Exhibit
10.42


 


TORNIER N.V.

2010 EMPLOYEE STOCK PURCHASE PLAN


 


1.                                       Purpose.  This Tornier N.V. 2010 Employee Stock
Purchase Plan (the “Plan”) is intended to advance the interests of
Tornier N.V., a public limited liability company (naamloze
vennootschap) organized under the laws of The Netherlands, or any
successor thereto (the “Company”) and its stockholders by providing
Eligible Employees of the Company and each Designated Subsidiary with
opportunities to acquire shares of Stock on favorable terms through payroll
deductions.  The Plan is intended to
qualify as an “employee stock purchase plan” under Section 423 of the
Internal Revenue Code of 1986, as amended (the “Code”), and will be
construed so as to extend and limit participation in a manner consistent with
the requirements of Section 423 of the Code.


 


2.                                       Definitions.  For purposes of the Plan, the following terms
shall be defined as set forth below:


 


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


 


(b)                                 “Committee” shall mean the Compensation
Committee of the Board or a subcommittee thereof consisting solely of not less
than two members of the Board who are “non-employee directors” within the
meaning of Rule 16b-3 under the Exchange Act.


 


(c)                                  “Company Group” shall mean the Company,
together with each Designated Subsidiary.


 


(d)                                 “Compensation” shall mean regular
straight-time earnings and commissions that are included in regular
compensation, including amounts that would have constituted compensation but
for a Participant’s election to defer or reduce compensation pursuant to any
deferred compensation, cafeteria, capital accumulation or any other similar
plan of the Company and excluding all other amounts such as amounts
attributable to overtime, shift premium, incentive compensation and bonuses
(except to the extent that the inclusion of any such item is specifically
directed by the Committee), determined in a manner consistent with the
requirements of Section 423 of the Code.


 


(e)                                  “Designated Subsidiary” shall mean a
Subsidiary that has been designated by the Board from time to time, in its sole
discretion, as eligible to participate in the Plan.


 


(f)                                    “Eligible Employee” shall mean an
Employee of the Company or a Designated Subsidiary (i) who would not,
immediately after an option is granted to him hereunder, own shares possessing
five percent (5%) or more of the total combined voting power or value of all
classes of shares of the Company or any 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) of this
subsection (f), the rules of Section 424(d) of the Code
with regard to the attribution of share ownership shall apply in determining
the share ownership of an individual, and shares which an Employee may purchase
under outstanding options shall be treated as shares owned by the
Employee.  Notwithstanding anything
herein to the contrary, Employees who are citizens or residents of a foreign
jurisdiction (without regard to 


 

















 


whether they are citizens
of the United States or resident aliens (within the meaning of
Section 7701(b)(1)(A) of the Code)) shall not be considered Eligible
Employees for purposes of the Plan if (x) the grant of an option hereunder
or any Offering to a citizen or foreign resident of such foreign jurisdiction
is prohibited by the laws of such jurisdiction, or (y) compliance with the
laws of such foreign jurisdiction would cause the Plan or any Offering to
violate the requirements of Section 423 of the Code.


 


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


 


(h)                                 “Employer” shall mean, with respect to
a Participant, the member of the Company Group by which the Participant is
principally employed.


 


(i)                                     “Enrollment Date” shall mean the first
Trading Day of each Offering Period.


 


(j)                                     “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


(k)                                  “Exercise Date” shall mean the last
Trading Day of each Offering Period.


 


(l)                                     “Fair Market Value” shall mean, with
respect to the Stock, as of any date: (i) the closing sale price of the
Stock as of such date at the end of the regular trading session, as reported by
the Nasdaq Stock Market, the New York Stock Exchange, the American Stock
Exchange or any national securities exchange on which the Stock is then listed
or quoted (or, if no shares were traded on such date, as of the next preceding
date on which there was such a trade); (ii) if the Stock is not so listed,
admitted to unlisted trading privileges, or reported on any national securities
exchange, the closing sale price as of such date at the end of the regular
trading session, as reported by the OTC Bulletin Board or the Pink Sheets, LLC,
or other comparable service (or, if no shares were traded or quoted on such
date, as of the next preceding date on which there was such a trade or quote);
or (iii) if the Stock is not so listed or reported, such price as the
Committee determines in its sole discretion in a manner acceptable under
Section 423 of the Code.


 


(m)                               “Offering” means any of the offerings
to Participants of options to purchase Stock under the Plan, as described in
Section 4 below.


