**Exhibit 10.42**

 

**INSIGNIA SOLUTIONS plc**

 

**1995 EMPLOYEE SHARE PURCHASE PLAN**

 

Adopted by theBoard of Directors on February 9, 1995

and Amended onDecember 15, 1995 and April 21, 1998

Amended andRestated on April 30, 2004

 

**1.  ESTABLISHMENT OFPLAN**

 

Insignia Solutions plc(the “Company”) proposes to grant options to subscribe for the Company’sordinary shares of 20p each, or any instruments evidencing such ordinary shares(e.g., American Depositary Shares or American Depositary Receipts), to eligibleemployees of the Company and its Subsidiaries (as hereinafter defined) pursuantto this Insignia Solutions plc 1995 Employee Share Purchase Plan (this “Plan”).  For purposes of this Plan, “ParentCorporation” and “Subsidiary” (collectively, “Subsidiaries”) shall havethe same meanings as “parent corporation” and “subsidiary corporation” inSections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,as amended (the “Code”).  TheCompany intends the Plan to qualify as an “employee stock purchase plan” underSection 423 of the Code (including any amendments to or replacements ofsuch section), and the Plan shall be so construed.  Any term not expressly defined in the Plan but defined forpurposes of Section 423 of the Code shall have the same definitionherein.  A total of one million twohundred thousand (1,200,00) of the Company’s ordinary shares is reserved forissue under the Plan.  Such number shallbe subject to adjustments effected in accordance with Section 14 of thePlan.

 

**2.  PURPOSES**

 

The purpose of the Planis to provide employees of the Company and Subsidiaries designated by the Boardof Directors of the Company (the “Board”) as eligible to participate inthe Plan with a convenient means of acquiring an equity interest in the Companythrough payroll deductions, to enhance such employees’ sense of participationin the affairs of the Company and Subsidiaries, and to provide an incentive forcontinued employment.

 

**3.  ADMINISTRATION**

 

This Plan may beadministered by the Board or a committee appointed by the Board (the “Committee”).  If a majority of the Board is not comprisedof Disinterested Persons as defined in Rule 16b-3(d) promulgated under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), the Boardshall appoint a committee consisting of at least two (2) members of the Board,each of whom is a Disinterested Person. As used in this Plan, references to the “Committee” shall mean eithersuch committee or the Board if no committee has been established.  Board members who are not DisinterestedPersons may not vote on any matters affecting

 

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the administration ofthis Plan, but any such member may be counted for determining the existence ofa quorum at any meeting of the Board. Subject to the provisions of the Plan and the limitations ofSection 423 of the Code or any successor provision in the Code, allquestions of interpretation or application of the Plan shall be determined bythe Board and its decisions shall be final and binding upon all participants.  Members of the Board shall receive nocompensation for their services in connection with the administration of thePlan, other than standard fees as established from time to time by the Boardfor services rendered by Board members serving on Board committees.  All expenses incurred in connection with theadministration of the Plan shall be paid by the Company.

 

**4.  ELIGIBILITY**

 

Any employee of theCompany or the Subsidiaries is eligible to participate in an Offering Period(as hereinafter defined) under the Plan except the following:

 

(a)  employees who are not employed by theCompany or Subsidiaries on the fifteenth (15th) day of the month before thebeginning of such Offering Period;

 

(b)  employees who are customarily employed forless than 20 hours per week;

 

(c)  employees who are customarily employed forless than 5 months in a calendar year;

 

(d)  employees who, together with any otherperson whose stock or shares would be attributed to such employee pursuant toSection 424(d) of the Code, own stock or shares or hold options tosubscribe for ordinary shares or who, as a result of being granted an optionunder the Plan with respect to such Offering Period, would own shares or holdoptions to subscribe for shares possessing 5 percent or more of the totalcombined voting power or value of all classes of stock or shares of the Companyor any of its Subsidiaries.

