**Exhibit10.3**

 

**ZORAN CORPORATION**

 

**AMENDED AND RESTATED**

 

**1995 EMPLOYEE STOCK PURCHASE PLAN**

 

**(As Amended Through April 21, 2002)**

 

1.             **Establishment, Purpose and Term of Plan.**

 

1.1           ***Establishment.***  The Zoran Corporation 1995 Employee StockPurchase Plan was initially established effective December 14, 1995 (the “**EffectiveDate**”), the effective date of the initial registration by theCompany of its Stock under Section 12 of the Exchange Act (the “**Initial Plan**”).  The Initial Plan was amended and restated inits entirety as the Zoran Corporation Amended and Restated 1995 Employee StockPurchase Plan (the “**Plan**”) effective as of the date ofcommencement of the first Offering under the Plan following approval of thePlan by the stockholders of the Company on June 6, 1996.

 

1.2           ***Purpose.***  The purpose of the Plan to provide EligibleEmployees of the Participating Company Group with an opportunity to acquire aproprietary interest in the Company through the purchase of Stock.  The Company intends that the Plan shallqualify as an “employee stock purchase plan” under Section 423 of the Code(including any amendments or replacements of such section), and the Plan shallbe so construed.

 

1.3           ***Term of Plan.***  The Plan shall continue in effect until theearlier of its termination by the Board or the date on which all of the sharesof Stock available for issuance under the Plan have been issued.

 

2.             **Definitions and Construction.**

 

2.1           ***Definitions.***  Any term not expressly defined in the Planbut defined for purposes of Section 423 of the Code shall have the samedefinition herein.  Whenever usedherein, the following terms shall have their respective meanings set forthbelow:

 

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

 

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

 

(c)           “**Committee**”means a committee of the Board duly appointed to administer the Plan and havingsuch powers as shall be specified by the Board.  Unless the powers of the Committee have been specificallylimited, the Committee shall have all of the powers of the Board granted herein,including, without limitation, the power to amend or

 

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terminate the Plan at any time, subject to the terms of the Plan andany applicable limitations imposed by law.

 

(d)           “**Company**”means Zoran Corporation, a Delaware corporation, or any successor corporationthereto.

 

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

 

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

 

(g)           “**Employee**”means any person treated as an employee (including an officer or a Director whois also treated as an employee) in the records of a Participating Company andfor purposes of Section 423 of the Code; provided, however, that neitherservice as a Director nor payment of a director’s fee shall be sufficient toconstitute employment for purposes of the Plan.

 

(h)           “**Exchange Act**”means the Securities Exchange Act of 1934, as amended.

 

(i)            “**Fair MarketValue**” means, as of any date, if there is then a public market forthe Stock, the closing price of a share of Stock (or the mean of the closingbid and asked prices of a share of Stock if the Stock is so reported instead)as reported on the National Association of Securities Dealers AutomatedQuotation (“**NASDAQ**”) System, the NASDAQ National Market System or suchother national or regional securities exchange or market system constitutingthe primary market for the Stock.  Ifthe relevant date does not fall on a day on which the Stock is trading onNASDAQ, the NASDAQ National Market System or other national or regionalsecurities exchange or market system, the date on which the Fair Market Valueshall be established shall be the last day on which the Stock was so tradedprior to the relevant date, or such other appropriate day as shall bedetermined by the Board, in its sole discretion.  If there is then no public market for the Stock, the Fair MarketValue on any relevant date shall be as determined by the Board without regardto any restriction other than a restriction which, by its terms, will neverlapse.  Notwithstanding the foregoing,the Fair Market Value per share of Stock on the Effective Date shall be deemedto be the public offering price set forth in the final prospectus filed withthe Securities and Exchange Commission in connection with the initial publicoffering of the Stock.

 

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

 

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

 

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(l)            “**OfferingPeriod**” means a period determined in accordance withSection 6.1.

 

(m)          “**ParentCorporation**” means any present or future “parent corporation” of theCompany, as defined in Section 424(e) of the Code.

 

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

 

(o)           “**ParticipatingCompany**” means the Company or any Parent Corporation or SubsidiaryCorporation which the Board determines should be included in the Plan.  The Board shall have the sole and absolutediscretion to determine from time to time what Parent Corporations orSubsidiary Corporations shall be Participating Companies.

