Parent or a Subsidiary (as determined under Section 423(b)(3) of
the Code); (ii) whose customary employment is for more than twenty (20) hours
per week; and (iii) whose customary employment is for more than five (5) months
in any calendar year.  For purposes of clause (i), the rules of
Section 424(d) of the Code with regard to the attribution of stock ownership
shall apply in determining the stock ownership of an individual, and stock which
an employee may purchase under outstanding options shall be treated as stock
owned by the employee.  For purposes of the Plan, the employment relationship
shall be treated as continuing intact while the individual is on sick leave or
other leave of absence approved by the Company or Designated Subsidiary and
meeting the requirements of Treasury Regulation Section 1.421-7(h)(2).  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 shall be deemed to have terminated on the ninety-first (91st) day
of such leave.

 

(k)                                 “Employee” shall mean any person who renders
services to the Company or a Subsidiary in the status of an employee within the
meaning of Code Section 3401(c).  “Employee” shall not include any director of
the Company or a Subsidiary who does not render services to the Company or a
Subsidiary in the status of an employee within the meaning of Code
Section 3401(c).

 

(l)                                     “Enrollment Date” shall mean the first
Trading Day of each Offering Period.  The Enrollment Date for the first Offering
Period under the Plan shall be the Effective Date.

 

(m)                             “Exercise Date” shall mean the last Trading Day
of each Purchase Period; provided, however, if the last Trading Day falls on the
day after the Thanksgiving holiday, then the Exercise Date will be the last
Trading Day before the Thanksgiving holiday,

 

(n)                                 “Fair Market Value” shall mean, as of any
date, the value of Common Stock determined as follows:

 

(i)                                     If the Common Stock is traded on an
exchange, its Fair Market Value shall be the closing sales price for a share of
Common Stock as reported in The Wall Street Journal (or such other source as the
Administrator may deem reliable for such purposes) for such date, or if no sale
occurred on such date, the first trading date immediately prior to such date
during which a sale occurred;

 

(ii)                                  If the Common Stock is not traded on an
exchange but is quoted on a quotation system, its Fair Market Value shall be the
mean between the closing representative bid and asked prices for the Common
Stock on such date, or if no sale occurred on such date, the first date
immediately prior to such date on which sales prices or bid and asked prices, as
applicable, are reported by such quotation system;

 

--------------------------------------------------------------------------------

 

(iii)                               In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator; or

 

(iv)                              For purposes of the first Offering Period
under the Plan, the Fair Market Value on the Enrollment Date shall be the
initial price to the public as set forth in the final prospectus included within
the registration statement on Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company’s Common Stock (the
“Registration Statement”).

 

(o)                                 “First Purchase Period” shall mean the
approximately six (6) month period commencing on each Enrollment Date and ending
on the first Exercise Date.  Notwithstanding the foregoing, the first Purchase
Period with respect to the initial Offering Period under the Plan shall commence
on the Effective Date and end on November 30, 2007, and such period may be more
or less than six (6) months in duration.

 

(p)                                 “Offering Period” shall mean each period of
approximately Twelve (12) months commencing on any December 1 or June 1 and
terminating on the last Trading Day on or before the next occurring November 30,
or May 31, except for the first Offering Period under the Plan, which shall
commence on the Effective Date and end on November 30, 2007.  The duration and
timing of Offering Periods may be changed pursuant to Section 4 of this Plan,
but in no event may an Offering Period have a duration in excess of twenty-seven
(27) months. Notwithstanding the foregoing, if the last Trading Day of an
Offering Period falls on the day after the Thanksgiving holiday, the Offering
Period shall end on the last trading day before the Thanksgiving holiday.

 

(q)                                 “Parent” means any corporation, other than
the Company, in an unbroken chain of corporations ending with the Company if, at
the time of the determination, each of the corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

 

(r)                                    “Plan” shall mean this Accuray
Incorporated 2007 Employee Stock Purchase Plan.

 

(s)                                   “Purchase Period” shall mean the First
Purchase Period or the Second Purchase Period, as applicable.