 

**5.  OFFERING DATES**

 

The Offering Periods ofthe Plan (the “Offering Period”) shall be of six (6) months durationcommencing February 1 and August 1 of each year and ending onJuly 31 and January 31 respectively. Payroll deductions of each participant are accumulated under the Planduring the Offering Periods.  The firstday of each Offering Period is referred to as the “Offering Date”.  The last business day of each OfferingPeriod is referred to as the “Purchase Date”. The Board shall have the power to change the duration of OfferingPeriods with respect to future offerings without shareholder approval if suchchange is announced at least fifteen (15) days prior to the scheduled beginningof the first Offering Period to be affected.

 

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**6.  PARTICIPATION INTHE PLAN**

 

Eligible employees maybecome participants in an Offering Period under the Plan on the first OfferingDate after satisfying the eligibility requirements by delivering a subscriptionagreement to the Company’s or Subsidiary’s (whichever employs such employee)payroll department (the “Payroll Department”) not later than five (5)days prior to such Offering Date unless a later time for filing thesubscription agreement authorizing payroll deductions is set by the Board forall eligible employees with respect to a given Offering Period.  An eligible employee who does not deliver asubscription agreement to the Payroll Department by such date after becomingeligible to participate in such Offering Period shall not participate in thatOffering Period or any subsequent Offering Period unless such employee enrollsin the Plan by filing a subscription agreement with the Payroll Department notlater than five (5) days prior to such subsequent Offering Date.  Once an employee becomes a participant in anOffering Period, such employee will automatically participate in the OfferingPeriod commencing immediately following the last day of the prior OfferingPeriod unless the employee withdraws from the Plan or terminates furtherparticipation in the Offering Period as set forth in Section 11below.  Such participant is not requiredto file any additional subscription agreement in order to continueparticipation in the Plan.

 

**7.  GRANT OF OPTION ONENROLLMENT**

 

Enrollment by an eligibleemployee in the Plan with respect to an Offering Period will constitute thegrant (as of the Offering Date) by the Company to such employee of an option tosubscribe on the Purchase Date for up to that number of ordinary shares of theCompany determined by dividing the amount accumulated in such employee’spayroll deduction account during such Offering Period, and if applicable, asconverted into U.S. Dollars at the Conversion Rate (as defined inSection 9(g)) on the Purchase Date, by the lower of (i) eighty-fivepercent (85%) of the fair market value of an ordinary share of the Company onthe Offering Date (the “Entry Price”) or (ii) eighty-five percent(85%) of the fair market value of an ordinary share of the Company on thePurchase Date; provided, however, that the number of ordinary shares of theCompany subject to any option granted pursuant to this Plan shall not exceedthe lesser of (a) the maximum number of shares set by the Board pursuant toSection 10(c) below with respect to the applicable Offering Period, or (b)200% of the number of shares determined by using 85% of the fair market valueof an ordinary share of the Company on the Offering Date as thedenominator.  Fair market value of anordinary share of the Company shall be determined as provided in Section 8hereof.

 

**8.  PURCHASE PRICE**

 

The purchase price ofshares issued pursuant to this Plan shall be payable in U.S. Dollars.  The purchase price per share at which a sharewill be issued in any Offering Period shall be 85 percent of the lesser of:

 

(a)  The fair market value on the Offering Date;or

 

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(b)  The fair market value on the Purchase Date.

 

Notwithstanding theforegoing, the purchase price per ordinary share shall not in any circumstancesbe less than the U.S. Dollar equivalent, at the Conversion Rate (as defined inSection 9(g)) on the Purchase Date, of 20p (being the par value of anordinary share).

