exv10w06



 





EXHIBIT 10.06




INTERWOVEN, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN




As Adopted July 22, 1999

Amended September 20, 1999, and September 15, 2005 and adjusted January 1, 2000,

July 13, 2000, December 29, 2000, January 1, 2001, January 1, 2002, January 1, 2003,

November 13, 2003, January 1, 2004, January 1, 2005, January 1, 2006 and January 1, 2007




     1. Establishment of Plan. Interwoven, Inc. (the “Company”) proposes to grant options for
purchase of the Company’s Common Stock to eligible employees of the Company and its Participating
Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this “Plan”).
For 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. A total of 2,680,7341 shares of the Company’s Common Stock is
reserved for issuance under this Plan. In addition, on each January 1, the aggregate number of
shares of the Company’s Common Stock reserved for issuance under the Plan shall be increased
automatically by a number of shares equal to 1% of the total number of outstanding shares of the
Company Common Stock on the immediately preceding December 31;
provided that the aggregate number
of shares issued over the term of this Plan shall not exceed 3,000,0002 shares. Such
number shall be subject to adjustments effected in accordance with Section 14 of this Plan.





 




			
	1	 	Adjusted to reflect (1) the automatic authorization of 228,864 additional shares of
Common Stock for issuance under this Plan pursuant to Section 1 of this Plan in January 2000
(based upon 22,886,494 shares of Common Stock issued and outstanding as of December 31, 1999);
(2) the 2-for-1 split of the Company’s Common Stock, paid in the form of a dividend, effected
in July 2000 with respect to stockholders of record on June 22, 2000; (3) the 2-for-1 split of
the Company’s Common Stock, paid in the form of a dividend, effected in December 2000 with
respect to stockholders of record on December 13, 2000; (4) the automatic authorization of
1,021,711 additional shares of Common Stock for issuance under this Plan pursuant to Section 1
of this Plan in January 2001 (based upon 102,171,132 shares of Common Stock issued and
outstanding as of December 31, 2000); (5) the automatic authorization of 1,044,744 additional
shares of Common Stock for issuance under this Plan pursuant to Section 1 of this Plan in
January 2002 (based upon 104,474,483 shares of Common Stock issued and outstanding as of
December 31, 2001); (6) the automatic authorization of 1,025,362 additional shares of Common
Stock for issuance under this Plan pursuant to Section 1 of this Plan in January 2003 (based
upon 102,536,200 shares of Common Stock issued and outstanding as of December 31, 2002); (7)
the 1-for-4 reverse split of the Company’s Common Stock, effected November 18, 2003; (8) the
automatic authorization of 400,076 additional shares of Common Stock for issuance under this
Plan pursuant to Section 1 of this Plan in January 2004 (based upon 40,007,621 shares of
Common Stock issued and outstanding as of December 31, 2003); (9) the automatic authorization
of 410,867 additional shares of Common Stock for issuance under this Plan pursuant to Section
1 of this Plan in January 2005 (based upon 41,087,000 shares of Common Stock issued and
outstanding as of December 31, 2004); (10) the automatic authorization of 423,864 additional
shares of Common Stock for issuance under this Plan pursuant to Section 1 of this Plan in
January 2006 (based upon 42,386,485 shares of Common Stock issued and outstanding as of
December 31, 2005); and (11) the automatic authorization of 444,166 additional shares of
Common Stock for issuance under this Plan pursuant to Section 1 of this Plan in January 2007
(based upon 44,416,650 shares of Common Stock issued and outstanding as of December 31, 2006).
	 
	2	 	Adjusted to account for (1) the 2-for-1 split of the Company’s Common Stock, paid in the
form of a dividend, effected in July 2000 with respect to stockholders of record on June
22, 2000; (2) the 2-for-1 split of the Company’s Common Stock, paid in the form of a
dividend, effected in December 2000
with




 









 










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Employee Stock Purchase Plan




     2. 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.



     3. 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.



     4. 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 (10) days
before the beginning of such Offering Period, except that employees who are employed on the
Effective Date of the Registration Statement filed by the Company with the Securities and Exchange
Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) registering
the initial public offering of the Company’s Common Stock shall be eligible to participate in the
first Offering Period under the Plan;




          (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; and




          (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.




     5. Offering Dates. The offering periods of this Plan (each, an “Offering Period”) shall be
of six (6) months duration commencing on May 1 and November 1 of each year and ending on April 30
and October 31 of each year. Each Offering Period shall consist of one (1) six month purchase
period (a “Purchase Period”) during which payroll deductions of the participants are accumulated
under this Plan. Any Offering Period that began prior to October 31, 2005 shall end on October 31,
2005. 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 duration of Offering Periods with respect to offerings without
stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected.



