Exhibit 10.2


 


DEPOMED,
INC.

2004 EMPLOYEE STOCK PURCHASE PLAN


 


As Amended March 25,
2010


 


1.                                      Establishment
of Plan.


 


Depomed, Inc. (the “Company”) proposes to grant options for
purchase of the Company’s common stock (the “Common Stock”) to eligible employees of
the Company and its Participating Subsidiaries (as hereinafter defined)
pursuant to this 2004 Employee Stock Purchase Plan (this “Plan”).  For the purposes of this Plan, “Parent
Corporation” and “Subsidiary” shall have the same meanings as “parent corporation”
and “subsidiary corporation” in Sections 424(e) and 424(f), respectively,
of the Internal Revenue Code of 1986, as amended (the “Code”).  “Participating Subsidiaries” are Parent
Corporations or Subsidiaries that the Board of Directors of the Company (the “Board”) designates
from time to time as corporations that shall participate in this Plan.  The Company intends this Plan to qualify as
an “employee stock purchase plan” under Section 423 of the Code (including
any amendments to or replacements of such Section), and this Plan shall be so
construed.  Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code
shall have the same definition herein.


 


2.                                      Number of
Shares.


 


The total number of shares of Common Stock reserved
and available for issuance pursuant to this Plan shall be 1,500,000 (the “Share Limit”),
subject to adjustments effected in accordance with Section 15 of this
Plan. Shares issued under this Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares reacquired in private
transactions or open market purchases, but all shares issued under this Plan
shall be counted against the Share Limit.


 


3.                                      Purpose.


 


The purpose of this Plan is to provide eligible
employees of the Company and Participating Subsidiaries with a convenient means
of acquiring an equity interest in the Company through payroll deductions, to
enhance such employees’ sense of participation in the affairs of the Company
and Participating Subsidiaries, and to provide an incentive for continued
employment.  For the purposes of this
Plan, “employee” shall mean any individual who is an employee of the Company or
a Participating Subsidiary. Whether an individual qualifies as an employee
shall be determined by the Committee (as hereinafter defined), in its sole
discretion. The Committee shall be guided by the provisions of Treasury
Regulation Section 1.421-7 and Section 3401(c) of the Code and
the Treasury Regulations thereunder, with the intent that the Plan cover all “employees”
within the meaning of those provisions other than those who are not eligible to
participate in the Plan, provided, however, that any determinations regarding
whether an individual is an “employee” shall be prospective only, unless
otherwise determined by the Committee. Unless the Committee makes a contrary
determination, the employees of the Company shall, for all purposes of this
Plan, be those individuals who are carried as employees of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to
participate in the Plan shall be directed to the Committee, whose decision
shall be final.


 


4.                                      Administration.


 


This Plan shall be administered by the Compensation
Committee of the Board (the “Committee”). 
Subject to the provisions of this Plan and the limitations of Section 423
of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Committee
and its decisions shall be final and binding upon all participants.  Members of the Committee shall receive no
compensation for their services in connection with the administration of this
Plan, other


 

















 


than standard fees as established from time to time by
the Board for services rendered by Board members serving on Board
committees.  All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.


 


5.                                      Eligibility.


 


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


 


a)              employees who are not employed by
the Company or a Participating Subsidiary prior to the beginning of such
Offering Period or prior to such other time period as specified by the
Committee;


 


b)             employees who are customarily
employed for twenty (20) hours or less per week;


 


c)              employees who are customarily
employed for five (5) months or less in a calendar year;


 


d)             employees who, together with any
other person whose stock would be attributed to such employee pursuant to Section 424(d) of
the Code, own stock or hold options to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or any of its Participating Subsidiaries or who, as a
result of being granted an option under this Plan with respect to such Offering
Period, would own stock or hold options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any of its Participating Subsidiaries;


 


e)              individuals who provide services to
the Company or any of its Participating Subsidiaries as independent contractors
who are reclassified as common law employees for any reason except for federal
income and employment tax purposes; and


 


f)                employees who reside in countries
for whom such employees’ participation in the Plan would result in a violation
under any corporate or securities laws of such country of residence.