 

For purposes of the Plan,the term “fair market value” on a given date shall mean the fair market valueof an ordinary share of the Company, or instrument evidencing such ordinaryshares (e.g., American Depositary Shares or American Depositary Receipts) inU.S. Dollars, as determined by the Committee from time to time in goodfaith.  If a public market exists forthe shares, or instrument evidencing such ordinary shares (e.g., AmericanDepositary Shares or American Depositary Receipts), the fair market value shallbe the average of the last reported bid and asked prices for an ordinary shareof the Company on the last trading day prior to the date of determination, or,in the event ordinary shares of the Company, or instruments evidencing suchordinary shares (e.g., American Depositary Shares or American DepositaryReceipts), are listed on the Nasdaq National Market, the fair market valueshall be the closing price of a share, or instrument evidencing such ordinaryshares (e.g., American Depositary Shares or American Depositary Receipts), onthe determination date as quoted on the Nasdaq National Market or if no suchreported sale takes place on such date, the closing price on the next precedingtrading date on which a reported sale occurred.

 

**9.  PAYMENT OFPURCHASE PRICE;  CHANGES IN PAYROLLDEDUCTIONS; ISSUE OF SHARES**

 

(a)  The purchase price of the shares isaccumulated by regular payroll deductions made during each OfferingPeriod.  The deductions are made as apercentage of the participant’s compensation in one percent increments not lessthan 2 percent nor greater than 10 percent, not to exceed $25,000 per year, orthe U.S. Dollar equivalent determined at the Conversion Rate (as defined inSection 9(g)) on the Offering Date, or such lower limit set by theCommittee.  Compensation for U.S.employees shall mean all W-2 compensation, including, but not limited to basesalary, wages, commissions, overtime, shift premiums and bonuses, plus drawsagainst commissions and excluding car allowances and any other in kindemployment related benefits; provided, however, that for purposes ofdetermining a participant’s compensation, any election by such participant toreduce his or her regular cash remuneration under Sections 125 or 401(k) of theCode shall be treated as if the participant did not make such election.  Compensation for U.K. employees shall meanall compensation, including, but not limited to base salary, wages,commissions, overtime, the substantial equivalent of U.S. “shift premiums” andbonuses, plus draws against commissions and excluding car allowances and anyother in kind employment related benefits. Payroll deductions shall commence on the first payday following theOffering Date and shall continue to the end of the Offering Period unlesssooner altered or terminated as provided in the Plan.

 

(b)  A participant may lower (but not increase)the rate of payroll deductions during an Offering Period by filing with thePayroll Department a new authorization for payroll deductions, in which casethe new rate shall become effective for the next payroll period

 

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commencing more than 15days after the Payroll Department’s receipt of the authorization and shallcontinue for the remainder of the Offering Period unless changed as describedbelow.  Such change in the rate ofpayroll deductions may be made at any time during an Offering Period, but notmore than one change may be made effective during any Offering Period.  A participant may increase or decrease therate of payroll deductions for any subsequent Offering Period by filing withthe Payroll Department a new authorization for payroll deductions not laterthan five (5) days prior to the beginning of such subsequent Offering Period.

 

(c)  All payroll deductions made for aparticipant are credited to his or her account under the Plan and are depositedwith the general funds of the Company. No interest accrues on the payroll deductions.  All payroll deductions received or held by the Company may beused by the Company for any corporate purpose, and the Company shall not beobligated to segregate such payroll deductions.

 

(d)  On each Purchase Date, so long as the Planremains in effect and provided that the participant has not submitted a signedand completed withdrawal form before that date, as set forth in Section 11below, which notifies the Company that the participant wishes to withdraw fromthat Offering Period under the Plan and have all payroll deductions accumulatedin the account maintained on behalf of the participant as of that date returnedto the participant, the Company shall apply the funds, and if applicable, asconverted into U.S. Dollars at the Conversion Rate (as defined inSection 9(g)) on the Purchase Date, then in the participant’s account tothe subscription for a whole number of ordinary shares reserved under theoption granted to such participant with respect to the Offering Period to theextent that such option is exercisable on the Purchase Date.  The purchase price per share shall be asspecified in Section 8 of the Plan. Any cash remaining in a participant’s account after such subscriptionfor ordinary shares shall be refunded to such participant in cash, withoutinterest; provided, however, that any amount remaining in such participant’saccount on a Purchase Date which is less than the amount necessary to subscribefor a single ordinary share shall be carried forward, without interest, intothe next Offering Period.  In the eventthat the Plan has been oversubscribed, all funds not used to subscribe forordinary shares on the Purchase Date shall be returned to the participant,without interest.  No ordinary sharesshall be subscribed for on a Purchase Date on behalf of any employee whoseparticipation in the Plan has terminated prior to such Purchase Date.