 

(p)           “**ParticipatingCompany Group**” means, at any point in time, the Company and allother corporations collectively which are then Participating Companies.

 

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

 

(r)            “**PurchasePeriod**” means a period determined in accordance with Section 6.2.

 

(s)           “**PurchasePrice**” means the price at which a share of Stock may be purchasedpursuant to the Plan, as determined in accordance with Section 9.

 

(t)            “**PurchaseRight**”  means an optionpursuant to the Plan to purchase such shares of Stock as provided inSection 8 which may or may not be exercised during an OfferingPeriod.  Such option arises from theright of a Participant to withdraw such Participant’s accumulated payrolldeductions not previously applied to the purchase of Stock under the Plan (ifany) and terminate participation in the Plan or any Offering therein at anytime during an Offering Period.

 

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

 

(v)           “**SubsidiaryCorporation**” means any present or future “subsidiary corporation” ofthe Company, as defined in Section 424(f) of the Code.

 

2.2           ***Construction.***  Captions and titles contained herein are forconvenience only and shall not affect the meaning or interpretation of anyprovision of the Plan.  Except whenotherwise indicated by the context, the singular shall include the plural, theplural shall include the singular, and use of the term “or” shall include theconjunctive as well as the disjunctive.

 

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3.             **Administration.**  The Plan shall be administered by the Board,including any duly appointed Committee of the Board.  All questions of interpretation of the Plan or of any PurchaseRight shall be determined by the Board and shall be final and binding upon allpersons having an interest in the Plan or such Purchase Right.  Subject to the provisions of the Plan, theBoard shall determine all of the relevant terms and conditions of PurchaseRights granted pursuant to the Plan; provided, however, that all Participantsgranted Purchase Rights pursuant to the Plan shall have the same rights andprivileges within the meaning of Section 423(b)(5) of the Code.  All expenses incurred in connection with theadministration of the Plan shall be paid by the Company.

 

4.             **Shares Subject to Plan.**

 

4.1           ***Maximum Number of Shares Issuable.***  Subject to adjustment as provided inSection 4.2, the maximum aggregate number of shares of Stock that may beissued under the Plan shall be six hundred thousand (600,000) and shall consistof authorized but unissued or reacquired shares of the Stock, or anycombination thereof.  If an outstandingPurchase Right for any reason expires or is terminated or canceled, the sharesof Stock allocable to the unexercised portion of such Purchase Right shallagain be available for issuance under the Plan.

 

4.2           ***Adjustments for Changes in CapitalStructure.***  In the eventof 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 thepurpose of changing the Company’s domicile), sale of assets or otherreorganization in which the Company is a party, appropriate adjustments shallbe made in the number and class of shares subject to the Plan, to the OfferingShare Limit set forth in Section 8.1 and to each Purchase Right and in thePurchase Price.

 

5.             **Eligibility**.

 

5.1           ***Employees Eligible to Participate.* **Any Employee of a Participating Companyis eligible to participate in the Plan except the following:

 

(a)           Employeeswho are customarily employed by the Participating Company Group for twenty (20)hours or less per week;

 

(b)           Employeeswho are customarily employed by the Participating Company Group for not morethan five (5) months in any calendar year; and

 

(c)           Employeeswho own or hold options to purchase or who, as a result of participation in thePlan, would own or hold options to purchase, stock of the Company or of anyParent Corporation or Subsidiary Corporation possessing five percent (5%) ormore of the total combined voting power or value of all classes of stock ofsuch corporation within the meaning of Section 423(b)(3) of the Code.

 

5.2           ***Leased Employees Excluded.***  Notwithstanding anything herein to thecontrary, any individual performing services for a Participating Company solely through a

 

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leasing agency or employment agency shall not be deemed an “Employee”of such Participating Company.

 

6.             **Offerings**.