 


6.                                      Offering Dates.


 


The offering periods of this Plan (each, an “Offering Period”)
shall be of twenty-four (24) months duration commencing on December 1 and June 1
of each year (or at such time or times as may be determined by the
Committee).  Each Offering Period shall
consist of four (4) six month purchase periods (individually, a “Purchase Period”)
during which payroll deductions of the participants are accumulated under this
Plan.  The first business day of each
Offering Period is referred to as the “Offering Date.”  The last business day of each Purchase Period
is referred to as the “Purchase
Date.”  The Committee
shall have the power to change the Offering Dates, the Purchase Dates and the
duration of Offering Periods or Purchase Periods without shareholder approval
if such change is announced prior to the relevant Offering Period or prior to
such other time period as specified by the Committee.


 


7.                                      Participation
in this Plan.


 


Eligible employees may become participants in an
Offering Period under this Plan on the Offering Date, after satisfying the
eligibility requirements, by delivering a subscription agreement to the Company
prior to such Offering Date, or such other time period as specified by the
Committee.  An eligible employee who does
not deliver a subscription agreement to the Company after becoming eligible to
participate in an Offering Period shall not participate in that Offering Period
or any subsequent Offering Period unless such employee enrolls in this Plan by
filing a subscription agreement with the Company prior to such Offering Period,
or such other time period as specified by the Committee.  Once an employee becomes a participant


 

















 


in an Offering Period by filing a subscription
agreement, such employee shall automatically participate in the Offering Period
commencing immediately following the last day of the prior Offering Period
unless the employee withdraws or is deemed to withdraw from this Plan or
terminates further participation in the Offering Period as set forth in Section 12
below.  Such participant is not required
to file any additional subscription agreement in order to continue
participation in this Plan.


 


8.                                      Grant of Option
on Enrollment.


 


Enrollment by an eligible employee in this Plan with
respect to an Offering Period shall constitute the grant (as of the Offering
Date) by the Company to such employee of an option to purchase on the Purchase
Date up to that number of shares of Common Stock determined by a fraction, the
numerator of which is the amount accumulated in such employee’s payroll
deduction account during such Purchase Period and the denominator of which is
the lower of (i) eighty-five percent (85%) of the fair market value of a
share of Common Stock on the Offering Date (but in no event less than the par
value of a share of Common Stock), or (ii) eighty-five percent (85%) of
the fair market value of a share of Common Stock on the Purchase Date (but in
no event less than the par value of a share of Common Stock), provided,
however, that the number of shares of Common Stock subject to any option
granted pursuant to this Plan shall not exceed the lesser of (x) the
maximum number of shares set by the Committee pursuant to Section 11(c) below
with respect to the applicable Purchase Date, or (y) the maximum number of
shares which may be purchased pursuant to Section 11(b) below with
respect to the applicable Purchase Date. 
The fair market value of a share of Common Stock shall be determined as
provided in Section 9 below.


 


9.                                      Purchase Price.


 


The purchase price per share at which a share of
Common Stock shall be sold in any Offering Period shall be eighty-five percent
(85%) of the lesser of:


 


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


 


b)             the fair market value on the
Purchase Date.