 

(e)  As promptly as practicable after thePurchase Date, the Company shall arrange the delivery to each participant of acertificate representing the shares issued upon exercise of his option.

 

(f)  During a participant’s lifetime, suchparticipant’s option to subscribe for shares hereunder is exercisable only byhim or her.  The participant will haveno interest or voting right in shares covered by his or her option until suchoption has been exercised.  Shares to bedelivered to a participant under the Plan will be registered in the name of theparticipant or in the name of the participant and his or her spouse.

 

(g)  “Conversion Rate” means the average currencyconversion rate quoted by the Bank of America in London for converting PoundsSterling into U.S. Dollars.

 

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**10.  LIMITATIONS ONSHARES TO BE PURCHASED**

 

(a)  No employee shall be entitled to subscribefor shares under the Plan at a rate which, when aggregated with his or herrights to subscribe for shares under all other employee stock purchase plans ofthe Company or any Subsidiary, exceeds $25,000 (or if applicable, the U.S.Dollars equivalent determined at the Conversion Rate (as defined in Section 9(g))as of the Offering Date) in fair market value, determined as of the OfferingDate (or such other limit as may be imposed by the Code) for each calendar yearin which the employee participates in the Plan.

 

(b)  No more than 200% of the number of sharesdetermined by using 85% of the fair market value of an ordinary share of theCompany on the Offering Date as the denominator may be subscribed for by aparticipant on any single Purchase Date.

 

(c)  No employee shall be entitled to subscribefor more than the Maximum Share Amount (as defined below) on any singlePurchase Date.  Not less than thirtydays prior to the commencement of any Offering Period, the Board may, in itssole discretion, set a maximum number of shares which may be subscribed for byany employee at any single Purchase Date (hereinafter the “Maximum ShareAmount”).  In no event shall theMaximum Share Amount exceed the amounts permitted under Section 10(b)above.  If a new Maximum Share Amount isset, then all participants must be notified of such Maximum Share Amount notless than fifteen days prior to the commencement of the next OfferingPeriod.  Once the Maximum Share Amountis set, it shall continue to apply with respect to all succeeding PurchaseDates and Offering Periods unless revised by the Board as set forth above.

 

(d)  If the number of shares to be subscribed foron a Purchase Date by all employees participating in the Plan exceeds thenumber of shares then available for issue under the Plan, the Company will makea pro rata allocation of the remaining shares in as uniform a manner as shallbe practicable and as the Board shall determine to be equitable.  In such event, the Company shall givewritten notice of such reduction of the number of shares to be subscribed for undera participant’s option to each participant affected thereby.

 

(e)  Any payroll deductions accumulated in aparticipant’s account which are not used to subscribe for ordinary shares dueto the limitations in this Section 10 shall be returned to the participantas soon as practicable after the end of the Offering Period, without interest.

 

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**11.  WITHDRAWAL**

 

(a)  Each participant may withdraw from anOffering Period under the Plan by signing and delivering to the PayrollDepartment notice on a form provided for such purpose.  Such withdrawal may be elected at any timeat least 15 days prior to the end of an Offering Period.

 

(b)  Upon withdrawal from the Plan, theaccumulated payroll deductions shall be returned to the withdrawn participant,without interest, and his or her interest in the Plan shall terminate.  In the event a participant voluntarilyelects to withdraw from the Plan, he or she may not resume his or herparticipation in the Plan during the same Offering Period, but he or she mayparticipate in any Offering Period under the Plan which commences on a datesubsequent to such withdrawal by filing a new authorization for payrolldeductions in the same manner as set forth in Section 6 above for initialparticipation in the Plan.