     6. Participation in this Plan. Eligible employees may become participants in an Offering
Period under this Plan on the first Offering Date after satisfying the eligibility requirements by
delivering a subscription
agreement to the Company’s treasury department (the “Treasury Department”) not later than five (5)
days before such




 





respect to stockholders of record on December 13, 2000; and (3) the 1-for-4 reverse
stock split of the Company’s Common Stock effected in November 2003 with respect to
stockholders of record on November 18, 2003.



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Offering Date. Notwithstanding the foregoing, the Committee may set a later time for filing the
subscription agreement authorizing payroll deductions for all eligible employees with respect to a
given Offering Period. An eligible employee who does not deliver a subscription agreement to the
Treasury Department by such date after becoming eligible to participate in such 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 Treasury Department not
later than five (5) days preceding a subsequent Offering Date. Once an employee becomes a
participant in an Offering Period, such employee will 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 11 below. Such participant is not required to file any
additional subscription agreement in order to continue participation in this Plan.




     7. Grant of Option on Enrollment. Enrollment by an eligible employee in this Plan with respect
to an Offering Period will 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
of the Company determined by dividing (a) the amount accumulated in such employee’s payroll
deduction account during such Purchase Period by (b) the lower of (i) eighty-five percent (85%) of
the fair market value of a share of the Company’s Common Stock on the Offering Date (but in no
event less than the par value of a share of the Company’s Common Stock), or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company’s Common Stock on the Purchase
Date (but in no event less than the par value of a share of the Company’s Common Stock), provided,
however, that the number of shares of the Company’s 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 10(c) below with respect to the applicable Purchase Date, or (y) the
maximum number of shares which may be purchased pursuant to Section 10(b) below with respect to the
applicable Purchase Date. The fair market value of a share of the Company’s Common Stock shall be
determined as provided in Section 8 below.



     8. Purchase Price. The purchase price per share at which a share of Common Stock will 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 purposes of this Plan, the term “Fair Market Value” means, as of any Purchase Date, the
value of a share of the Company’s Common Stock determined as follows:





	 	(a)	 	if such Common Stock is then quoted on the Nasdaq National Market, its closing price on the
Nasdaq National Market on the Purchase Date as reported in The Wall Street Journal;
	 
	 	(b)	 	if such Common Stock is publicly traded and is then listed on a national
securities exchange, its closing price on the Purchase Date on the principal national
securities exchange on which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal; or
	 
	 	(c)	 	if such Common Stock is publicly traded but is not quoted on the Nasdaq National Market nor
listed or admitted to trading on a national securities exchange, the average of the closing bid and
asked prices on the Purchase Date as reported in The Wall Street Journal.





          For purposes of this Plan, the term “Fair Market Value” means, as of any Offering Date, the
value of a share of the Company’s Common Stock determined as follows:





	 	(a)	 	if such Common Stock is then quoted on the Nasdaq National Market, its closing price on
the Nasdaq National Market on the business day immediately prior to the Offering Date as reported
in The Wall Street Journal;




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	 	(b)	 	if such Common Stock is publicly traded and is then listed on a national
securities exchange, its closing price on the business day immediately prior
to the Offering Date on the principal national securities exchange on which
the Common Stock is listed or admitted to trading as reported in The Wall
Street Journal;
	 
	 	(c)	 	if such Common Stock is publicly traded but is not quoted on the Nasdaq
National Market nor listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices on the business day
immediately prior to the Offering Date as reported in The Wall Street Journal;
or
	 
	 	(d)	 	if none of the foregoing is applicable, by the Board in good faith, which in
the case of the First Offering Date will be the price per share at which
shares of the Company’s Common Stock are initially offered for sale to the
public by the Company’s underwriters in the initial public offering of the
Company’s Common Stock pursuant to a registration statement filed with the SEC
under the Securities Act.





     9. 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 two percent (2%), nor greater than fifteen percent (15%) or
such lower limit set by the Committee. Compensation shall mean all W-2 cash compensation,
including, but not limited to, base salary, wages, commissions, overtime, shift premiums and
bonuses, plus draws against commissions, provided, however, that for purposes of determining a
participant’s compensation, any election by such participant to reduce his or her regular cash
remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did
not make such election. 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 decrease the rate of payroll deductions during an Offering Period by
filing with the Treasury Department a new authorization for payroll deductions, in which case the
new rate shall become effective for the next payroll period commencing more than fifteen (15) days
after the Treasury Department’s 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 Treasury Department a new authorization for payroll deductions not later than fifteen (15)
days before the beginning of such Offering Period.