 

6.1           ***Offering Periods.***  Except as otherwise set forth below, thePlan shall be implemented by sequential Offerings of approximately twenty-four(24) months duration (an “**Offering Period**”); provided, however thatthe first Offering Period shall commence on the Effective Date and end onOctober 31, 1997 (the “**Initial Offering Period**”).  Subsequent Offerings shall commence on thefirst days of May and November of each year and end on the last days of thesecond April and October, respectively, occurring thereafter.  Notwithstanding the foregoing, the Board mayestablish a different term for one or more Offerings or different commencing orending dates for such Offerings; provided, however, that no Offering may exceeda term of twenty-seven (27) months.  AnEmployee who becomes an Eligible Employee after an Offering Period hascommenced shall not be eligible to participate in such Offering but mayparticipate in any subsequent Offering provided such Employee is still anEligible Employee as of the commencement of any such subsequent Offering.  Eligible Employees may not participate inmore than one Offering at a time.  Inthe event the first or last day of an Offering Period is not a business day,the Company shall specify the business day that will be deemed the first orlast day, as the case may be, of the Offering Period.

 

6.2           ***Purchase Periods.***  Each Offering Period shall consist of four(4) consecutive purchase periods of approximately six (6) months duration(individually, a “**Purchase****Period**”).  The Purchase Period commencing on theOffering Date of the Initial Offering Period shall end on April 30, 1996.  A Purchase Period commencing on the firstday of May shall end on the last day of the next following October.  A Purchase Period commencing on the firstday of November shall end on the last day of the next following April.  Notwithstanding the foregoing, the Board mayestablish a different term for one or more Purchase Periods or differentcommencing or ending dates for such Purchase Periods.  In the event the first or last day of a Purchase Period is not abusiness day, the Company shall specify the business day that will be deemedthe first or last day, as the case may be, of the Purchase Period.

 

6.3           ***Governmental Approval; StockholderApproval.*** Notwithstanding any other provision of the Plan to the contrary, anyPurchase 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 benecessary in order to grant any Purchase Right granted in the Plan’s InitialOffering Period; provided, however, that the exercise of any such PurchaseRight shall be subject to obtaining stockholder approval of the Plan.

 

7.             **Participationin the Plan**.

 

7.1           ***Initial Participation.***  An Eligible Employee shall become aParticipant on the first Offering Date after satisfying the eligibilityrequirements of Section 5 and delivering to the Company’s payroll officeor other office designated by the Company not later than the close of businessfor such office on the last business day before such Offering Date (the “**Subscription**

 

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**Date**”)a subscription agreement indicating the Employee’s election to participate inthe Plan and authorizing payroll deductions. An Eligible Employee who does not deliver a subscription agreement tothe Company’s payroll or other designated office on or before the SubscriptionDate shall not participate in the Plan for that Offering Period or for anysubsequent Offering Period unless such Employee subsequently enrolls in thePlan by filing a subscription agreement with the Company by the SubscriptionDate for such subsequent Offering Period. The Company may, from time to time, change the Subscription Date asdeemed advisable by the Company in its sole discretion for properadministration of the Plan.

 

7.2           ***Continued Participation.***  A Participant shall automaticallyparticipate in the Offering Period commencing immediately after the finalPurchase Date of each Offering Period in which the Participant participates untilsuch time as such Participant (a) ceases to be an Eligible Employee,(b) withdraws from the Plan pursuant to Section 13.2 or(c) terminates employment as provided in Section 14.  If a Participant automatically mayparticipate in a subsequent Offering Period pursuant to this Section 7.2,then the Participant is not required to file any additional subscriptionagreement for such subsequent Offering Period in order to continueparticipation in the Plan.  However, aParticipant may file a subscription agreement with respect to a subsequentOffering Period if the Participant desires to change any of the Participant’selections contained in the Participant’s then effective subscription agreement.

 

8.             **Right toPurchase Shares**.

 

8.1           ***Purchase Right.***  Except as set forth below, during anOffering Period each Participant in such Offering Period shall have a PurchaseRight consisting of the right to purchase that number of whole shares of Stockarrived at by dividing Fifty Thousand Dollars ($50,000) by the Fair MarketValue of a share of Stock on the Offering Date of such Offering Period;provided, however, that such number shall not exceed 5,000 shares (the “**OfferingShare Limit**”).  Shares ofStock may only be purchased through a Participant’s payroll deductions pursuantto Section 10.