 

(t)                                    “Purchase Price” shall mean: (1) with
respect to the First Purchase Period, 85% of the Fair Market Value of a share of
Common Stock on the Offering Date or on the Exercise Date of the First Purchase
Period, whichever is lower; and (2), with respect to the Second Purchase Period,
85% of the Fair Market Value of a share of Common Stock on (A) the Offering Date
or the Second Purchase Date, unless the Fair Market Value of a share of Common
Stock on the Exercise Date of the First Purchase Period (the “Reset Trigger
Date”) is lower than the Fair Market Value on the Offering Date, then the Reset
Date (FMV on the first trading day after the Reset Trigger Date) or (B) on the
Exercise Date of the second Purchase Period, whichever is lower, provided, 
however, that the Purchase Price may be adjusted by the Administrator pursuant
to Section 19 hereof; provided, further, that the Purchase Price shall not be
less than the par value of a share of Common Stock.

 

--------------------------------------------------------------------------------

 

(u)                                 “Second Purchase Period” shall mean the
approximately six (6) month period commencing on the first Trading Day after the
end of the First Purchase Period and ending with the next Exercise Date.

 

(v)                                 “Subsidiary” shall mean any corporation,
other than the Company, in an unbroken chain of corporations beginning with the
Company if, at the time of the determination, each of the corporations other
than the last corporation in an unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

(w)                               “Trading Day” shall mean a day on which
national stock exchanges are open for trading.

 

3.                                      Eligibility.

 

(a)                                 Any Eligible Employee who shall be employed
by the Company or a Designated Subsidiary on a given Enrollment Date for an
Offering Period shall be eligible to participate in the Plan during such
Offering Period, subject to the requirements of Section 5 hereof and the
limitations imposed by Section 423(b) of the Code.

 

(b)                                 Each person who, during the course of an
Offering Period, first becomes an Eligible Employee subsequent to the Enrollment
Date will be eligible to become a participant in the Plan on the first day of
the first Purchase Period following the day on which such person becomes an
Eligible Employee, subject to the requirements of Section 5 hereof and the
limitations imposed by Section 423(b) of the Code.

 

(c)                                  No Eligible Employee shall be granted an
option under the Plan which permits his rights to purchase stock under the Plan,
and to purchase stock under all other employee stock purchase plans of the
Company, any Parent or any Subsidiary subject to the Section 423 of the Code, to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined at the time the option is granted) for each calendar year in which
the option is outstanding at any time.  For purposes of the limitation imposed
by this subsection, the right to purchase stock under an option accrues when the
option (or any portion thereof) first becomes exercisable during the calendar
year, the right to purchase stock under an option accrues at the rate provided
in the option, but in no case may such rate exceed $25,000 of fair market value
of such stock (determined at the time such option is granted) for any one
calendar year, and a right to purchase stock which has accrued under an option
may not be carried over to any option.  This limitation shall be applied in
accordance with Section 423(b)(8) of the Code and the Treasury Regulations
thereunder.

 

4.                                      Offering Periods.  The Plan shall be
implemented by consecutive Offering Periods which shall continue until the Plan
expires or is terminated in accordance with Section 20 hereof.  The
Administrator shall 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 at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected
thereafter.

 

--------------------------------------------------------------------------------

 

5.                                      Participation.

 

