Unassociated Document


    Exhibit
4.1

     

    
 

    TRANSWITCH
CORPORATION

    


     

    2005
EMPLOYEE STOCK PURCHASE PLAN

     

     

    [As
amended through May, 2010]

     

     

    


     

    Article 1 —
Purpose.

     

    This 2005
Employee Stock Purchase Plan (the “Plan”) is intended to encourage stock
ownership by all Eligible Employees (as defined in Article 3) of TranSwitch
Corporation (the “Company”), a Delaware corporation, and its participating
subsidiaries (as defined in Article 17) so that they may share in the growth of
the Company by acquiring or increasing their proprietary interest in the
Company. The Plan is designed to encourage Eligible Employees to remain in the
employ of the Company and its participating subsidiaries. The Plan is intended
to constitute an “employee stock purchase plan” within the meaning of Section
423(b) of the Internal Revenue Code of 1986, as amended (the
“Code”).

     

    Article 2 — Administration of the
Plan.

     

    The Plan
may be administered by a committee appointed by the Board of Directors of the
Company (the “Committee”). The Committee shall consist of not less than two
members of the Company’s Board of Directors. The Board of Directors may from
time to time remove members from, or add members to, the Committee. Vacancies on
the Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee may select one of its members as Chairman, and shall hold meetings at
such times and places as it may determine. Acts by a majority of the Committee,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.

     

    The
interpretation and construction by the Committee of any provisions of the Plan
or of any option granted under it shall be final, unless otherwise determined by
the Board of Directors. The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem best, provided that any
such rules and regulations shall be applied on a uniform basis to all employees
under the Plan. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under it.

     

    In the
event the Board of Directors fails to appoint or refrains from appointing a
Committee, the Board of Directors shall have all power and authority to
administer the Plan. In such event, the word “Committee” wherever used herein
shall be deemed to mean the Board of Directors.

     

    Article 3 —Eligible
Employees.

     

    All
employees of the Company or any of its participating subsidiaries whose
customary employment is more than 20 hours per week and for more than five
months in any calendar year and who have completed at least six (6) months of
employment (each an “Eligible Employee”) shall be eligible to receive options
under the Plan to purchase common stock of the Company, and all Eligible
Employees shall have the same rights and privileges hereunder. Persons who are
Eligible Employees on the first business day of any Payment Period (as defined
in Article 5) shall receive their options as of such day. Persons who become
Eligible Employees after any date on which options are granted under the Plan
shall be granted options on the first day of the next succeeding Payment Period
on which options are granted to Eligible Employees under the Plan. In no event,
however, may an employee be granted an option if such employee, immediately
after the option was granted, would be treated as owning stock possessing five
percent or more of the total combined voting power or value of all classes of
stock of the Company or of any parent corporation or subsidiary corporation, as
the terms “parent corporation” and “subsidiary corporation” are defined in
Section 424(e) and (f) of the Code. For purposes of determining stock ownership
under this paragraph, the stock attribution rules of Section 424(d) of the Code
shall apply, and stock which the employee may purchase under outstanding options
shall be treated as stock owned by the employee.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article 4 — Stock Subject to the
Plan.

     

    The stock
subject to the options under the Plan shall be shares of the Company’s
authorized but unissued common stock, par value $.001 per share (the “Common
Stock”), or shares of Common Stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares which may be issued
pursuant to the Plan is 125,000, subject to adjustment as provided in Article
12. If any option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject thereto shall
again be available under the Plan.

     

    Article 5 — Payment Period and Stock
Options.

     

    The first
Payment Period during which Eligible Employee’s payroll deductions will be
accumulated under the Plan shall commence on July 1, 2005 and shall end on
December 31, 2005. For the remainder of the duration of the Plan, Payment
Periods shall consist of the six-month periods commencing on January 1 and
ending on June 30 and commencing on July 1 and ending on December 31 of each
calendar year.

     

    Twice
each year, on the first business day of each Payment Period, the Company will
grant to each Eligible Employee who is then a participant in the Plan an option
to purchase on the last day of such Payment Period, at the Option Price
hereinafter provided for, a maximum of 2,500 shares, on condition that such
employee remains eligible to participate in the Plan throughout the remainder of
such Payment Period. The participant shall be entitled to exercise the option so
granted only to the extent of the participant’s accumulated payroll deductions
on the last day of such Payment Period. If the participant’s accumulated payroll
deductions on the last day of the Payment Period would enable the participant to
purchase more than 2,500 shares except for the 2,500-share limitation, the
excess of the amount of the accumulated payroll deductions over the aggregate
purchase price of the 2,500 shares shall be promptly refunded to the participant
by the Company. In no event will interest accrue on payroll deductions or any
amount refunded to the participant. The Option Price per share for each Payment
Period shall be the lesser of (i) 85% of the average market price of the Common
Stock on the first business day of the Payment Period and (ii) 85% of the
average market price of the Common Stock on the last business day of the Payment
Period, in either event rounded up to avoid fractions of a dollar other than
1/4, 1/2 and 3/4. The foregoing limitation on the number of shares subject to
option and the Option Price shall be subject to adjustment as provided in
Article 12.