 

8.2           ***Pro Rata Adjustment of PurchaseRight.***  Notwithstandingthe foregoing, if the Board shall establish an Offering Period of less thantwenty-three and one-half (231⁄2) months in duration or more than twenty-four andone-half (241⁄2) months in duration, (a) the dollar amount inSection 8.1 shall be determined by multiplying $2,083.33 by the number ofmonths in the Offering Period and rounding to the nearest whole dollar, and(b) the Offering Share Limit shall be determined by multiplying 208.33shares by the number of months in the Offering Period and rounding to thenearest whole share.  For purposes ofthe preceding sentence, fractional months shall be rounded to the nearest wholemonth.

 

# 9.             **Purchase Price.**  The Purchase Price at which each share ofStock may be acquired in a given Offering Period pursuant to the exercise ofall or any portion of a Purchase Right granted under the Plan shall be set bythe Board; provided, however, that the Purchase Price shall not be less thaneighty-five percent (85%) of the lesser of (a) the Fair Market Value of ashare of Stock on the Offering Date of the Offering Period, or (b) theFair Market Value of a share of Stock on the Purchase Date of the OfferingPeriod.  Unless otherwise provided bythe Board prior to the commencement of an Offering Period, the Purchase Pricefor that Offering Period shall be eighty-five percent (85%) of the lesser of(a) the Fair Market Value of a share of

 

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Stock on the Offering Date of the Offering Period, or (b) the FairMarket Value of a share of Stock on the Purchase Date of the Offering Period.

 

# 10.           **Accumulation of Purchase Pricethrough Payroll Deduction.** Shares of Stock which are acquired pursuant to the exercise of all orany portion of a Purchase Right for an Offering Period may be paid for only bymeans of payroll deductions from the Participant’s Compensation accumulatedduring the Offering Period.  Except asset forth below, the amount of Compensation to be deducted from a Participant’sCompensation during each pay period shall be determined by the Participant’ssubscription agreement.

 

10.1         ***Commencement of Payroll Deductions.***  Payroll deductions shall commence on thefirst payday following the Offering Date and shall continue to the end of theOffering Period unless sooner altered or terminated as provided in the Plan.

 

10.2         ***Limitations on Payroll Deductions.***  The amount of payroll deductions withrespect to the Plan for any Participant during any pay period shall be in onepercent (1%) increments not to exceed ten percent (10%) of the Participant’sCompensation for such pay period. Notwithstanding the foregoing, the Board may change the limits onpayroll deductions effective as of a future Offering Date, as determined by theBoard.  Amounts deducted fromCompensation shall be reduced by any amounts contributed by the Participant andapplied to the purchase of Company stock pursuant to any other employee stockpurchase plan qualifying under Section 423 of the Code.

 

10.3         ***Election to Change or Stop PayrollDeductions.***  During anOffering Period, a Participant may elect to increase or decrease the amountdeducted or stop deductions from his or her Compensation by filing an amendedsubscription agreement with the Company on or before the “Change NoticeDate.”  The “**Change Notice Date**” shallinitially be the seventh (7th) day prior to the end of the first pay period forwhich such election is to be effective; however, the Company may change suchChange Notice Date from time to time.  AParticipant who elects to decrease the rate of his or her payroll deductions tozero percent (0%) shall nevertheless remain a Participant in the currentOffering Period unless such Participant subsequently withdraws from theOffering or the Plan as provided in Sections 13.1 and 13.2, respectively,or is automatically withdrawn from the Offering as provided inSection 13.4.

 

10.4         ***Participant Accounts.***  Individual Plan accounts shall be maintainedfor each Participant.  All payrolldeductions from a Participant’s Compensation shall be credited to such accountand shall be deposited with the general funds of the Company.  All payroll deductions received or held bythe Company may be used by the Company for any corporate purpose.