 


For the purposes of this Plan, the term “fair market value”
means, as of any date, the value of a share of the Common Stock determined as
follows:


 


a)              If the Common Stock is traded on
any established stock exchange or quoted on a national market system, fair
market value shall be the closing sales price for the Common Stock as quoted on
that stock exchange or system for the date the value is to be determined (the “Value Date”) as reported by such stock exchange or national
market system, or, if not reported by such stock exchange or national market
system, as reported in The  Wall Street Journal or a similar publication.  If no sales are reported as having occurred
on the Value Date, fair market value shall be that closing sales price for the
last preceding trading day on which sales of Common Stock are reported as
having occurred.  If no sales are
reported as having occurred during the five trading days before the Value Date,
Fair Market Value shall be the closing bid for Common Stock on the Value
Date.  If the Common Stock is listed on
multiple exchanges or systems, fair market value shall be based on sales or bid
prices on the primary exchange or system on which the Common Stock is traded or
quoted;


 


b)             If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported on
any established stock exchange or quoted on a national market system, fair
market value shall be the mean between the high bid and low asked prices on the
Value Date.  If no prices are quoted for
the Value Date, fair market value shall be the mean between the high bid and
low asked prices on the last preceding trading day on which any bid and asked
prices were quoted; or


 

















 


c)              If the Common Stock is not traded
on any established stock exchange or quoted on a national market system and are
not quoted by a recognized securities dealer, the Board or Committee will
determine fair market value in good faith. 
The Board or Committee will consider the following factors, and any
others it considers significant, in determining fair market value: (i) the
price at which other securities of the Company have been issued to purchasers
other than employees, directors, or consultants, (ii) the Company’s
shareholder’s equity, prospective earning power, dividend-paying capacity, and
non-operating assets, if any, and (iii) any other relevant factors,
including the economic outlook for the Company and the Company’s industry, the
Company’s position in that industry, the Company’s goodwill and other
intellectual property, and the values of securities of other businesses in the
same industry.


 


10.                               Payment of
Purchase Price; Changes in Payroll Deductions; Issuance of Shares.


 


a)              The purchase price of the shares is
accumulated by regular payroll deductions made during each Offering
Period.  The deductions are made as a
percentage of the participant’s compensation in one percent (1%) increments,
not less than one percent (1%), nor greater than fifteen percent (15%), or such
lower limit set by the Committee. 
Compensation shall mean all regular straight-time gross earnings, and
shall not include payments for overtime, shift premium, incentive compensation
or payments, bonuses, commissions or other compensation.  Payroll deductions shall commence on the
first payday of the Offering Period and shall continue to the end of the
Offering Period unless sooner altered or terminated as provided in this Plan.


 


b)             A participant may increase or
decrease the rate of payroll deductions during an Offering Period by filing
with the Company a new authorization for payroll deductions, in which case the
new rate shall become effective for the next payroll period commencing after
the Company’s timely receipt of the authorization and shall continue for the
remainder of the Offering Period unless changed as described below.  Such change in the rate of payroll deductions
may be made at any time during an Offering Period, but not more than one (1) change
may be made effective during any Purchase Period.  A participant may increase or decrease the
rate of payroll deductions for any subsequent Offering Period by filing with
the Company a new authorization for payroll deductions prior to the beginning
of such Offering Period, or such other time period as specified by the Committee.


 


c)              A participant may reduce his or her
payroll deduction percentage to zero during an Offering Period by filing with
the Company a request for cessation of payroll deductions.  Such reduction shall be effective beginning
with the next payroll period after the Company’s timely receipt of the request
and no further payroll deductions shall be made for the duration of the
Offering Period.  Payroll deductions
credited to the participant’s account prior to the effective date of the
request shall be used to purchase shares of Common Stock of the Company in
accordance with Section (e) below. 
A participant may not resume making payroll deductions during the
Offering Period in which he or she reduced his or her payroll deductions to
zero.


 


d)             All payroll deductions made for a
participant are credited to his or her account under this Plan and are
deposited with the general funds of the Company.  No interest accrues on the payroll
deductions.  All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.