(a)                                 Each Eligible Employee who is employed by
the Company or a Designated Subsidiary on the calendar day immediately preceding
the Effective Date shall automatically become a participant in the Plan with
respect to the first Offering Period.  Each such participant shall be granted an
option to purchase shares of Common Stock and shall be enrolled in such first
Offering Period to the extent of ten percent (10%) of his or her Compensation
for the pay days during the first Offering Period (or, if less, the maximum
amount of contributions permitted to be made by such participant for such
Offering Period by payroll deduction under the terms of this Plan). 
Participants wishing to purchase shares of Common Stock during the first
Offering Period shall do so by making a lump sum cash payment to the Company not
later than ten (10) calendar days before each Exercise Date of such Offering
Period, and each such payment may be made in an amount not exceeding ten percent
(10%) of such participant’s Compensation for the pay days occurring during such
Offering Period and occurring prior to such lump sum payment; provided, however,
that such participant shall not be required to make such lump sum cash payments,
or exercise all or any portion of such option to purchase shares of Common Stock
by making such lump sum payments.  Following the Effective Date, each such
participant may, during the period designated from time to time by the
Administrator for such purpose, elect to make such contributions (or a lesser
amount of contributions) for the first Offering Period by payroll deductions in
accordance with Section 6 hereof, in lieu of making contributions in such lump
sum cash payments under this subsection (a), or may elect to make no
contributions for such Offering Period; provided, however, that, to make
contributions by payroll deductions, such participant must complete the form of
subscription agreement provided by the Company for the first Offering Period
under this Plan.  If (i) during such Offering Period, such a participant elects
to make contributions by payroll deduction, or elects to make no contributions
for such Offering Period, or (ii) on or prior to the tenth (10th) calendar day
before the last Exercise Date of such Offering Period, such a participant fails
to make any lump sum cash payment, such participant shall be deemed to have
elected not to make contributions by lump sum payment with respect to such first
Offering Period.  Except as described in subsection (e) below, a participant may
not make contributions by lump sum payment for any Offering Period other than
the first Offering Period.

 

(b)                                 Following the first Offering Period, an
Eligible Employee may become a participant in the Plan by completing a
subscription agreement authorizing payroll deductions in a form acceptable to
the Administrator and filing it with the Company’s payroll office fifteen (15)
days (or such shorter or longer period as may be determined by the
Administrator, in its sole discretion) prior to the applicable Enrollment Date.

 

(c)                                  Each person who, during the course of an
Offering Period, first becomes an Eligible Employee subsequent to the Enrollment
Date may become a participant in the Plan by completing a subscription agreement
authorizing payroll deductions in a form acceptable to the Administrator and
filing it with the Company’s payroll office fifteen (15) days (or such shorter
or longer period as may be determined by the Administrator, in its sole
discretion) prior to the first day of any Purchase Period during the Offering
Period in which such person becomes an Eligible Employee.  The rights granted to
such participant shall have the same characteristics as any rights originally
granted during that Offering Period except that the first day of the Purchase
Period in which such person initially participates in the Plan shall be the
“Enrollment Date” for all purposes for such person, including determination of
the Purchase Price.

 

--------------------------------------------------------------------------------

 

(d)                                 Except as provided in subsection (a) hereof,
payroll deductions for a participant shall commence on the first payroll
following the Enrollment Date and shall end on the last payroll in the Offering
Period to which such authorization is applicable, unless sooner terminated by
the participant as provided in Section 10 hereof.

 

(e)                                  During a leave of absence approved by the
Company or a Subsidiary and meeting the requirements of Treasury Regulation
Section 1.421-7(h)(2), a participant may elect to continue participating in the
Plan by making cash payments to the Company on each pay day equal to the amount
of the participant’s payroll deductions under the Plan for the pay day
immediately preceding the first day of such participant’s leave of absence.

 

Alternatively, during a leave of absence approved by the Company or a Subsidiary
and meeting the requirements of Treasury Regulation Section 1.421-7(h)(2), a
participant may elect to continue participating in the Plan, but not make any
payroll deductions or cash payments. Any payroll deductions made prior to the
beginning of the leave in the current Offering Period will be used to purchase
shares at the end of the Purchase Period. The participant may resume payroll
deduction when the leave ends and they return to work in an amount equal to
their payroll deductions under the Plan for the pay day immediately preceding
the first day of such participant’s leave of absence..

 

If a leave of absence is unapproved or fails to meet the requirements of
Treasury Regulation Section 1.421-7(h)(2), the participant will cease
automatically to participate in the Plan.  In such event, the Company will
automatically cease to deduct the participant’s payroll under the Plan.  The
Company will pay to the participant his or her total payroll deductions for the
Purchase Period, in cash in one lump sum (without interest), as soon as
practicable after the participant ceases to participate in the Plan.