 

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

 

10.6         ***Company Established Procedures.***  The Company may, from time to time,establish or change (a) a minimum required payroll deduction amount for participationin an Offering, (a) limitations on the frequency or number of changes inthe rate of payroll deduction during an Offering, (c) an exchange ratioapplicable to amounts withheld in a currency

 

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other than U.S. dollars, (d) payroll deduction in excess of orless than the amount designated by a Participant in order to adjust for delaysor mistakes in the Company’s processing of subscription agreements,(e) the date(s) and manner by which the Fair Market Value of a share ofStock is determined for purposes of administration of the Plan, or(vi) such other limitations or procedures as deemed advisable by theCompany in the Company’s sole discretion which are consistent with the Plan andin accordance with the requirements of Section 423 of the Code.

 

11.           **Purchase of Shares.**

 

11.1         ***Exercise of Purchase Right.***  On each Purchase Date of an Offering Period,each Participant who has not withdrawn from the Offering or whose participationin the Offering has not terminated on or before such Purchase Date shallautomatically acquire pursuant to the exercise of the Participant’s PurchaseRight the number of whole shares of Stock arrived at by dividing the totalamount of the Participant’s accumulated payroll deductions for the PurchasePeriod by the Purchase Price; provided, however, in no event shall the numberof shares purchased by the Participant during an Offering Period exceed thenumber of shares subject to the Participant’s Purchase Right.  No shares of Stock shall be purchased on aPurchase Date on behalf of a Participant whose participation in the Offering orthe Plan has terminated on or before such Purchase Date.

 

11.2         ***Return of Cash Balance.***  Any cash balance remaining in theParticipant’s Plan account shall be refunded to the Participant as soon aspracticable after the Purchase Date.  Inthe event the cash to be returned to a Participant pursuant to the precedingsentence is an amount less than the amount necessary to purchase a whole shareof Stock, the Company may establish procedures whereby such cash is maintainedin the Participant’s Plan account and applied toward the purchase of shares ofStock in the subsequent Purchase Period or Offering Period.

 

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

 

11.4         ***Expiration of Purchase Right.***  Any portion of a Participant’s PurchaseRight remaining unexercised after the end of the Offering Period to which suchPurchase Right relates shall expire immediately upon the end of such OfferingPeriod.

 

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12.           **Limitationson Purchase of Shares; Rights as a Stockholder**.

 

12.1         ***Fair Market Value Limitation.***  Notwithstanding any other provision of thePlan, no Participant shall be entitled to purchase shares of Stock under thePlan (or any other employee stock purchase plan which is intended to meet therequirements of Section 423 of the Code sponsored by the Company or aParent Corporation or Subsidiary Corporation) at a rate which exceeds $25,000in Fair Market Value, which Fair Market Value is determined for sharespurchased during a given Offering Period as of the Offering Date for suchOffering Period (or such other limit as may be imposed by the Code), for eachcalendar year in which the Participant participates in the Plan (or any otheremployee stock purchase plan described in this sentence).

 

12.2         ***Pro Rata Allocation.***  In the event the number of shares of Stockwhich might be purchased by all Participants in the Plan exceeds the number ofshares of Stock available in the Plan, the Company shall make a pro rataallocation of the remaining shares in as uniform a manner as shall bepracticable and as the Company shall determine to be equitable.

 

12.3         ***Rights as a Stockholder andEmployee.***  A Participantshall have no rights as a stockholder by virtue of the Participant’sparticipation in the Plan until the date of the issuance of a stock certificatefor the shares of Stock being purchased pursuant to the exercise of theParticipant’s Purchase Right.  Noadjustment shall be made for cash dividends or distributions or other rightsfor which the record date is prior to the date such stock certificate is issued.  Nothing herein shall confer upon aParticipant any right to continue in the employ of the Participating CompanyGroup or interfere in any way with any right of the Participating Company Groupto terminate the Participant’s employment at any time.

 

13.           **Withdrawal**.

