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offerings without stockholder approval if such change is announced prior to the scheduled beginningof the first Offering Period to be affected thereafter, except as provided in Section 23.     4. Participation.          (a) First Purchase Interval in the Offering Period. An Employee who is eligible toparticipate in the Plan pursuant to Section 2 shall be entitled to participate in the firstPurchase Interval in the first Offering Period only if such individual submits to the Company’spayroll office (or its designee), a properly completed subscription agreement authorizing payrolldeductions in the form provided by the Administrator for such purpose (i) no earlier than theeffective date of the Form S-8 registration statement with respect to the issuance of Common Stockunder this Plan and (ii) no later than five (5) business days from the effective date of such S-8registration statement (the “Enrollment Window”). An eligible Employee’s failure to submit thesubscription agreement during the Enrollment Window shall result in the automatic termination ofsuch individual’s participation in the Offering Period.          (b) Subsequent Purchase Intervals and Offering Periods. An Employee who is eligibleto participate in the Plan pursuant to Section 2 may become a participant by (i) submitting to theCompany’s payroll office (or its designee), on or before a date prescribed by the Administratorprior to an applicable Enrollment Date or Semi-Annual Entry Date, a properly completed subscriptionagreement authorizing payroll deductions in the form provided by the Administrator for suchpurpose, or (ii) following an electronic or other enrollment procedure prescribed by theAdministrator.     5. Payroll Deductions.          (a) At the time a participant enrolls in the Plan pursuant to Section 4, he or she shall electto have payroll deductions made on each payday during the Offering Period in an amount notexceeding ten percent (10%) of the Compensation which he or she receives on each such payday;provided, that should a payday occur on a Purchase Date, a participant shall have the payrolldeductions made on such payday applied to his or her account under the new Offering Period orPurchase Interval, as the case may be. A participant’s subscription agreement shall remain ineffect for successive Offering Periods unless terminated as provided in Section 9.          (b) Payroll deductions authorized by a participant shall commence on the first paydayfollowing the Entry Date and shall end on the last payday in the Offering Period to which suchauthorization is applicable, unless sooner terminated by the participant as provided in Section 9;provided, however, that for the first Offering Period, payroll deductions shall commence on thefirst payday on or following the end of the Enrollment Window.          (c) All payroll deductions made for a participant shall be credited to his or her accountunder the Plan and shall be withheld in whole percentages only. A participant may not make anyadditional payments into such account.          (d) A participant may (i) discontinue his or her participation in the Plan as provided inSection 9, (ii) increase the rate of his or her payroll deductions once during each PurchaseInterval, and (iii) decrease the rate of his or her payroll deductions once during eachPurchase Interval by (x) properly completing and submitting to the Company’s payroll office(or its
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designee), on or before a date prescribed by the Administrator prior to an applicablePurchase Date, a new subscription agreement authorizing the change in payroll deduction rate in theform provided by the Administrator for such purpose, or (y) following an electronic or otherprocedure prescribed by the Administrator. If a participant has not followed such procedures tochange the rate of payroll deductions, the rate of his or her payroll deductions shall continue atthe originally elected rate throughout the Offering Period and future Offering Periods (unlessterminated as provided in Section 9). The Administrator may, in its sole discretion, change orinstitute any limit as to the nature and/or number of payroll deduction rate changes that may bemade by participants during any Offering Period. Any change in payroll deduction rate madepursuant to this Section 5(d) shall be effective as of the first full payroll period following five(5) business days after the date on which the change is made by the participant (unless theAdministrator, in its sole discretion, elects to process a given change in payroll deduction ratemore quickly).          (e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) ofthe Code and Section 2(b), a participant’s payroll deductions may be decreased to zero percent (0%)at any time during a Purchase Interval. Payroll deductions shall recommence at the rate originallyelected by the participant effective as of the beginning of the first Purchase Interval which isscheduled to end in the following calendar year, unless terminated by the participant as providedin Section 9.          (f) At the time the purchase right is exercised, in whole or in part, or at the time some orall of the Company’s Common Stock issued under the Plan is disposed of, the participant must makeadequate provision for the Company’s federal, state, or other tax withholding obligations, if any,that arise upon the exercise of the purchase right or the disposition of the Common Stock. At anytime, the Company may, but shall not be obligated to, withhold from the participant’s compensationthe amount necessary for the Company to meet applicable withholding obligations, including anywithholding required to make available to the Company any tax deductions or benefits attributableto the sale or early disposition of Common Stock by the Employee.     6. Grant of Purchase Right. On the Enrollment Date of each Offering Period, or theSemi-Annual Entry Date of each Offering Period for each Employee who entered such Offering Periodon a Semi-Annual Entry Date, each Employee participating in such Offering Period shall be granted apurchase right to purchase on each Purchase Date during such Offering Period (at the applicablePurchase Price) up to a number of shares of Common Stock determined by dividing such participant’spayroll deductions accumulated prior to such Purchase Date and retained in the participant’saccount as of the Purchase Date by the applicable Purchase Price; provided that in no event shall aparticipant be permitted to purchase during each Purchase Interval more than 750 shares of CommonStock (subject to any adjustment pursuant to Section 18), and provided further that such purchaseshall be subject to the limitations set forth in Sections 2(b) and 8. The Employee may accept thegrant of such purchase right by electing to participate in the Plan in accordance with therequirements of Section 4. The Administrator may, for future Offering Periods, increase ordecrease, in its absolute discretion, the maximum number of shares of Common Stock that aparticipant may purchase during each Purchase Interval of such Offering Period. Exercise of thepurchase right shall occur as provided in Section 7, unless the participant has withdrawn pursuantto Section 9. The purchase right shall expire on the last day of the Offering Period.