 

**12.  TERMINATION OFEMPLOYMENT**

 

Termination of aparticipant’s employment for any reason, including retirement, death or thefailure of a participant to remain an eligible employee, immediately terminateshis or her participation in the Plan. In such event, the payroll deductions credited to the participant’saccount will be returned to him or her or, in the case of his or her death, tohis or her legal representative, without interest.  For purposes of this Section 12, an employee will not bedeemed to have terminated employment or failed to remain in the continuousemploy of the Company in the case of sick leave, military leave, or any otherleave of absence approved by the Board; provided that such leave is for a periodof not more than ninety (90) days or reemployment upon the expiration of suchleave is guaranteed by contract or statute.

 

**13.  RETURN OF PAYROLLDEDUCTIONS**

 

In the event aparticipant’s interest in the Plan is terminated by withdrawal, termination ofemployment or otherwise, or in the event the Plan is terminated by the Board,the Company shall promptly deliver to the participant all payroll deductionscredited to his account.  No interestshall accrue on the payroll deductions of a participant in the Plan.

 

**14.  CAPITAL CHANGES**

 

Subject to any requiredaction by the shareholders of the Company, the number of ordinary sharescovered by each option under the Plan which has not yet been exercised and thenumber of ordinary shares which have been authorized for issue under the Planbut have not yet been placed under option (collectively, the “Reserves”),as well as the price per ordinary share covered by each option under the Planwhich has not yet been exercised, shall be proportionately adjusted for anyincrease or decrease in the number of issued ordinary shares resulting from anyconsolidation or subdivision of ordinary shares of the Company, or any bonus orother capitalization issue of ordinary shares or any other increase or decreasein the number of issued ordinary shares effected without receipt ofconsideration by the Company; provided, however, that conversion of any

 

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convertible securities ofthe Company shall not be deemed to have been “effected without receipt ofconsideration.”  Such adjustment shallbe made by the Board, whose determination shall be final, binding andconclusive.  Except as expresslyprovided herein, no issue by the Company of shares of any class, or securitiesconvertible into shares of any class, shall affect, and no adjustment by reasonthereof shall be made with respect to, the number or price of ordinary sharessubject to an option.

 

In the event of theproposed dissolution or liquidation of the Company, the Offering Period willterminate immediately prior to the consummation of such proposed action, unlessotherwise provided by the Board.  TheBoard may, in the exercise of its sole discretion in such instances, declarethat the options under the Plan shall terminate as of a date fixed by the Boardand give each participant the right to exercise his or her option as to all ofthe ordinary shares comprised in the option, including shares in respect ofwhich the option would not otherwise be exercisable.  In the event of a proposed sale of all or substantially all ofthe assets of the Company, or the sale of the entire share capital of theCompany to another corporation, (whether for consideration in cash or in theform of securities of any kind) (a “Merger”), each option under the Plan shallbe assumed or an equivalent option shall be substituted by the purchasingcorporation or a parent or subsidiary of such purchasing corporation, unlessthe Board determines, in the exercise of its sole discretion and in lieu ofsuch assumption or substitution, to shorten the Offering Period then inprogress and set a new purchase date (the “New Purchase Date”) and provide thatthe participant shall have the right to exercise the option as to all of theordinary shares comprised in the option as of the New Purchase Date.  If the Board sets a New Purchase Date andmakes an option exercisable in lieu of assumption or substitution in the eventof a Merger the Board shall notify the participant in writing, at least ten(10) days prior to the New Purchase Date, that the Purchase Date for his or heroption has changed to the New Purchase Date and that his or her option will beautomatically exercised on the New Purchase Date, unless prior to such date hoor she has withdrawn from the Offering Period as provided in Section 11.