          (c) A participant may reduce his or her payroll deduction percentage to zero during an
Offering Period by filing with the Treasury Department a request for cessation of payroll
deductions. Such reduction shall be effective beginning with the next payroll period commencing
more than fifteen (15) days after the Treasury Department’s receipt of the request and no further
payroll deductions will 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, 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





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Employee Stock Purchase Plan



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 8 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 of the
Company shall be carried forward, without interest, into the next Purchase Period. 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 promptly 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 will have no interest or voting right in shares
covered by his or her option until such option has been exercised.




     10. 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) On any single Purchase Date, no participant shall be entitled to purchase more than twice
the
number of shares which could have been purchased if the purchase price were eighty-five percent
(85%) of the fair market value of a share of the Company’s Common Stock on the Offering Date.




          (c) No participant shall be entitled to purchase more than the Maximum Share Amount (as
defined below) on any single Purchase Date. Not less than thirty (30) days prior to the
commencement of any Offering Period, the Committee may, in its sole discretion, set a maximum
number of shares which may be purchased by any employee at any single Purchase Date (hereinafter
the “Maximum Share Amount"). Until otherwise determined by the Committee, there shall be no
Maximum Share Amount. In no event shall the Maximum Share Amount exceed the amounts permitted under
Section 10(b) above. 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.




          (d) 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 will make a pro rata allocation of the remaining shares in as uniform a manner as shall be
reasonably practicable and 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.




          (e) Any payroll deductions accumulated in a participant’s account which are not used to
purchase stock due to the limitations in this Section 10 shall be returned to the participant as
soon as practicable after the end of the applicable Purchase Period, without interest.




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     11. Withdrawal.



          (a) Each participant may withdraw from an Offering Period under this Plan by signing and
delivering to the Treasury Department a written notice to that effect on a form provided for
such purpose. Such withdrawal may be elected at any time at least fifteen (15) days prior to the
end of an Offering Period.




          (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 6 above for initial participation in this Plan.




     12. 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, immediately terminates his or her participation in this
Plan. In such event, the payroll deductions credited to the participant’s account will 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 12, an employee will 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
Board; provided 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.



     13. 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.



     14. Capital Changes. Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each option under this Plan which has not yet been
exercised and the number 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 of the Company resulting from a stock split or the payment
of a stock dividend (but only on 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.



     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 Committee. The Committee may, in the exercise of its sole discretion in such
instances, declare that this Plan shall terminate as of a date fixed by the Committee and give each
participant the right to purchase shares under this Plan prior to such termination. 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
stockholders 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 will be binding on
all participants), (ii) a merger in which the Company is the surviving corporation but after which
the stockholders of the Company immediately prior to such merger (other than any stockholder 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



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of the Company by tender offer or similar transaction, the Plan will continue with regard to
Offering Periods that commenced prior to the closing of the proposed transaction and shares will be
purchased based on the Fair Market Value of the surviving corporation’s stock on each Purchase
Date, unless otherwise provided by the Committee consistent with pooling of interests accounting
treatment.




     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.



     15. 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 will, the laws of
descent and distribution or as provided in Section 22 below) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be void and without effect.



     16. Reports. Individual accounts will be maintained for each participant in this Plan. Each
participant shall receive promptly 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.



     17. 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.



     18. 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.



     19. 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 19 shall take
precedence over all other provisions in this Plan.



     20. 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.



     21. Term; Stockholder Approval. After this Plan is adopted by the Board, this Plan will become
effective on the First Offering Date (as defined above). This Plan shall be approved by the
stockholders of the Company, in any manner permitted by applicable corporate law, within twelve
(12) months before or after the date this Plan is adopted by the Board. No purchase of shares
pursuant to this Plan shall occur prior to such stockholder approval. This Plan shall continue
until the earlier 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.



     22. Designation of Beneficiary.



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          (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. 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. 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.




     23. Conditions Upon Issuance of Shares; Limitation on Sale 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, 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.



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



     25. Amendment or Termination of this Plan. The Board may at any time amend, terminate or
extend the term of this Plan, except that any such termination cannot affect options previously
granted under this Plan, nor may any amendment 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 stockholders of the Company obtained in accordance with Section 21 above within
twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) 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.




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