     

    For
purposes of the Plan, the term “average market price” on any date means (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq Stock
Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the average of the closing bid and asked prices last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the Nasdaq Stock Market; or
(iv) if the Common Stock is not publicly traded, the fair market value of the
Common Stock as determined by the Committee after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm’s
length.

     

    For
purposes of the Plan, the term “business day” means a day on which there is
trading on the Nasdaq Stock Market or the aforementioned national securities
exchange, whichever is applicable pursuant to the preceding paragraph; and if
neither is applicable, a day that is not a Saturday, Sunday or legal holiday in
the State of Connecticut.

     

    No
employee shall be granted an option which permits the employee’s right to
purchase stock under the Plan, and under all other Section 423(b) employee stock
purchase plans of the Company and any parent or subsidiary corporations, to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined on the date or dates that options on such stock were granted) for
each calendar year in which such option is outstanding at any time. The purpose
of the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code. If the participant’s accumulated payroll deductions on the last day
of the Payment Period would otherwise enable the participant to purchase Common
Stock in excess of the Section 423(b)(8) limitation described in this paragraph,
the excess of the amount of the accumulated payroll deductions over the
aggregate purchase price of the shares actually purchased shall be promptly
refunded to the participant by the Company, without interest.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article 6 — Exercise of
Option.

     

    Each
Eligible Employee who continues to be a participant in the Plan on the last day
of a Payment Period shall be deemed to have exercised his or her option on such
date and shall be deemed to have purchased from the Company such number of full
shares of Common Stock reserved for the purpose of the Plan as the participant’s
accumulated payroll deductions on such date will pay for at the Option Price,
subject to the 2,500-share limit of the option and the Section 423(b)(8)
limitation described in Article 5. If the individual is not a participant on the
last day of a Payment Period, then he or she shall not be entitled to exercise
his or her option. Only full shares of Common Stock may be purchased under the
Plan. Unused payroll deductions remaining in a participant’s account at the end
of a Payment Period by reason of the inability to purchase a fractional share
shall be promptly refunded to the participant by the Company without
interest.

     

    Article 7 — Authorization for
Entering the Plan.

     

    An
Eligible Employee may elect to enter the Plan by filling out, signing and
delivering, in manual or electronic format, to the Company an
authorization:

     

    A.  Stating
the whole percentage to be deducted regularly from the employee’s
pay;

     

    B.  Authorizing
the purchase of stock for the employee in each Payment Period in accordance with
the terms of the Plan; and

     

    C.  Specifying
the exact name or names in which stock purchased for the employee is to be
issued as provided under Article 11 hereof.

     

    Such
authorization must be received by the Company at least ten days before the first
day of the next succeeding Payment Period and shall take effect only if the
employee is an Eligible Employee on the first business day of such Payment
Period.

     

    Unless a
participant files a new authorization or withdraws from the Plan, the deductions
and purchases under the authorization the participant has on file under the Plan
will continue from one Payment Period to succeeding Payment Periods as long as
the Plan remains in effect.

     

    The
Company will accumulate and hold for each participant’s account the amounts
deducted from his or her pay. No interest will be paid on these
amounts.

     

    Article 8 — Maximum Amount of
Payroll Deductions.

     

    An
employee may authorize payroll deductions in an amount (expressed as a whole
percentage) not less than one percent (1%) but not more than five percent (5%)
of the employee’s total cash compensation, including base pay or salary and any
overtime, or commissions. Total cash compensation will exclude bonus payments or
other incentive compensation as determined in the Company’s sole
discretion.

     

    Article 9 — Change in Payroll
Deductions.

     

    Deductions
may not be increased or decreased during a Payment Period. However, a
participant may withdraw in full from the Plan.

    


    Article 10 — Withdrawal from the
Plan.

     

    An
employee may withdraw from the Plan (in whole but not in part) at any time by
delivering a withdrawal notice to the Company no later than ten business days
prior to the last day of the Payment Period, in which case the Company will
promptly refund the entire balance of the employee’s deductions not previously
used to purchase stock under the Plan.