 


e)              On each Purchase Date, for so long
as this Plan remains in effect and provided that the participant has not
submitted a signed and completed withdrawal form before that date, which
notifies the Company that the participant wishes to withdraw from that Offering
Period under this Plan and have all payroll deductions accumulated in the
account


 

















 


maintained on behalf of the
participant, as of that date returned to the participant, the Company shall
apply the funds then in the participant’s account to the purchase of whole
shares of Common Stock reserved under the option granted to such participant
with respect to the Offering Period to the extent that such option is
exercisable on the Purchase Date.  The
purchase price per share shall be as specified in Section 9 of this
Plan.  Any cash remaining in a
participant’s account after such purchase of shares shall be refunded to such
participant in cash, without interest, provided, however, that any amount
remaining in such participant’s account on a Purchase Date which is less than
the amount necessary to purchase a full share of Common Stock shall be carried
forward, without interest, into the next Purchase Period or Offering Period, as
the case may be.  In the event that this
Plan has been oversubscribed, all funds not used to purchase shares on the
Purchase Date shall be returned to the participant, without interest.  No Common Stock shall be purchased on a
Purchase Date on behalf of any employee whose participation in this Plan has
terminated prior to such Purchase Date.


 


f)                As soon as practicable after the
Purchase Date, the Company shall issue shares for the participant’s benefit
representing the shares purchased upon exercise of his or her option.


 


g)             During a participant’s lifetime,
his or her option to purchase shares hereunder is exercisable only by him or
her.  The participant shall have no
interest or voting rights in shares covered by his or her option until such
option has been exercised.


 


11.                               Limitations on
Shares to be Purchased.


 


a)              No participant shall be entitled to
purchase stock under this Plan at a rate which, when aggregated with his or her
rights to purchase stock under all other employee stock purchase plans of the
Company or any Subsidiary, exceeds $25,000 in fair market value, determined as
of the Offering Date (or such other limit as may be imposed by the Code) for
each calendar year in which the employee participates in this Plan.  The Company shall automatically suspend the
payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.


 


b)             No participant shall be entitled to
purchase more than 3,000 shares of Common Stock (the “Maximum Share Amount”) on any single Purchase
Date.  Prior to the commencement of any
Offering Period or prior to such time period as specified by the Committee, the
Committee may, in its sole discretion, set a new Maximum Share Amount.  If a new Maximum Share Amount is set, then
all participants must be notified of such Maximum Share Amount prior to the
commencement of the next Offering Period. 
The Maximum Share Amount shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Committee
as set forth above.


 


c)              If the number of shares to be
purchased on a Purchase Date by all employees participating in this Plan
exceeds the number of shares then available for issuance under this Plan, then
the Company shall make a pro rata allocation of the remaining shares in as
uniform a manner as shall be reasonably practicable or as the Committee shall
determine to be equitable.  In such
event, the Company shall give written notice of such reduction of the number of
shares to be purchased under a participant’s option to each participant
affected.


 


d)             Any payroll deductions accumulated
in a participant’s account which are not used to purchase stock due to the
limitations in this Section 11 shall be returned to the participant as
soon as practicable after the end of the applicable Purchase Period, without
interest.


 

















 


12.                               Withdrawal.


 


a)              Each participant may withdraw from
an Offering Period under this Plan by signing and delivering to the Company a
written notice to that effect on a form provided for such purpose.  Such withdrawal may be elected at any time
prior to the end of an Offering Period, or such other time period as specified
by the Committee.


 


b)             Upon withdrawal from this Plan, the
accumulated payroll deductions shall be returned to the withdrawn participant,
without interest, and his or her interest in this Plan shall terminate.  In the event a participant voluntarily elects
to withdraw from this Plan, he or she may not resume his or her participation
in this Plan during the same Offering Period, but he or she may participate in
any Offering Period under this Plan which commences on a date subsequent to
such withdrawal by filing a new authorization for payroll deductions in the
same manner as set forth in Section 7 above for initial participation in
this Plan.


 


c)              If the fair market value on the
first day of the current Offering Period in which a participant is enrolled is
higher than the fair market value on the first day of any subsequent Offering
Period, the Company shall automatically enroll such participant in the
subsequent Offering Period.  Any funds accumulated
in a participant’s account prior to the first day of such subsequent Offering
Period shall be applied to the purchase of shares on the Purchase Date
immediately prior to the first day of such subsequent Offering Period, if any.