 

For purposes of thisSection 14, an option granted under the Plan shall be deemed to beassumed, without limitation, if , at the time of issuance of the stock or otherconsideration upon a Merger, each holder of an option under the Plan would beentitled to receive upon exercise of the option the same number and kind ofshares of stock or the same amount of property, cash or securities as suchholder would have been entitled to receive upon the occurrence of thetransaction if the holder had been, immediately prior to the transaction, theholder of the number of ordinary shares covered by the option at such time(after giving effect to any adjustments in the number of ordinary sharescovered by the option as provided for in this Section 14); providedhowever that if the consideration received in the transaction is not solelyordinary shares of the successor corporation or its parent (as defined inSection 424(e) of the Code), the Board may, with the consent of thesuccessor corporation, provide for the consideration to be received uponexercise of the option to be solely ordinary shares of the successorcorporation or its parent equal in Fair Market Value to the per shareconsideration received by holders of ordinary shares in the transaction.

 

The Board may, if it sodetermines in the exercise of its sole discretion, also make provision foradjusting the Reserves, as well as the price per ordinary share comprised ineach

 

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outstanding option, inthe event that the Company effects one or more reorganizations,recapitalizations, rights offerings or other increases or reductions of sharecapital, or in the event of a merger.

 

**15.  NONASSIGNABILITY**

 

Neither payrolldeductions credited to a participant’s account nor any rights with regard tothe 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 22 hereof)by the participant.  Any such attempt atassignment, transfer, pledge or other disposition shall be without effect.

 

**16.  REPORTS**

 

Individual accounts willbe maintained for each participant in the Plan.  Each participant shall receive promptly after the end of eachOffering Period a report of his or her account setting forth the total payrolldeductions accumulated (and if applicable, the Conversion Rate (as defined inSection 9(g)) at which such participant’s payroll deductions wereconverted into U.S. Dollars), the number of shares subscribed for, the pershare price thereof and the remaining cash balance, if any, carried forward tothe next Offering Period.

 

**17.  NOTICE OFDISPOSITION**

 

Each participant shallnotify the Company if the participant disposes of any of the shares subscribedfor in any Offering Period pursuant to this Plan if such disposition occurswithin two years from the Offering Date or within one year from the PurchaseDate on which such shares were subscribed for (the “Notice Period”).  Unless such participant is disposing of anyof such shares during the Notice Period, such participant shall keep thecertificates representing such shares in his or her name (and not in the nameof a nominee) during the Notice Period. The Company may, at any time during the Notice Period, place a legend orlegends on any certificate representing shares acquired pursuant to the Planrequesting the Company’s transfer agent to notify the Company of any transferof the shares.  The obligation of theparticipant to provide such notice shall continue notwithstanding the placementof any such legend on the certificates.

 

**18.  NO RIGHTS TOCONTINUED EMPLOYMENT**

 

(a)                                  Neitherthis Plan nor the grant of any option hereunder shall confer any right on anyemployee to remain in the employ of the Company or any Subsidiary, or restrictthe right of the Company or any Subsidiary to terminate such employee’semployment.

 

(b)                                 Inthe event that any person holding an option under the Plan ceases to be employedby the Company or a Subsidiary for whatever reason, he shall have no right toany compensation in respect of the loss of his right to receive shares underthis Plan.

 

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**19.  EQUAL RIGHTS ANDPRIVILEGES**

 

All eligible employeesshall have equal rights and privileges with respect to the Plan so that thePlan qualifies as an “employee stock purchase plan” within the meaning ofSection 423 or any successor provision of the Code and the relatedregulations.  Any provision of the Planwhich is inconsistent with Section 423 or any successor provision of theCode shall, without further act or amendment by the Company or the Board, bereformed to comply with the requirements of Section 423.  This Section 19 shall take precedenceover all other provisions in the Plan.