 


(n)                                 “Participant” shall mean an Eligible
Employee who participates in the Plan pursuant to Section 5 hereof.


 


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(o)                                 “Purchase Price” shall mean eighty five
percent (85%) of the Fair Market Value of one share of Stock on the Exercise
Date; provided, however, that the Purchase Price may be
adjusted by the Committee pursuant to Section 19 hereof; provided, further,
that the Purchase Price shall not be less than the par value of one share of
Stock.


 


(p)                                 “Securities Act” shall mean the
Securities Act of 1933, as amended.


 


(q)                                 “Stock” shall mean the ordinary shares,
par value €0.01 per share, of the Company, or the number and kind of shares of
stock or other securities into which such ordinary shares may be changed in
accordance with Section 13 of the Plan.


 


(r)                                    “Subsidiary” shall mean any subsidiary
corporation of the Company within the meaning of Section 424(f) of
the Code.


 


(s)                                  “Trading Day” shall mean a day on which
the principal exchange on which the Stock is traded is open for trading.


 


3.                                       Eligibility.


 


(a)                                  Any Employee who is an Eligible Employee on
the Enrollment Date for an Offering Period (as defined in Section 4 below)
shall be eligible to participate in the Plan during such Offering Period,
subject to the requirements of Section 3(b) hereof and the
limitations imposed by Section 423(b) of the Code.


 


(b)                                 No Eligible Employee shall be granted an
option under the Plan if the amount of payroll deductions that the Eligible
Employee has elected to have withheld under such option (pursuant to
Section 5 below) would permit the Eligible Employee to purchase shares of
Stock under all “employee stock purchase plans” (within the meaning of
Section 423 of the Code) of the Company or any Subsidiary to accrue (i.e.,
become exercisable) at a rate that exceeds twenty five thousand dollars
($25,000) of the Fair Market Value of such shares of Stock (determined as of
the Enrollment Date) for each calendar year in which such option is outstanding
at any time.


 


4.                                       Offering Periods.  Options to purchase shares of Stock shall be
offered to Participants under the Plan through a continuous series of
Offerings, each continuing for six months and each of which shall commence on January 1
and July 1 of each year, as the case may be, and shall terminate on
June 30 and December 31 of such year, as the case may be (each such
period being, an “Offering Period”); provided, however, that the first Offering Period under the Plan and
any subsequent Offering Period commenced immediately after a suspension of the
Plan shall have an Enrollment Date and Exercise Date as determined by the
Committee in its sole discretion. 
Offerings under the Plan shall continue until either (a) the
Committee decides, in its sole discretion, that no further Offerings shall be
made because the Stock remaining available under the Plan is insufficient to
make an Offering to all Eligible Employees, or (b) the Plan is terminated
under Section 20 below. 
Notwithstanding the foregoing, and without limiting the authority of the
Committee under Section 14, 19 and 20 of the Plan, the Committee, in its
sole discretion, may (a) accelerate the Exercise Date of the then current
Offering Period and provide for the exercise of options thereunder by
Participants in accordance with Section 8 of the Plan, or
(b) accelerate the Exercise Date of the then current Offering Period and
provide that all payroll 


 


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deductions credited to the accounts of Participants
will be paid to Participants as soon as practicable after such Exercise Date
and that all options for such Offering Period will automatically be canceled
and will no longer be exercisable, if such change is announced at least five
(5) days prior to the newly scheduled Exercise Date.


 


5.                                       Participation.


 


(a)                                  Each Eligible Employee may become a
Participant with respect to any Offering Period by completing a subscription
agreement authorizing payroll deductions in a form acceptable to the Committee
and filing it with the Company (or its designated third-party stock plan
administrator) fifteen (15) business days (or a different number of days as may
be determined by the Committee, in its sole discretion) prior to the first day
of such Offering Period.  A Participant’s
completion of a subscription agreement with respect to any Offering Period will
enroll such Participant in the Plan for 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.


 


(b)                                 Payroll deductions for a Participant shall
commence on the first payday following the Enrollment Date and shall end on the
last payday in the Offering Period with respect to which such authorization is
applicable, unless sooner terminated by the Participant as provided in
Section 10 hereof.


 


(c)                                  During a Participant’s leave of absence
approved by his Employer and meeting the requirements of Treasury Regulation Section 1.421-7(h)(2),
such Participant may continue to participate in the Plan by making cash
payments to the Company on each payday equal to the amount of the Participant’s
payroll deductions under the Plan for the payday 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 automatically cease to participate in the Plan and may not
make any further contributions to the Plan hereunder.  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
total payroll deductions for the Offering Period, in cash in one lump sum
(without interest), as soon as practicable after the Participant ceases to
participate in the Plan.


