Exhibit 10.4


 


SUNESIS PHARMACEUTICALS, INC.


 


EMPLOYEE STOCK PURCHASE PLAN


 


Sunesis
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby
adopts the Sunesis Pharmaceuticals, Inc. 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.


 


(f)            “Company” shall mean
Sunesis Pharmaceuticals, Inc., a Delaware corporation, and any successor by
merger, consolidation or otherwise.


 


(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.


 


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


 


(i)             If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;


 


(ii)            If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean of the
closing bid and asked prices for the Common Stock on the date prior to the date
of determination as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;


 


(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


 


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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)           “Offering Period”
shall mean subject to Section 24, each twelve (12) month period commencing
on any December 1 or June 1 and terminating on the last Trading Day
in the periods ending twelve (12) months later, except for the first Offering
Period under the Plan, which shall commence on the Effective Date and end on May
31, 2006.  The duration and timing of
Offering Periods may be changed pursuant to Section 4 of this Plan.


 


(p)           “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.


 


(q)           “Plan” shall mean this
Sunesis Pharmaceuticals, Inc. Employee Stock Purchase Plan.


 


(r)            “Purchase Period”
shall mean the approximately six (6) month period commencing after one Exercise
Date and ending with the next Exercise Date, except that the first Purchase
Period of any Offering Period shall commence on the Enrollment Date and end
with the next Exercise Date.  Notwithstanding
the foregoing, the first Purchase Period with respect to the initial Offering
Period under the Plan shall end on the last Trading Day on or before the next
occurring December 1 following the Effective Date and such period may be
more or less than six-months in duration.


 


(s)           “Purchase Price” shall
mean 85% of the Fair Market Value of a share of Common Stock on the Enrollment
Date or on the Exercise Date, whichever is lower; provided,
however, that the Purchase Price may be adjusted by the Administrator
pursuant to Section 20; provided, further,
that the Purchase Price shall not be less than the par value of a share of
Common Stock.


 


(t)            “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.


 


(u)           “Trading Day” shall
mean a day on which national stock exchanges and the Nasdaq System 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 and the limitations imposed by Section 423(b)
of the Code.


 


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(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 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, 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 purpose 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.  Subject to Section 24, the
Plan shall be implemented by consecutive, overlapping 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.  In no event may an Offering Period exceed
twenty-seven (27) months in duration.


 


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 twenty percent (20%) 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 twenty percent (20%) 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 


 


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contributions) for the
first Offering Period by payroll deductions in accordance with Section 6,
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
the form of Exhibit A to this Plan 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 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.  Such person may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan 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), 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 continue to participate 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.  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 


 


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lump sum (without
interest), as soon as practicable after the participant ceases to participate
in the Plan.


 


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 twenty percent (20%) 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 Offering Period more than 10,000 shares of the Company’s
Common Stock (subject to any adjustment pursuant to Section 19) and during
each Purchase Period more than 5,000 shares
of the Company’s Common Stock (subject to any adjustment pursuant to Section 19);
and provided, further, that such purchase shall be subject to


 


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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.


 


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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 the form
of Exhibit A to this Plan.  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 initial number of shares of the Company’s Common Stock
which shall be made available for sale under the Plan shall be seven hundred
fifty thousand (750,000) shares.  In
addition to the foregoing, subject to Section 19 hereof, commencing on the
first day of the Company’s 2006 fiscal year and on the first day of each fiscal
year 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-half percent (0.5%) of the Company’s outstanding
shares of Stock on such date, (ii) five hundred thousand (500,000) shares
or (iii) a lesser amount determined by the Board.  Notwithstanding the foregoing, in no event
shall the aggregate number of shares reserved for issuance under the Plan,
during the term of the Plan, exceed five million (5,000,000) shares of the
Company’s Common Stock during the term of the Plan, subject to adjustment as
provided in Section 19 hereof.


 


(b)           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.


 


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(c)           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.  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.  Each member of the Committee shall serve for
a term commencing on a date specified by the Board and continuing until the
member dies or resigns or is removed from office 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


 


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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 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), as well as the


 


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 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 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
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 can 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 and this Section 20 hereof, 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 


 


11





















 


law, regulation or stock
exchange rule), the Company shall obtain stockholder approval 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 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 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 


 


12





















 


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.  The Plan shall become effective
on the Effective Date.  Subject to
approval by the stockholders of the Company in accordance with this Section,
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. 
The Plan shall be submitted for the approval of the Company’s
stockholders within twelve (12) months after the date of the initial adoption
of the Plan by the Board.


 


24.           Automatic Transfer to Low Price Offering Period.  To the
extent permitted by any applicable laws, regulations, or stock exchange rules,
if the Fair Market Value of the Common Stock on any Exercise Date in an
Offering Period is lower than the Fair Market Value of the Common Stock on the
Enrollment Date of such Offering Period, then (i) a new twelve (12) month
Offering Period will automatically begin on the first trading day following
that Exercise Date, and (ii) all
participants in such Offering Period shall be automatically withdrawn from such
Offering Period immediately after the exercise of their option on such Exercise
Date and automatically re-enrolled in the immediately following Offering Period
as of the first day thereof.


 


25.           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.


 


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 


 


13





















 


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 Delaware without regard to otherwise governing principles of
conflicts of law.


 


14



















 


EMPLOYEE
STOCK PURCHASE PLAN (the “Plan”)


ENROLLMENT/CHANGE
FORM


(Capitalized terms not defined on this form have
the meanings ascribed to them in the Plan)


 


EMPLOYEE
NAME:                                                                                                            


 


ADDRESS:                                                                                                                                                                            


                                                                                (Please Print)


SOCIAL SECURITY:         _______________


 


COMPLETE REASON(S) FOR
ENROLLMENT/CHANGE:


____       New Enrollment


____       Withdrawal (This will reduce your
Contribution Rate to 0% and terminate your participation in the Plan for this
Offering Period.  Your existing payroll
deduction account balance will be refunded to you as soon as administratively
possible.)


____       Change: Contribution
Rate _______ (decreases only)                 Beneficiary  ________


 


 


PAYROLL
DEDUCTION AUTHORIZATION


I
authorize deductions from each payroll check of the following percentage of my
Compensation during the Offering Period in accordance with the Plan.  I understand that if I do not withdraw from
an Offering Period, any accumulated payroll deductions will be used to
automatically exercise my Option.  This
authorization will stay in effect until I change it or cease to participate in
the Plan.


Contribution Rate: 
________  (1–20%,
whole increments)


 


 


BENEFICIARY


___________________________________              ___________________    _______________


                                Name                                                      Social
Security #                 Relationship


_____________________________________________________________________


                                Address


_____________________________________________


Signature of Spouse (If beneficiary other than
spouse)


 


 


I have received and reviewed a copy of the Plan and the Company’s
Prospectus issued in connection with my participation in the Plan.  I have carefully reviewed and understand the
terms of the Plan and such other matters as I found necessary to understand the
mechanics and risks of participation in the Plan.


___________________________________________                            __________


                                Employee Signature                                                            Date


 


 


(For Human Resources Department Use Only)


Approved By:        _________________________________________


Date: 
____________                                                                        Payroll
Processing Date:  ____________