 

**20.  NOTICES**

 

All notices or othercommunications by a participant to the Company under or in connection with thePlan shall be deemed to have been duly given when received in the formspecified by the Company at the location, or by the person, designated by theCompany for the receipt thereof.

 

**21.  TERM; SHAREHOLDERAPPROVAL**

 

This Plan shall becomeeffective at such date and time as the Registration Statement filed with theSecurities and Exchange Commission relating to the Company’s securities isdeclared effective (and then only provided that the initial public offeringlater closes).  This Plan shall beapproved by the shareholders of the Company, in any manner permitted byapplicable tax and corporate law, within twelve months before or after the datethis Plan is adopted by the Board.  Nosubscription for shares pursuant to the Plan shall occur prior to suchshareholder approval.  The Plan shallcontinue until the earlier to occur of termination by the Board (as set forthin Section 24), issue of all of the ordinary shares reserved for issueunder the Plan, or twenty (20) years from the adoption of the Plan by theBoard.

 

**22.  DESIGNATION OFBENEFICIARY**

 

(a)  A participant may file a written designationof a beneficiary who is to receive any shares and cash, if any, from theparticipant’s account under the Plan in the event of such participant’s deathsubsequent to the end of an Offering Period but prior to delivery to him ofsuch shares and cash.  In addition, aparticipant may file a written designation of a beneficiary who is to receiveany cash from the participant’s account under the Plan in the event of suchparticipant’s death prior to a Purchase Date.

 

(b)  Such designation of beneficiary may bechanged by the participant at any time by written notice.  In the event of the death of a participantand in the absence of a beneficiary validly designated under the Plan who isliving at the time of such participant’s death, the Company shall deliver suchshares or cash to the executor or administrator of the estate of theparticipant, or if no such executor or administrator has been appointed (to theknowledge of the Company), the Company, in its discretion, may deliver suchshares or cash to the spouse or to any one or more dependents or relatives ofthe participant, or if no spouse, dependent or relative is known to theCompany, then to such other person as the Company may designate.

 

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**23.  CONDITIONS UPONISSUE OF SHARES; LIMITATION ON SALE OF SHARES**

 

Shares shall not beissued with respect to an option unless the exercise of such option and theissue and delivery of such shares pursuant thereto shall comply with allapplicable provisions of law, domestic or foreign, including, withoutlimitation, the Securities Act of 1933, as amended, the Exchange Act, the rulesand regulations promulgated thereunder, and the requirements of any stockexchange upon which the shares may then be listed, and shall be further subjectto the approval of counsel for the Company with respect to such compliance.

 

**24.  AMENDMENT ORTERMINATION OF THE PLAN**

 

The Board may at any timeamend, terminate or extend the term of the Plan, except that any suchtermination cannot affect options previously granted under the Plan, nor mayany amendment make any change in an option previously granted which wouldadversely affect the right of any participant, provided that the Plan or anOffering Period may be terminated by the Board on a Purchase Date or by theBoard’s setting a new Purchase Date with respect to an Offering Period then inprogress if the Board determines that termination of the Plan and/or theOffering Period is in the best interests of the Company and its Shareholders, orif continuation of the Plan and/or the Offering Period would cause the Companyto incur adverse accounting charges as a result of a change after the effectivedate of the Plan in the generally accepted accounting rules applicable to thePlan.  Except as provided inSection 14 and in this Section 24, no amendment to the Plan shallmake any change in any option previously granted which adversely affects therights of any participant.  In addition,to the extent necessary to comply with Rule 16b-3 under the Exchange Act, orunder Section 423 of the Code (or any successor rule or provision or anyother applicable law, regulation or stock exchange rule), the Company shallobtain Shareholder approval in such a manner and to such a degree as sorequired.

 

**25.  GOVERNING LAW**

 

The Plan and allagreements, documents and instruments entered into pursuant to the Plan shallbe governed by and construed in accordance with the internal laws of the Stateof California, excluding that body of law pertaining to conflict of laws.

 

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