 

(f)                                   A participant’s completion of a
subscription agreement will enroll such participant in the Plan for each
successive Purchase Period and each subsequent Offering Period on the terms
contained therein until the participant either submits a new subscription
agreement, withdraws from participation under the Plan as provided in Section 10
hereof or otherwise becomes ineligible to participate in the Plan.

 

(g)                                  The subscription agreement(s) used in
connection with the Plan shall be in a form prescribed by the Administrator, and
the Administrator may, in its sole discretion, determine whether such agreement
shall be submitted in written or electronic form.

 

6.                                      Payroll Deductions.

 

(a)                                 At the time a participant files his or her
subscription agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in an amount from one percent (1%) to
ten percent (10%) of the Compensation which he or she receives on each pay day
during the Offering Period.

 

--------------------------------------------------------------------------------

 

(b)                                 All payroll deductions made for a
participant shall be credited to his or her account under the Plan and shall be
withheld in whole percentages only.  Except as described in Section 5(a) hereof,
a participant may not make any additional payments into such account.

 

(c)                                  A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the Offering Period by
completing or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate.  The Administrator may, in its discretion,
limit the number of participation rate changes during any Offering Period.  The
change in rate shall be effective with the first full payroll period following
five (5) business days after the Company’s receipt of the new subscription
agreement (or such shorter or longer period as may be determined by the
Administrator, in its sole discretion).

 

(d)                                 Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 3(c) hereof,
a participant’s payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period.

 

(e)                                  At the time the option is exercised, in
whole or in part, or at the time some or all of the Company’s Common Stock
issued under the Plan is disposed of, the participant must make adequate
provision for the Company’s federal, state, 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 may, but shall not be
obligated to, withhold from the participant’s compensation the amount necessary
for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.

 

7.                                      Grant of Option.  On the Enrollment Date
of each Offering Period, each Eligible Employee participating in such Offering
Period shall 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
the Company’s Common Stock determined by dividing such participant’s payroll
deductions accumulated prior to such Exercise Date and retained in the
participant’s account as of the Exercise Date by the applicable Purchase Price;
provided, however, that in no event shall a participant be permitted to purchase
during each Purchase Period more than 2,500 shares of the Company’s Common Stock
(subject to any adjustment pursuant to Section 19 hereof) (for the avoidance of
doubt, in the event that the Offering Period and Purchase Period are
approximately the same length, the participant shall only be entitled to
purchase an aggregate of 2,500 shares during such period); and provided,
further, that such purchase shall be subject to the limitations set forth in
Sections 3(c) and 13 hereof.  The Administrator may, for future Offering
Periods, increase or decrease, in its absolute discretion, the maximum number of
shares of the Company’s Common Stock a participant may purchase during each
Purchase Period and Offering Period.  Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof or otherwise becomes ineligible to participate in the Plan. 
The option shall expire on the last day of the Offering Period.

 

--------------------------------------------------------------------------------

 

8.                                      Exercise of Option.

 

(a)                                 Unless a participant withdraws from the Plan
as provided in Section 10 hereof or otherwise becomes ineligible to participate
in the Plan, his or her option for the purchase of shares shall be exercised
automatically on the Exercise Date, and the maximum number of full shares
subject to the option shall be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. 
No fractional shares shall be purchased; any payroll deductions accumulated in a
participant’s account which are not sufficient to purchase a full share shall be
retained in the participant’s account for the subsequent Purchase Period or
Offering Period.  During a participant’s lifetime, a participant’s option to
purchase shares hereunder is exercisable only by him or her.