     

    To
re-enter the Plan, an Eligible Employee who has previously withdrawn must file a
new authorization at least ten business days before the first day of the next
Payment Period in which he or she wishes to participate. The Eligible Employee’s
re-entry into the Plan becomes effective at the beginning of such Payment
Period, provided that he or she is an Eligible Employee on the first business
day of the Payment Period.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article 11 — Issuance of
Stock.

     

    Certificates
for stock issued to participants shall be delivered or electronic transfer will
be effected as soon as practicable after each Payment Period by the Company’s
transfer agent.

     

    Stock
purchased under the Plan shall be issued only in the name of the participant, or
if the participant’s authorization so specifies, in the name of the participant
and another person of legal age as joint tenants with rights of
survivorship.

     

    Article 12 —
Adjustments.

     

    Upon the
happening of any of the following described events, a participant’s rights under
options granted under the Plan shall be adjusted as hereinafter
provided:

     

    A.  In
the event that the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if, upon a reorganization, split-up,
liquidation, recapitalization or the like of the Company, the shares of Common
Stock shall be exchanged for other securities of the Company, each participant
shall be entitled, subject to the conditions herein stated, to purchase such
number of shares of Common Stock or amount of other securities of the Company as
were exchangeable for the number of shares of Common Stock that such participant
would have been entitled to purchase except for such action, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or exchange; and

     

    B.  In
the event the Company shall issue any of its shares as a stock dividend upon or
with respect to the shares of stock of the class which shall at the time be
subject to option hereunder, each participant upon exercising such an option
shall be entitled to receive (for the purchase price paid upon such exercise)
the shares as to which the participant is exercising his or her option and, in
addition thereto (at no additional cost), such number of shares of the class or
classes in which such stock dividend or dividends were declared or paid, and
such amount of cash in lieu of fractional shares, as is equal to the number of
shares thereof and the amount of cash in lieu of fractional shares,
respectively, which the participant would have received if the participant had
been the holder of the shares as to which the participant is exercising his or
her option at all times between the date of the granting of such option and the
date of its exercise.

     

    Upon the
happening of any of the foregoing events, the class and aggregate number of
shares set forth in Article 4 hereof which are subject to options which have
been or may be granted under the Plan and the limitations set forth in the
second paragraph of Article 5 shall also be appropriately adjusted to reflect
the events specified in paragraphs A. and B. above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A. or B. shall be made
only after the Committee, based on advice of counsel for the Company, determines
whether such adjustments would constitute a “modification” (as that term is
defined in Section 424 of the Code and other interpretative guidance from the
Internal Revenue Service). If the Committee determines that such adjustments
would constitute a modification, it may refrain from making such
adjustments.

     

    If the
Company is to be consolidated with or acquired by another entity in a merger, a
sale of all or substantially all of the Company’s assets or otherwise (an “Acquisition”), the Committee
or the board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor
Board”) shall, with respect to options then outstanding under the Plan,
either (i) make appropriate provision for the continuation of such options by
arranging for the substitution on an equitable basis for the shares then subject
to such options either (a) the consideration payable with respect to the
outstanding shares of the Common Stock in connection with the Acquisition, (b)
shares of stock of the successor corporation, or a parent or subsidiary of such
corporation, or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed the fair
market value of the shares of Common Stock subject to such options immediately
preceding the Acquisition; or (ii) terminate each participant’s options in
exchange for a cash payment equal to the excess of (a) the fair market value on
the date of the Acquisition, of the number of shares of Common Stock that the
participant’s accumulated payroll deductions as of the date of the Acquisition
could purchase, at an option price determined with reference only to the first
business day of the applicable Payment Period and subject to the 2,500 share
limit, Code Section 423(b)(8) and fractional-share limitations on the amount of
stock a participant would be entitled to purchase, over (b) the result of
multiplying such number of shares by such option price.

     

    The
Committee or Successor Board shall determine the adjustments to be made under
this Article 12, and its determination shall be conclusive.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article 13 — No Transfer or
Assignment of Employee’s Rights.

     

    An
employee’s rights under the Plan are the employee’s alone and may not be
transferred or assigned to, or availed of by, any other person other than by
will or the laws of descent and distribution. Any option granted under the Plan
to an employee may be exercised, during the employee’s lifetime, only by the
employee.

     

    Article 14 — Termination of
Employee’s Rights.

     

    Whenever
a participant ceases to be an Eligible Employee because of retirement, voluntary
or involuntary termination, resignation, layoff, discharge, death or for any
other reason, his or her rights under the Plan shall immediately terminate, and
the Company shall promptly refund, without interest, the entire balance of his
or her payroll deduction account under the Plan. Notwithstanding the foregoing,
eligible employment shall be treated as continuing intact while a participant is
on military leave, sick leave or other bona fide leave of absence, for up to 90
days, or for so long as the participant’s right to re-employment is guaranteed
either by statute or by contract, if longer than 90 days.