 

13.1         ***Withdrawal From an Offering.***  A Participant may withdraw from an Offeringby signing and delivering to the Company’s payroll or other designated office awritten notice of withdrawal on a form provided by the Company for suchpurpose.  Such withdrawal may be electedat any time prior to the end of an Offering Period; provided, however, if aParticipant withdraws after a Purchase Date, the withdrawal shall not affectshares of Stock acquired by the Participant on such Purchase Date.  Unless otherwise indicated, withdrawal froman Offering shall not result in a withdrawal from the Plan or any succeedingOffering therein.  By withdrawing froman Offering effective as of the close of a given Purchase Date, a Participantmay have shares of Stock purchased on such Purchase Date and immediatelycommence participation in the new Offering commencing immediately after suchPurchase Date.  A Participant isprohibited from again participating in an Offering at any time followingwithdrawal from such Offering.  TheCompany may impose, from time to time, a requirement that the notice ofwithdrawal be on file with the Company’s payroll office or other designatedoffice for a reasonable period prior to the effectiveness of the Participant’swithdrawal from an Offering.

 

13.2         ***Withdrawal from the Plan.***  A Participant may withdraw from the Plan bysigning and delivering to the Company’s payroll office or other designatedoffice a written notice of withdrawal on a form provided by the Company forsuch purpose.  Withdrawals made after aPurchase Date shall not affect shares of Stock acquired by the Participant onsuch Purchase Date.

 

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In the event a Participant voluntarily elects to withdraw from thePlan, the Participant may not resume participation in the Plan during the sameOffering Period, but may participate in any subsequent Offering under the Planby again satisfying the requirements of Sections 5 and 7.1.  The Company may impose, from time to time, arequirement that the notice of withdrawal be on file with the Company’s payrolloffice or other designated office for a reasonable period prior to theeffectiveness of the Participant’s withdrawal from the Plan.

 

13.3         ***Return of Payroll Deductions.***  Upon a Participant’s withdrawal from anOffering or the Plan pursuant to Sections 13.1 or 13.2, respectively, theParticipant’s accumulated payroll deductions which have not been applied towardthe purchase of shares of Stock shall be returned as soon as practicable afterthe withdrawal, without the payment of any interest, to the Participant, andthe Participant’s interest in the Offering or the Plan, as applicable, shallterminate.  Such accumulated payrolldeductions may not be applied to any other Offering under the Plan.

 

13.4         ***Automatic Withdrawal From anOffering.***  If the FairMarket Value of a share of Stock on a Purchase Date of an Offering (other thanthe final Purchase Date of such Offering) is less than the Fair Market Value ofa share of Stock on the Offering Date for such Offering, then every Participantshall automatically (a) be withdrawn from such Offering at the close ofsuch Purchase Date and after the acquisition of shares of Stock for suchPurchase Period and (b) be enrolled in the Offering commencing on thefirst business day subsequent to such Purchase Period.  A Participant may elect not to beautomatically withdrawn from an Offering Period pursuant to thisSection 13.4 by delivering to the Company not later than the close ofbusiness on the last day before the Purchase Date a written notice indicatingsuch election.

 

13.5         ***Waiver of Withdrawal Right.***  The Company may, from time to time,establish a procedure pursuant to which a Participant may elect, at least six(6) months prior to a Purchase Date, to have all payroll deductions accumulatedin his or her Plan account as of such Purchase Date applied to purchase sharesof Stock under the Plan, and (a) to waive his or her right to withdrawfrom the Offering or the Plan and (b) to waive his or her right toincrease, decrease, or cease payroll deductions under the Plan from his or herCompensation during the Purchase Period ending on such Purchase Date.  Such election shall be made in writing on aform provided by the Company for such purpose and must be delivered to theCompany not later than the close of business on the day preceding the datewhich is six (6) months before the Purchase Date for which such election is tofirst be effective.

 

14.           **Terminationof Employment or Eligibility.** Termination of a Participant’s employment with the Company for anyreason, including retirement, disability or death or the failure of aParticipant to remain an Eligible Employee, shall terminate the Participant’sparticipation in the Plan immediately. In such event, the payroll deductions credited to the Participant’s Planaccount since the last Purchase Date shall, as soon as practicable, be returnedto the Participant or, in the case of the Participant’s death, to theParticipant’s legal representative, and all of the Participant’s rights underthe Plan shall terminate.  Interestshall not be paid on sums returned to a Participant pursuant to thisSection 14.  A Participant whoseparticipation has been so terminated may again become eligible to participatein the Plan by again satisfying the requirements of Sections 5 and 7.1.

 

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15.           **Transferof Control**.

 

15.1         ***Definitions***.