 

(b)                                 If the Administrator determines that, on a
given Exercise Date, the number of shares with respect to which options are to
be exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Enrollment Date of the applicable
Offering Period, or (ii) the number of shares available for sale under the Plan
on such Exercise Date, the Administrator may in its sole discretion (x) provide
that the Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Enrollment Date or Exercise Date, as applicable,
in as uniform a manner as shall be practicable and as it shall 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 (y) provide that the Company shall make a pro rata allocation
of the shares available for purchase on such Enrollment Date or Exercise Date,
as applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Exercise Date, and terminate
any or all Offering Periods then in effect pursuant to Section 20 hereof.  The
Company may make pro rata allocation of the shares available on the Enrollment
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 Enrollment Date.  The
balance of the amount credited to the account of each participant which has not
been applied to the purchase of shares of stock shall be paid to such
participant in one lump sum in cash as soon as reasonably practicable after the
Exercise Date, without any interest thereon.

 

9.                                      Deposit of Shares.  As promptly as
practicable after each Exercise Date on which a purchase of shares occurs, the
Company may arrange for the deposit, into each participant’s account with any
broker designated by the Company to administer this Plan, of the number of
shares purchased upon exercise of his or her option.

 

10.                               Withdrawal.

 

(a)                                 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 giving written
notice to the Company in a form acceptable to the Administrator.  All of the
participant’s payroll deductions credited to his or her account during the
Offering Period shall be paid to such participant as soon as reasonably
practicable after receipt of notice of withdrawal and such participant’s option
for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such Offering
Period.  If a participant withdraws from an Offering Period, payroll deductions
shall not resume at the beginning of the succeeding Offering Period unless the
participant delivers to the Company a new subscription agreement.

 

--------------------------------------------------------------------------------

 

(b)                                 A participant’s withdrawal from an Offering
Period shall 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.

 

11.                               Termination of Employment.  Upon a
participant’s ceasing to be an Eligible Employee, for any reason, he or she
shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant’s account during the Offering Period
shall be paid to such participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 15 hereof, as soon as
reasonably practicable and such participant’s option for the Offering Period
shall be automatically terminated.

 

12.                               Interest.  No interest shall accrue on the
payroll deductions or lump sum contributions of a participant in the Plan.

 

13.                               Shares Subject to Plan.

 

(a)                                 Subject to adjustment upon changes in
capitalization of the Company as provided in Section 19 hereof, the maximum
number of shares of the Company’s Common Stock which shall be made available for
sale under the Plan shall be 1,000,000 shares.  In addition to the foregoing,
subject to Section 19 hereof, commencing on July 1, 2008 and on the first day of
each fiscal year of the Company thereafter during the term of the Plan, the
number of shares of the Company’s Common Stock which shall be made available for
sale under the Plan shall be increased by that number of shares of the Company’s
Common Stock equal to the least of (i) one percent (1%) of the Company’s
outstanding shares on such date, (ii) 1,000,000 shares, or (iii) a lesser amount
determined by the Board.  The Company’s fiscal year currently begins on July 1
and ends on June 30 of each year and, accordingly, the number of shares of the
Company’s Common Stock which shall be available for sale under the Plan shall be
subject to automatic increase under the preceding sentence only on July 1, 2008
and on each subsequent July 1 through and including July 1, 2016 (provided that
the Company’s fiscal year remains the same).  If any right granted under the
Plan shall for any reason terminate without having been exercised, the Common
Stock not purchased under such right shall again become available for issuance
under the Plan.  The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

 

(b)                                 With respect to shares of stock subject to
an option granted under the Plan, a participant shall not be deemed to be a
stockholder of the Company, and the participant shall not have any of the rights
or privileges of a stockholder, until such shares have been issued to the
participant or his or her nominee following exercise of the participant’s
option.  No adjustments shall be made for dividends (ordinary or extraordinary,
whether in cash securities, or other property) or distribution or other rights
for which the record date occurs prior to the date of such issuance, except as
otherwise expressly provided herein.