     

    If a
participant’s payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the
participant on the day the interruption occurs.

     

    Nothing
in the Plan, or the grant of a option hereunder, shall confer upon a participant
any right to continue in the employ of the Company or shall affect the right of
the Company to terminate the employment of the participant, with or without
cause.

     

    Article 15 — Termination and
Amendments to Plan.

     

    Unless
terminated sooner as provided below, the Plan shall terminate on December 31,
2014. The Plan may be terminated at any time by the Company’s Board of Directors
but such termination shall not affect options then outstanding under the Plan.
It will terminate in any case when all or substantially all of the unissued
shares of stock reserved for the purposes of the Plan have been purchased. If at
any time shares of stock reserved for the purpose of the Plan remain available
for purchase but not in sufficient number to satisfy all then unfilled purchase
requirements, the available shares shall be apportioned among participants in
proportion to the amount of payroll deductions accumulated on behalf of each
participant that would otherwise be used to purchase stock, and the Plan shall
terminate. Upon such termination or any other termination of the Plan, all
payroll deductions not used to purchase stock will be refunded, without
interest.

     

    The
Committee or the Board of Directors may from time to time adopt amendments to
the Plan provided that, without the approval of the stockholders of the Company,
no amendment may (i) increase the number of shares that may be issued under the
Plan; (ii) change the class of employees eligible to receive options under the
Plan, if such action would be treated as the adoption of a new plan for purposes
of Section 423(b) of the Code; or (iii) cause Rule 16b-3 under the Securities
Exchange Act of 1934 to become inapplicable to the Plan.

     

    Article 16 — Limits on Sale of Stock
Purchased under the Plan.

     

    The Plan
is intended to provide shares of Common Stock for investment and not for resale.
The Company does not, however, intend to restrict or influence any employee in
the conduct of his or her own affairs. An employee may, therefore, sell stock
purchased under the Plan at any time the employee chooses, subject to compliance
with any applicable federal or state securities laws and subject to any
restrictions imposed under Article 21 to ensure that tax withholding obligations
are satisfied. THE EMPLOYEE
ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE
STOCK.

     

    Article 17 — Participating
Subsidiaries.

     

    The term
“participating subsidiary” shall mean any present or future subsidiary of the
Company, as that term is defined in Section 424(f) of the Code, which is
designated from time to time by the Board of Directors to participate in the
Plan. The Board of Directors shall have the power to make such designation
before or after the Plan is approved by the stockholders.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article 18 — Optionees Not
Stockholders.

     

    Neither
the granting of an option to an employee nor the deductions from his or her pay
shall constitute such employee a stockholder of the shares covered by an option
until such shares have been actually purchased by the employee.

     

    Article 19—Application of
Funds.

     

    The
proceeds received by the Company from the sale of Common Stock pursuant to
options granted under the Plan will be used for general corporate
purposes.

     

    Article
20 — Notice to Company of Disqualifying Disposition.

     

    By
electing to participate in the Plan, each participant agrees to notify the
Company in writing immediately after the participant transfers Common Stock
acquired under the Plan, if such transfer occurs within two years after the
first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as “disqualifying dispositions” under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.

     

    Article 21 —Withholding of
Additional Income Taxes.

     

    By
electing to participate in the Plan, each participant acknowledges that the
Company and its participating subsidiaries are required to withhold taxes with
respect to the amounts deducted from the participant’s compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant’s compensation, when amounts are
added to the participant’s account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant’s
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
participant further acknowledges that the Company and its participating
subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.

     

    Article 22 — Governmental
Regulations.

     

    The
Company’s obligation to sell and deliver shares of Common Stock under the Plan
is subject to the approval of any governmental authority required in connection
with the authorization, issuance or sale of such shares.

     

    Government
regulations may impose reporting or other obligations on the Company with
respect to the Plan. For example, the Company may be required to identify shares
of Common Stock issued under the Plan on its stock ownership records and send
tax information statements to employees and former employees who transfer title
to such shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Article 23 — Governing
Law.

     

    The
validity and construction of the Plan shall be governed by the laws of the State
of Delaware, without giving effect to the principles of conflicts of law
thereof.

     

    Article 24 — Approval of Board of
Directors and Stockholders of the Company.

     

    The Plan
was adopted by the Board of Directors on March 17, 2005 and was approved by the
stockholders of the Company as of May 19, 2005.

     

    An
amendment to the Plan was adopted by the Board of Directors on August 6,
2009.

     

    An
amendment to the Plan was adopted by the Board of Directors on May 20,
2010.