 


(d)                                 The subscription agreement(s) used in
connection with the Plan shall be in a form prescribed by the Committee, and
the Committee 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 subscription
agreement, such Participant shall elect to have payroll deductions made on each
payday (such amount to be deducted after any applicable deduction for tax and
other withholding) during the Offering Period in an amount from one percent
(1%) to ten percent (10%) of the Compensation which he receives on each pay day
during the Offering Period.


 


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


 


(c)                                  A Participant may discontinue his
participation in the Plan as provided in Section 10 hereof, or may
increase or decrease the rate of his payroll deductions during the Offering
Period by completing or filing with the Company (or its designated third-party
stock plan administrator) a new subscription agreement authorizing a change in
payroll deduction rate.  The Committee
may, in its discretion, limit the number of participation rate changes per
Participant during any Offering Period. 
The change in rate shall be effective with the first full payroll period
following five business (5) days (or a different number of days as may be
determined by the Committee, in its sole discretion) after the Company’s (or
its designated third-party stock plan administrator’s) receipt of the new
subscription agreement.


 


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


 


(e)                                  At the time an option is exercised, in whole
or in part, or at the time some or all of the shares of Stock issued under the
Plan are disposed of, the Participant must make adequate provision for any
federal, state, or other tax obligations, if any, which arise upon the exercise
of the option or the disposition of the shares of Stock.  At any time, the Company may, but shall not
be obligated to, withhold from all of 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 the sale or early disposition of shares of Stock by
the Participant.


 


7.                                       Grant of Option.  On the Enrollment Date of each Offering
Period, each Participant in such Offering Period shall be granted an option to
purchase on the Exercise Date with respect to such Offering Period (at the
applicable Purchase Price) up to a number of the shares of 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 (i) such purchase shall be subject to the limitations set forth in
Sections 3 and 13 hereof, and (ii) in no event may more than two thousand
five hundred (2,500) shares of Stock be purchased by any Participant during any
Offering Period.  Exercise of the option
shall occur as provided in Section 8 hereof, unless the Participant has
withdrawn from participation 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, such Participant’s option for the purchase of Stock
shall be exercised automatically on the Exercise Date, and the maximum number
of full shares of Stock subject to the option shall be purchased for such
Participant at the applicable Purchase Price with the accumulated payroll
deductions in his account.  No fractional
shares of Stock shall be purchased, and any payroll deductions accumulated in a
Participant’s 


 


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account which are not
sufficient to purchase a full share of Stock shall be retained in such
Participant’s account for the subsequent Offering Period.  During a Participant’s lifetime, a
Participant’s option to purchase Stock hereunder is exercisable only by him.


 


(b)                                 If the Committee determines that, on a given
Exercise Date, the number of shares of Stock with respect to which options are
to be exercised may exceed either (i) the number of shares of Stock that
were available for sale under the Plan on the Enrollment Date of the applicable
Offering Period (notwithstanding any authorization of additional shares of
Stock for issuance under the Plan by the Company’s shareholders subsequent to
such Enrollment Date); or (ii) the number of shares of Stock available for
sale under the Plan on such Exercise Date, the Committee shall provide that the
Company (or its designated third-party stock plan administrator) shall make a
pro rata allocation of the 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 Stock on such Exercise Date, and
shall decide, in its sole discretion, to either (x) continue all Offering
Periods then in effect or (y) terminate any or all Offering Periods then
in effect pursuant to Section 20 hereof. 
In the event of such a pro rata allocation of Stock pursuant to this
Section 8(b), the balance of the amount credited to the account of each
Participant that has not been applied to the purchase of Stock shall be paid to
each such Participant in one lump sum in cash as soon as reasonably practicable
after the Exercise Date, without any interest thereon.


 


9.                                       Deposit of Stock.  As promptly as practicable after each
Exercise Date on which a purchase of Stock 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 of Stock purchased
upon exercise of each such Participant’s option.