 

--------------------------------------------------------------------------------

 

14.                               Administration.

 

(a)                                 The Plan shall be administered by the Board
unless and until the Board delegates administration to a Committee as set forth
below.  The Board may delegate administration of the Plan to a Committee
comprised of two or more members of the Board, each of whom is a “non-employee
director” within the meaning of Rule 16b-3 which has been adopted by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, and which is otherwise constituted to comply with applicable law, and
the term “Committee” shall apply to any persons to whom such authority has been
delegated, provided that any action taken by the Committee shall be valid and
effective, whether or not members of the Committee at the time of such action
are later determined not to have satisfied the requirements for membership set
forth in this Section 14(a) or otherwise provided in the charter of the
Committee.  If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise, subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board.  The governance of the
Committee shall be subject to the charter of the Committee as approved by the
Board.  References in this Plan to the “Administrator” shall mean the Board
unless administration is delegated to a Committee or subcommittee, in which case
references in this Plan to the Administrator shall thereafter be to the
Committee or subcommittee.

 

(b)                                 It shall be the duty of the Administrator to
conduct the general administration of the Plan in accordance with the provisions
of the Plan.  The Administrator shall have the power to interpret the Plan and
the terms of the options and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules.  The Administrator at its option may
utilize the services of an agent to assist in the administration of the Plan
including establishing and maintaining an individual securities account under
the Plan for each participant.  In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Administrator under the Plan.

 

(c)                                  All expenses and liabilities incurred by
the Administrator in connection with the administration of the Plan shall be
borne by the Company.  The Administrator may, with the approval of the Board,
employ attorneys, consultants, accountants, appraisers, brokers or other
persons.  The Administrator, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
 All actions taken and all interpretations and determinations made by the
Administrator in good faith shall be final and binding upon all participants,
the Company and all other interested persons.  No member of the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the options, and all members of the Board
shall be fully protected by the Company in respect to any such action,
determination, or interpretation.

 

15.                               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 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

 

--------------------------------------------------------------------------------

 

written 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 shall be required for such
designation to be effective.

 

(b)                                 Such designation of a beneficiary may be
changed by the participant at any time by written notice to the Company.  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 shall 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.

 

16.                               Transferability.  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 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 shall 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.

 

17.                               Use of Funds.  All payroll deductions received
or held by the Company under the Plan may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

 

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

 

19.                               Adjustments Upon Changes in Capitalization,
Dissolution, Liquidation, Merger or Asset Sale.

 

(a)                                 Changes in Capitalization.  Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock which have been authorized for issuance under the Plan but not yet
placed under option, the maximum number of shares each participant may purchase
each Purchase Period (pursuant to Section 7 hereof), as well as the price per
share and the number of shares of Common Stock covered by each option under the
Plan which has not yet been exercised shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of 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 Administrator, whose
determination in

 

--------------------------------------------------------------------------------

 

that respect shall be final, binding and conclusive.  Except as expressly
provided herein, no issuance 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)                                 Dissolution or Liquidation.  In the event of
the proposed dissolution or liquidation of the Company, the Offering Period then
in progress shall be shortened by setting a new Exercise Date (the “New Exercise
Date”), and shall terminate immediately prior to the consummation of such
proposed dissolution or liquidation, unless provided otherwise by the
Administrator.  The New Exercise Date shall be before the effective date of the
Company’s proposed dissolution or liquidation.  The Administrator shall 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 shall 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.

 

(c)                                  Merger or Asset Sale.  In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each outstanding option
shall 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, any Purchase Periods then in progress shall be shortened by setting a
New Exercise Date and any Offering Periods then in progress shall end on the New
Exercise Date.  The New Exercise Date shall be before the effective date of the
Company’s proposed sale or merger.  The Administrator shall 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 shall 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.

 

20.                               Amendment or Termination.

 

(a)                                 The Board may at any time and for any reason
terminate or amend the Plan.  Except as provided in Section 19 hereof, no such
termination shall affect options previously granted, provided that an Offering
Period may be terminated by the Board if the Board determines that the
termination of the Offering Period or the Plan is in the best interests of the
Company and its stockholders.  Except as provided in Section 19 hereof and this
Section 20, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant without the consent of
such participant.  To the extent necessary to comply with Section 423 of the
Code (or any successor rule or provision or any other applicable law, regulation
or stock exchange rule), the Company shall obtain stockholder approval of any
amendment in such a manner and to such a degree as required.