 

(a)           An“**OwnershipChange Event**” shall be deemed to have occurred if any of thefollowing occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or seriesof related transactions by the stockholders of the Company of more than fiftypercent (50%) of the voting stock of the Company; (ii) a merger orconsolidation in which the Company a party; (iii) the sale, exchange, ortransfer of all or substantially all of the assets of the Company; or(iv) a liquidation or dissolution of the Company.

 

(b)           A“**Transferof Control**” shall mean an Ownership Change Event or a series ofrelated Ownership Change Events (collectively, the “**Transaction**”) wherein the stockholders of the Companyimmediately before the Transaction do not retain immediately after theTransaction, in substantially the same proportions as their ownership of sharesof the Company’s voting stock immediately before the Transaction, direct orindirect beneficial ownership of more than fifty percent (50%) of the totalcombined voting power of the outstanding voting stock of the Company or thecorporation or corporations to which the assets of the Company were transferred(the “**TransfereeCorporation(s)**”), as the case may be.  For purposes of the preceding sentence, indirect beneficialownership shall include, without limitation, an interest resulting fromownership of the voting stock of one or more corporations which, as a result ofthe Transaction, own the Company or the Transferee Corporation(s), as the casemay be, either directly or through one or more subsidiary corporations.  The Board shall have the right to determinewhether multiple sales or exchanges of the voting stock of the Company ormultiple Ownership Change Events are related, and its determination shall befinal, binding and conclusive.

 

15.2         ***Effect of Transfer of Control onPurchase Rights.***  In theevent of a Transfer of Control, the surviving, continuing, successor, orpurchasing corporation or parent corporation thereof, as the case may be (the **“AcquiringCorporation”**), may assume the Company’s rights and obligations underthe Plan or substitute substantially equivalent Purchase Rights for stock ofthe Acquiring Corporation.  If theAcquiring Corporation elects not to assume or substitute for the outstandingPurchase Rights, the Board may, in its sole discretion and notwithstanding anyother provision herein to the contrary, adjust the Purchase Date of the thencurrent Purchase Period to a date on or before the date of the Transfer ofControl, but shall not adjust the number of shares of Stock subject to anyPurchase Right.  All Purchase Rightswhich are neither assumed or substituted for by the Acquiring Corporation inconnection with the Transfer of Control nor exercised as of the date of theTransfer of Control shall terminate and cease to be outstanding effective as ofthe date of the Transfer of Control. Notwithstanding the foregoing, if the corporation the stock of which issubject to the outstanding Purchase Rights immediately prior to an OwnershipChange Event described in Section 15.1(a)(i) constituting a Transfer of Controlis the surviving or continuing corporation and immediately after such OwnershipChange Event less than fifty percent (50%) of the total combined voting powerof its voting stock is held by another corporation or by other corporationsthat are members of an affiliated group within the meaning of Section 1504(a) ofthe Code without regard to the provisions of Section 1504(b) of the Code, theoutstanding Purchase Rights shall not terminate unless the Board otherwiseprovides in its sole discretion.

 

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16.           **Nontransferabilityof Purchase Rights.**  APurchase Right may not be transferred in any manner otherwise than by will orthe laws of descent and distribution and shall be exercisable during thelifetime of the Participant only by the Participant.  The Company, in its absolute discretion, may impose suchrestrictions on the transferability of the shares purchasable upon the exerciseof a Purchase Right as it deems appropriate and any such restriction shall beset forth in the respective subscription agreement and may be referred to onthe certificates evidencing such shares.

 

17.           **Reports.**  Each Participant who exercised all or partof his or her Purchase Right for a Purchase Period shall receive, as soon aspracticable after the Purchase Date of such Purchase Period, a report of suchParticipant’s Plan account setting forth the total payroll deductionsaccumulated, the number of shares of Stock purchased, the Purchase Price forsuch shares, the date of purchase and the remaining cash balance to be refundedor retained in the Participant’s Plan account pursuant to Section 11.2, ifany.  Each Participant shall be providedinformation concerning the Company equivalent to that information generallymade available to the Company’s common stockholders.