 


10.                                 Withdrawal.


 


(a)                                  At any time prior to the Exercise Date, a
Participant, by giving written notice to the Company (or its designated
third-party stock plan administrator) in a form acceptable to the Committee,
may withdraw all but not less than all of the payroll deductions credited to
his account and not yet used to exercise an option under the Plan.  All of the Participant’s payroll deductions
credited to his account during the Offering Period, plus any balance retained
in his account from a prior Offering Period, if any, 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
Stock shall be made for such Offering Period. 
If a Participant withdraws from an Offering Period, payroll deductions
shall not resume at the beginning of any subsequent Offering Period unless the
Participant delivers to the Company (or its designated third-party stock plan
administrator) a new subscription agreement in accordance with the terms of
Section 5(a) hereof.


 


(b)                                 A Participant’s withdrawal from an Offering
Period shall not have any effect upon his eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in Offering
Periods which commence after the termination of the Offering Period from which
the Participant withdraws.


 


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11.                                 Termination of Employment.  Upon a Participant’s ceasing to be an
Eligible Employee, for any reason, such Participant 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, plus any balance retained in
his account from a prior Offering Period, if any, shall be paid to him, or in
the case of his 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.                                 Stock Subject to Plan.


 


(a)                                  Subject to adjustment upon changes in
capitalization of the Company as provided in Section 19 hereof, a maximum
of one million (1,000,000) shares of Stock shall be made available for sale
under the Plan.  If any option granted
under the Plan shall for any reason terminate without having been exercised,
the shares of Stock not purchased under such option shall again become
available for issuance under the Plan. 
The shares of Stock subject to the Plan may be unissued shares or
reacquired shares bought on the market or otherwise.


 


(b)                                 Except as otherwise provided herein, with
respect to Stock subject to an option granted under the Plan, a Participant
shall not be deemed to be a shareholder of the Company, and the Participant
shall not have any of the rights or privileges of a shareholder, until such
Stock has been issued to the Participant or his 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 distributions or other rights for which the
record date occurs prior to the date of such issuance, except as otherwise
expressly provided herein.


 


14.                                 Administration.  The Plan will be administered by the
Committee.  To the extent consistent with
corporate law, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided,
however, that only the Committee may
exercise such duties, power and authority with respect to Participants who are
subject to Section 16 of the Exchange Act. 
The Committee may exercise its duties, power and authority under the
Plan in its sole discretion without the consent of any Participant or other
party, unless the Plan specifically provides otherwise.  Each determination, interpretation or other
action made or taken by the Committee pursuant to the provisions of the Plan
will be final, conclusive and binding for all purposes and on all persons,
including, without limitation, the Company, the stockholders of the Company,
the Participants and their respective successors-in-interest.  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted under the Plan.


 


15.                                 Designation of Beneficiary.


 


(a)                                  A Participant may file a written designation
of a beneficiary who is to receive any Stock and cash, if any, from such
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 


 


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prior to delivery to such
Participant of such Stock 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.  To the extent required under applicable law,
spousal consent shall be required for such designation to be effective if the
Participant is married and the designated beneficiary is not the Participant’s
spouse.


 


(b)                                 Such beneficiary designation 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
Stock 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 may, in its discretion, deliver such
Stock 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 Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the Participant (other than by will, the
laws of descent and distribution, or as provided in Section 15
hereof).  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 Participants following each Offering Period, which
statements shall set forth the amounts of payroll deductions, the Purchase
Price, the number of shares of Stock purchased, and the remaining cash balance,
if any.


 


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


 


(a)                                  Changes in Capitalization.  The
number of shares of Stock which have been authorized for issuance under the
Plan but not yet placed under option, the maximum number of shares of Stock
each Participant may purchase in each Offering Period (pursuant to Section 7
hereof), as well as the price per share of Stock and the number of shares of
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 Stock resulting from a stock split, reverse stock split, stock
dividend, combination, or reclassification of the Stock, or any other increase
or decrease in the number of shares of 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 


 


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adjustment shall be made
by the Committee, whose determination in that respect shall be final, binding,
and conclusive on all Participants and the Company.  Except as expressly provided herein, no
issuance by the Company of shares of any class, or securities convertible into
shares of any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Stock subject to an
option.


 


(b)                                 Merger, Amalgamation, Asset Sale, Dissolution
or Liquidation.  In the event of a proposed merger or
amalgamation of the Company with or into another corporation or a proposed sale
of all or substantially all of the assets of the Company, 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
or a parent or subsidiary of the successor corporation refuses to assume or
substitute for the option, or in the event of the proposed dissolution, or
liquidation of the Company, the Offering Period then in progress shall be
shortened by the Committee by setting a new Exercise Date (the “New Exercise
Date”), which shall occur no later than immediately prior to the effective
date of such proposed merger, amalgamation, sale, dissolution or liquidation,
as applicable.  The Company 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 New
Exercise 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 shareholders.  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 shareholder approval of any amendment in such a manner and to such a
degree as required.