 

(b)                                 Without stockholder consent and without
regard to whether any participant rights may be considered to have been
“adversely affected,” the Administrator shall 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.

 

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

 

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

 

(ii)                                  shortening any Offering Period so that the
Offering Period ends on a new Exercise Date, including an Offering Period
underway at the time of the Administrator action; and

 

(iii)                               allocating shares.

 

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

 

21.                               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.

 

22.                               Conditions to Issuance of Shares.  The Company
shall not be required to issue or deliver any certificate or certificates for
shares of Common Stock purchased upon the exercise of options prior to
fulfillment of all the following conditions:

 

(a)                                 The admission of such shares to listing on
all stock exchanges, if any, on which the Common Stock is then listed; and

 

(b)                                 The completion of any registration or other
qualification of such shares under any state or federal law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Administrator shall, in its absolute
discretion, deem necessary or advisable; and

 

(c)                                  The obtaining of any approval or other
clearance from any state or federal governmental agency which the Administrator
shall, in its absolute discretion, determine to be necessary or advisable; and

 

--------------------------------------------------------------------------------

 

(d)                                 The payment to the Company of all amounts
which it is required to withhold under federal, state or local law upon exercise
of the option; and

 

(e)                                  The lapse of such reasonable period of time
following the exercise of the option as the Administrator may from time to time
establish for reasons of administrative convenience.

 

23.                               Term of Plan.  Subject to approval by the
Company’s stockholders, the Plan shall become effective as of the Effective
Date.  The Plan shall be deemed to be approved by the Company’s stockholders if
it receives the affirmative vote of the holders of a majority of the shares of
stock of the Company in accordance with applicable law and the applicable
provisions of the Company’s bylaws.  Subject to approval by the stockholders of
the Company in accordance with this Section 23, the Plan shall be in effect
until the tenth (10th) anniversary of the date of the initial adoption of the
Plan by the Board, unless sooner terminated under Section 20 hereof.

 

24.                               Equal Rights and Privileges.  All Eligible
Employees of the Company (or of any Designated Subsidiary) will have equal
rights and privileges under this Plan so that this Plan qualifies as an
“employee stock purchase plan” within the meaning of Section 423 of the Code or
applicable Treasury regulations thereunder.  Any provision of this Plan that is
inconsistent with Section 423 or applicable Treasury regulations will, without
further act or amendment by the Company, the Board or the Administrator, be
reformed to comply with the equal rights and privileges requirement of Section
423 or applicable Treasury regulations.

 

25.                               Section 409A.  The options to purchase shares
of Common Stock under the Plan are not intended to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code.  However,
if at any time the Administrator determines that the options may be subject to
Section 409A of the Code, the Administrator shall have the right, in its sole
discretion, to amend the Plan and any outstanding options as it may determine is
necessary or desirable either to exempt the options from the application of
Section 409A of the Code or to cause the options to comply with the requirements
of Section 409A of the Code.

 

26.                               No Employment Rights.  Nothing in the Plan
shall be construed to give any person (including any Eligible Employee or
participant) the right to remain in the employ of the Company, a Parent or a
Subsidiary or to affect the right of the Company, any Parent or any Subsidiary
to terminate the employment of any person (including any Eligible Employee or
participant) at any time, with or without cause.

 

27.                               Notice of Disposition of Shares.  Each
participant shall give prompt notice to the Company of any disposition or other
transfer of any shares of stock purchased upon exercise of an option if such
disposition or transfer is made:  (a) within two (2) years from the Enrollment
Date of the Offering Period in which the shares were purchased or (b) within one
(1) year after the Exercise Date on which such shares were purchased.  Such
notice shall specify the date of such disposition or other transfer and the
amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the participant in such disposition or other transfer.

 

28.                               Governing Law.  The validity and
enforceability of this Plan shall be governed by and construed in accordance
with the laws of the State of California without regard to otherwise governing
principles of conflicts of law.

 

*  *  *  *  *

 

--------------------------------------------------------------------------------