 


13.                               Termination of
Employment.


 


Termination of a participant’s employment for any
reason, including retirement, death or the failure of a participant to remain
an eligible employee of the Company or of a Participating Subsidiary, shall
immediately terminate his or her participation in this Plan.  In such event, the payroll deductions
credited to the participant’s account shall be returned to him or her or, in
the case of his or her death, to his or her legal representative, without
interest.  For purposes of this Section 13,
an employee shall not be deemed to have terminated employment or failed to
remain in the continuous employ of the Company or of a Participating Subsidiary
in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided, however that such leave is for a period of
not more than ninety (90) days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.


 


14.                               Return of
Payroll Deductions.


 


In the event a participant’s interest in this Plan is
terminated by withdrawal, termination of employment or otherwise, or in the
event this Plan is terminated by the Board, the Company shall deliver to the
participant all payroll deductions credited to such participant’s account.  No interest shall accrue on the payroll
deductions of a participant in this Plan.


 


15.                               Capital Changes.


 


a)              Subject to any required action by
the shareholders of the Company, the number and type of shares of Common Stock
covered by each option under this Plan which has not yet been exercised and the
number and type of shares of Common Stock which have been authorized for
issuance under this Plan but have not yet been placed under option
(collectively, the “Reserves”), as well as the
price per share of Common Stock covered by each option under this Plan which
has not yet been exercised, shall be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Common Stock
resulting from a stock split, stock dividend, combination or reclassification
of the Common Stock or any other increase or decrease in the number of issued
and outstanding shares of Common Stock effected without receipt of any


 

















 


consideration by the Company,
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive.  Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.


 


b)             In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.  In the event of (i) a
merger or consolidation in which the Company is not the surviving corporation
(other than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the shareholders of the
Company or their relative stock holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
shall be binding on all participants), (ii) a merger in which the Company
is the surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in
such merger) cease to own their shares or other equity interest in the Company,
(iii) the sale of all or substantially all of the assets of the Company,
or (iv) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction, each
option under this Plan shall be assumed or an equivalent option shall be
substituted by the successor corporation or a parent or subsidiary of the
successor corporation, unless the successor corporation does not agree to
assume the option or to substitute an equivalent option, in which case the
Board may determine, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Purchase Date (the “New Purchase Date”). 
If the Board shortens the Offering Period then in progress, the Board
shall notify each participant in writing, at least ten (10) days prior to
the New Purchase Date, that the Purchase Date for his or her option has been
changed to the New Purchase Date and that his or her option will be exercised
automatically on the New Purchase Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section 12.


 


c)              The Committee may, if it so
determines in the exercise of its sole discretion, also make provision for
adjusting the Reserves, as well as the price per share of Common Stock covered
by each outstanding option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock, or in the event of the
Company being consolidated with or merged into any other corporation.


 


16.                               Nonassignability.


 


Neither payroll deductions credited to a participant’s
account nor any rights with regard to the exercise of an option or to receive
shares under this Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by the laws of descent and distribution or
as provided in Section 23 below) by the participant.  Any such attempt at assignment, transfer,
pledge or other disposition shall be void and without effect.


 


17.                               Reports.


 


Individual accounts shall be maintained for each
participant in this Plan.  Each
participant shall receive, as soon as practicable after the end of each Purchase
Period, a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof


 

















 


and the remaining cash balance, if any, carried
forward to the next Purchase Period or Offering Period, as the case may be.


 


18.                               Notice of
Disposition.


 


Each participant shall notify the Company in writing
if the participant disposes of any of the shares purchased in any Offering
Period pursuant to this Plan if such disposition occurs within two (2) years
from the Offering Date or within one (1) year from the Purchase Date on
which such shares were purchased (the “Notice Period”).  The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company’s transfer agent to
notify the Company of any transfer of the shares.  The obligation of the participant to provide
such notice shall continue notwithstanding the placement of any such legend on
the certificates.