 


(b)                                 Without shareholder consent and without regard
to whether any Participant’s rights may be considered to have been “adversely
affected,” the Committee shall be entitled to change the Offering Periods (but
in no event may an Offering Period have a duration in excess of twenty seven
(27) months), 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 Stock for each Participant properly correspond with
amounts withheld from the Participant’s Compensation, and establish such other
limitations or procedures as the Committee determines in its sole discretion
advisable which are consistent with the Plan.


 


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(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 financial
accounting consequences, 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
Committee action; and


 


(iii)                               allocating shares.


 


Such
modifications or amendments shall not require shareholder approval or the
consent of any 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 Stock.


 


(a)                                  The Company shall not be required to issue or
deliver to a Participant any certificate or certificates for shares of Stock
purchased upon the exercise of options prior to fulfillment of all the
following conditions:


 


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


 


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


 


(iii)                               Such Participant’s 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


 


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


 


(b)                                 The obligation of the Company to make a
payment of Stock or otherwise shall be subject to all applicable laws, rules and
regulations, and to such approvals by governmental agencies as may be
required.  Notwithstanding any terms or
conditions of any option to the contrary, the Company shall be under no
obligation to offer to sell or to sell and shall be prohibited from offering to
sell or selling any Stock pursuant to an option unless such Stock has been
properly registered for sale with the Securities and Exchange Commission 


 


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pursuant to the
Securities Act or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such Stock may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms
and conditions of such exemption have been fully complied with.  The Company shall be under no obligation to
register for sale or resale under the Securities Act any of the Stock to be
offered or sold under the Plan or any Stock issued upon exercise or settlement
of options.  If the Stock offered for
sale or sold under the Plan is offered or sold pursuant to an exemption from
registration under the Securities Act, the Company may restrict the transfer of
such Stock and may legend the share certificates representing such Stock in
such manner as it deems advisable to ensure the availability of any such
exemption.


 


23.                                 Term of Plan.  The Plan shall become effective as of the
Effective Date.  The Plan shall be deemed
to be approved by the Company’s shareholders if it receives the affirmative
vote of the Company’s shareholders in accordance with the by-laws of the
Company.  Subject to approval by the
shareholders 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.  In the event the Company’s
shareholders do not approve this Plan pursuant to this Section 23, neither
this Plan nor any elections made hereunder shall be of any force or effect, any
outstanding option shall be cancelled for no consideration, and all amounts
deducted from each Participant’s paycheck shall be repaid to such Participant
as soon as practicable without interest.


 


24.                                 Equal Rights and Privileges.  All Eligible Employees 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.  Any provision of this Plan that is
inconsistent with this requirement to provide equal rights and privileges will,
without further act or amendment by the Company, the Board or the Committee, be
reformed to comply with the equal rights and privileges requirement of Section 423
of the Code.


 


25.                                 Section 409A.  The options to purchase 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 Committee determines that the options may be
subject to Section 409A of the Code, the Committee 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 or a Subsidiary, or to affect the right of
the Company 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 Stock; Transfer Restrictions.  If required by the Company, each
Participant shall give prompt notice to the Company (at its local Human
Resources office), or cause a designated third-party stock administrator to
give prompt notice to the Company, of any disposition or other transfer of any
Stock purchased upon exercise of an 


 


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option hereunder if such disposition or transfer is
made either (a) within two (2) years from the Enrollment Date of the
Offering Period in which the Stock was purchased or (b) within one (1) year
after the Exercise Date on which such Stock was 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. 
Notwithstanding anything herein to the contrary, no Participant shall be
permitted to dispose of or transfer any Stock purchased pursuant to an option
hereunder prior to the date that is twelve (12) months following the date upon
which such Stock was so purchased.  The
Committee may provide, in its sole discretion, that the Stock purchased
pursuant to an option hereunder shall be held in book entry form, rather than
delivered to the Participant, through the expiration of such twelve (12) month
period.  If certificates representing the
shares of Stock are registered in the name of the Participant, the Committee
may require that such certificates bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Stock and that the
Company retain physical possession of the certificates.


 


28.                                 Governing Law.  Subject to any applicable provisions of
United States federal law (including, without limitation, Section 423(b) of
the Code), the validity and enforceability of this Plan shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to otherwise governing principles of conflicts of law.


 


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