**Exhibit 10.35**

 

VERITY, INC. 

 

1995 EMPLOYEE STOCK PURCHASE PLAN 

 

(As Amended and Adjusted through September 30, 2004) 

 

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN. 

 

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

 

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

 

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

 

2. DEFINITIONS AND CONSTRUCTION. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3. ADMINISTRATION. 

 

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

 

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

 

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

 

4. SHARES SUBJECT TO PLAN. 

 

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

 

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

 

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

 

5. ELIGIBILITY. 

 

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

 

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

 

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

 

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

 

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

 

6. OFFERINGS. 

 

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

 

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

 

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purchase periods (Effective Date to March 31, 1996; April 1, 1996 to September 30, 1996; October 1, 1996 to March 31, 1997; and April 1, 1997 to September30, 1997)) or such other number or duration as the Board shall determine (individually, a “Purchase Period”). A Purchase Period commencing on the first day of April shall end on the last day of the next following September. A PurchasePeriod commencing on the first day of October shall end on the last day of the next following March. Notwithstanding the foregoing, the Board may establish a different term for one or more Purchase Periods or different commencing or ending dates forsuch Purchase Periods. If the first or last day of a Purchase Period is not a day on which the national securities exchanges or Nasdaq Stock Market are open for trading, the Company shall specify the trading day that will be deemed the first or lastday, as the case may be, of the Purchase Period. 

 

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

 

7. PARTICIPATION IN THE PLAN. 

 

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

 

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

 

8. RIGHT TO PURCHASE SHARES.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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11. PURCHASE OF SHARES. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12.WITHDRAWAL FROM OFFERING OR PLAN. 

 

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

 

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

 

12.2 Withdrawal from the Plan. A Participant may withdraw from the Plan (and thereby all Offerings) by signing and delivering to the Company’sdesignated office a written notice of withdrawal on a form provided by the Company for such purpose. Such withdrawal may be elected at any time prior to the end of an Offering Period (with an effective date as specified in the election pursuant toprocedures established by the Company). For Offerings that commence on or after October 1, 2001, however, if a Participant withdraws from the Plan less than fifteen (15) days prior to the Purchase Date of a Purchase Period, such withdrawal shall notaffect the purchase of shares of Stock for the Participant on such Purchase Date. A Participant who voluntarily elects to withdraw from the Plan is prohibited from resuming participation in the Plan in the same Offering from which he or shewithdrew, but may participate in any subsequent Offering under the Plan by again satisfying the requirements of Sections 5 and 7.1. The Company may impose, from time to time, a requirement that the notice of withdrawal from the Plan be on file withthe Company’s designated office for a reasonable period prior to the effectiveness of the Participant’s withdrawal from the Plan. 

 

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

 

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

 

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

 

14. TRANSFER OF CONTROL. 

 

14.1 Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

B-9. 

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

 

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

 

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

 

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

 

20. NOTICES. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been dulygiven when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 

 

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

 

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

 

B-10. 

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

 

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

 

B-11.