 

18.           **Restrictionon Issuance of Shares.** The issuance of shares under the Plan shall be subject to compliancewith all applicable requirements of foreign, federal or state law with respectto such securities.  A Purchase Rightmay not be exercised if the issuance of shares upon such exercise wouldconstitute a violation of any applicable foreign, federal or state securitieslaws or other law or regulations.  Inaddition, no Purchase Right may be exercised unless (a) a registrationstatement under the Securities Act of 1933, as amended, shall at the time ofexercise of the Purchase Right be in effect with respect to the shares issuableupon exercise of the Purchase Right, or (b) in the opinion of legalcounsel to the Company, the shares issuable upon exercise of the Purchase Rightmay be issued in accordance with the terms of an applicable exemption from theregistration requirements of said Act. The inability of the Company to obtain from any regulatory body havingjurisdiction the authority, if any, deemed by the Company’s legal counsel to benecessary to the lawful issuance and sale of any shares under the Plan shallrelieve the Company of any liability in respect of the failure to issue or sellsuch shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of a PurchaseRight, the Company may require the Participant to satisfy any qualificationsthat may be necessary or appropriate, to evidence compliance with anyapplicable law or regulation, and to make any representation or warranty withrespect thereto as may be requested by the Company.

 

19.           **Legends.**  The Company may at any time place legends orother identifying symbols referencing any applicable foreign, federal or statesecurities law restrictions or any provision convenient in the administrationof the Plan on some or all of the certificates representing shares of Stockissued under the Plan.  The Participantshall, at the request of the Company, promptly present to the Company any andall certificates representing shares acquired pursuant to a Purchase Right inthe possession of the Participant in order to carry out the provisions of thisSection.  Unless otherwise specified bythe Company, legends placed on such certificates may include but shall not belimited to the following:

 

“THE SHARESEVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTEREDHOLDER UPON

 

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THE PURCHASE OF SHARESUNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNALREVENUE CODE OF 1986, AS AMENDED.  THETRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATIONIMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF MADEON OR BEFORE               ,19   .  THE REGISTEREDHOLDER 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.”

 

20.           **Notificationof Sale of Shares.**  TheCompany may require the Participant to give the Company prompt notice of anydisposition of shares acquired by exercise of a Purchase Right within two yearsfrom the date of granting such Purchase Right or one year from the date ofexercise of such Purchase Right.  TheCompany may require that until such time as a Participant disposes of sharesacquired upon exercise of a Purchase Right, the Participant shall hold all suchshares in the Participant’s name (and not in the name of any nominee) until thelapse of the time periods with respect to such Purchase Right referred to in thepreceding sentence.  The Company maydirect that the certificates evidencing shares acquired by exercise of aPurchase Right refer to such requirement to give prompt notice of disposition.

 

21.           **Amendmentor Termination of the Plan.** The Board may at any time amend or terminate the Plan, except that(a) such termination shall not affect Purchase Rights previously grantedunder the Plan, except as permitted under the Plan, and (b) no amendmentmay adversely affect a Purchase Right previously granted under the Plan (exceptto the extent permitted by the Plan or as may be necessary to qualify the Planas an employee stock purchase plan pursuant to Section 423 of the Code orto obtain qualification or registration of the shares of Stock under applicableforeign, federal or state securities laws). In addition, an amendment to the Plan must be approved by thestockholders of the Company within twelve (12) months of the adoption of suchamendment if such amendment would authorize the sale of more shares than are authorizedfor issuance under the Plan or would change the definition of the corporationsthat may be designated by the Board as Participating Companies.

 

# 22.           **Continuation of Initial Plan as toOutstanding Purchase Rights.** Any other provision of the Plan to the contrary notwithstanding, theterms of the Initial Plan shall remain in effect and apply to all PurchaseRights granted pursuant to the Initial Plan.

 

IN WITNESS WHEREOF, the undersigned Secretary of theCompany certifies that the foregoing sets forth the Zoran Corporation Amendedand Restated 1995 Employee Stock Purchase Plan as duly adopted by the Board ofDirectors of the Company on January 24, 1996 and amended through April 21,2002.

 

 
|   |   |      |
|--------|--------|-----------|
|   |   | Secretary |

 

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