 


19.                               No Rights to
Continued Employment.


 


Neither this Plan nor the grant of any option
hereunder shall confer any right on any employee to remain in the employ of the
Company or any Participating Subsidiary, or restrict the right of the Company
or any Participating Subsidiary to terminate such employee’s employment.


 


20.                               Equal Rights
and Privileges.


 


All eligible employees shall have equal rights and
privileges with respect to this Plan so that this Plan qualifies as an “employee
stock purchase plan” within the meaning of Section 423 or any successor
provision of the Code and the related regulations.  Any provision of this Plan which is
inconsistent with Section 423 or any successor provision of the Code
shall, without further act or amendment by the Company, the Committee or the
Board, be reformed to comply with the requirements of Section 423.  This Section 20 shall take precedence
over all other provisions in this Plan.


 


21.                               Notices.


 


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


 


22.                               Term;
Shareholder Approval.


 


This Plan shall be approved by the shareholders of the
Company, in any manner permitted by applicable corporate law, within twelve
(12) months after the date this Plan is adopted by the Board.  No purchase of shares pursuant to this Plan
shall occur prior to such shareholder approval. 
This Plan shall continue until the earliest to occur of (a) termination
of this Plan by the Board (which termination may be effected by the Board at
any time), (b) issuance of all of the shares of Common Stock reserved for issuance
under this Plan, or (c) ten (10) years from the adoption of this Plan
by the Board.


 


23.                               Designation of
Beneficiary.


 


a)              A participant may file a written
designation of a beneficiary who is to receive any shares and cash, if any,
from the participant’s account under this Plan in the event of such participant’s
death subsequent to the end of a Purchase Period but prior to delivery to him
of such shares and cash.  The participant
shall deliver along with such designation a written acknowledgment of the
participant’s spouse, if any, consenting to the designation.  In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the participant’s
account under this Plan in the event of such participant’s death prior to a
Purchase Date.


 


b)             Such designation of beneficiary may
be changed by the participant at any time by written


 

















 


notice.  The participant shall deliver along with such
designation a written acknowledgment of the participant’s spouse, if any, consenting
to the designation.  In the event of the
death of a participant and in the absence of a beneficiary validly designated
under this Plan who is living at the time of such participant’s death, the
Company shall deliver such shares or cash to the executor or administrator of
the estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion,
may deliver such shares or cash to the spouse or to any one or more dependents
or relatives of the participant, or if no spouse, dependent or relative is
known to the Company, then to such other person as the Company may designate.


 


24.                               Conditions upon
Issuance of Shares.


 


Shares shall not be issued with respect to an option
unless the exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law, domestic
or foreign, including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
or automated quotation system upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.


 


25.                               Applicable Law.


 


The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of California.


 


26.                               Amendment or
Termination.


 


The Board may at any time amend, terminate or extend
the term of this Plan; provided, however, that: 
(i) any such termination cannot affect options previously granted
under this Plan; (ii) no amendment may make any change in an option
previously granted which would adversely affect the right of any participant,
nor may any amendment be made without approval of the shareholders of the
Company obtained in accordance with Section 22 above within twelve (12)
months of the adoption of such amendment if such amendment would:


 


a)              increase the number of shares that
may be issued under this Plan; or


 


b)             change the designation of the
employees (or class of employees) eligible for participation in this Plan.


 


Notwithstanding the foregoing, the Board may make such
amendments to the Plan as the Board determines to be advisable, if the
continuation of the Plan or any Offering Period would result in financial
accounting treatment for the Plan that is different from the financial
accounting treatment in effect on the date this Plan is adopted by the Board.


 


Adopted by the Board on:  March 19, 2004


Approved by the shareholders on:  May 27, 2004


Effective date of this Plan:  May 27, 2004


Amended by the Board on:  March 22, 2007 and March 25, 2010