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     7. Exercise of Purchase Right.          (a) Unless a participant withdraws from the Plan as provided in Section 9, his or her purchaseright for the purchase of shares of Common Stock shall be exercised automatically on the PurchaseDate, and the maximum number of full shares subject to purchase right shall be purchased for suchparticipant at the applicable Purchase Price with the accumulated payroll deductions in his or heraccount. No fractional shares of Common Stock shall be purchased; any payroll deductionsaccumulated in a participant’s account which are not sufficient to purchase a full share shall beretained in the participant’s account for the subsequent Purchase Interval or Offering Period,subject to earlier withdrawal by the participant as provided in Section 9. Any other funds leftover in a participant’s account after the Purchase Date shall be returned to the participant.During a participant’s lifetime, a participant’s purchase right to purchase shares hereunder isexercisable only by him or her.          (b) Notwithstanding any contrary Plan provision, if the Administrator determines that, on agiven Purchase Date, the number of shares of Common Stock with respect to which purchase rights areto be exercised may exceed (i) the number of shares of Common Stock that were available for saleunder the Plan on an Entry Date of the applicable Offering Period, or (ii) the number of shares ofCommon Stock available for sale under the Plan on such Purchase Date, the Administrator may in itssole discretion (x) provide that the Company shall make a pro rata allocation of the shares ofCommon Stock available for purchase on such Entry Date or Purchase Date, as applicable, in asuniform a manner as shall be practicable and as it shall determine in its sole discretion to beequitable among all participants exercising purchase rights to purchase Common Stock on suchPurchase Date, and continue the Offering Period then in effect, or (y) provide that the Companyshall make a pro rata allocation of the shares of Common Stock available for purchase on such EntryDate or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as itshall determine in its sole discretion to be equitable among all participants exercising purchaserights to purchase Common Stock on such Purchase Date, and terminate the Offering Period then ineffect pursuant to Section 19. The Company may make pro rata allocation of the shares of CommonStock available on the Entry Date of any applicable Offering Period pursuant to the precedingsentence, notwithstanding any authorization of additional shares of Common Stock for issuance underthe Plan by the Company’s shareholders subsequent to such Entry Date.     8. Delivery. As soon as administratively practicable after each Purchase Date onwhich a purchase of shares of Common Stock occurs, the Company shall arrange the delivery to eachparticipant, the shares purchased upon exercise of his or her purchase right in a form determinedby the Administrator (in its sole discretion). No participant shall have any voting, dividend, orother shareholder rights with respect to shares of Common Stock subject to any purchase rightgranted under the Plan until such shares have been purchased and delivered to the participant asprovided in this Section 8.     9. Withdrawal.          (a) Under procedures established by the Administrator, a participant may withdraw all but notless than all the payroll deductions credited to his or her account and not yet used to exercisehis or her purchase right under the Plan at any time by (i) submitting to the Company’s payrolloffice (or its designee) a written notice of withdrawal in the form prescribed by
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the Administrator for such purpose, or (ii) following an electronic or other withdrawalprocedure prescribed by the Administrator. All of the participant’s payroll deductions credited tohis or her account shall be paid to such participant as promptly as practicable after the effectivedate of his or her withdrawal and such participant’s purchase right for the Offering Period shallbe automatically terminated, and no further payroll deductions for the purchase of shares shall bemade for such Offering Period. If a participant withdraws from an Offering Period, payrolldeductions shall not resume at the beginning of the succeeding Offering Period unless theparticipant re-enrolls in the Plan in accordance with the provisions of Section 4.          (b) A participant’s withdrawal from an Offering Period shall not have any effect upon his orher eligibility to participate in any similar plan that may hereafter be adopted by the Company orin succeeding Offering Periods that commence after the termination of the Offering Period fromwhich the participant withdraws.     10. Termination of Employment. In the event a participant ceases to be an Employee ofan Employer, his or her purchase right shall immediately expire and any payroll deductions creditedto such participant’s account during the Offering Period but not yet used to purchase shares ofCommon Stock under the Plan shall be returned to such participant or, in the case of his or herdeath, to the person or persons entitled thereto under Section 14, and such participant’s purchaseright shall be automatically terminated.     11. Interest. No interest shall accrue on the payroll deductions of a participant inthe Plan.     12. Stock.          (a) Subject to adjustment upon changes in capitalization of the Company as provided in Section18, the maximum number of shares of Common Stock which shall be made available for sale under thePlan shall be 1,250,000 shares plus any shares which have been reserved but not issued under theCompany’s 1995 Employee Stock Purchase Plan as of the date of its termination.          (b) Shares of Common Stock to be delivered to a participant under the Plan shall be registeredin the name of the participant or in the name of the participant and his or her spouse.     13. Administration. The Administrator shall administer the Plan and shall have fulland exclusive discretionary authority to construe, interpret and apply the terms of the Plan, todetermine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding,decision and determination made by the Administrator shall, to the full extent permitted by law, befinal and binding upon all parties.     14. Designation of Beneficiary.          (a) A participant may designate a beneficiary who is to receive any shares of Common Stock andcash, if any, from the participant’s account under the Plan in the event of such participant’sdeath subsequent to an Purchase Date on which the purchase right is exercised but prior to deliveryto such participant of such shares and cash. In addition, a participant may designate abeneficiary who is to receive any cash from the participant’s account under the Plan in the eventof
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such participant’s death prior to exercise of the purchase right. If a participant is marriedand the designated beneficiary is not the spouse, spousal consent shall be required for suchdesignation to be effective.          (b) In the event of the death of a participant and in the absence of a beneficiary validlydesignated under the Plan who is living at the time of such participant’s death, the Company shalldeliver such shares and/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), theCompany, in its discretion, may deliver such shares and/or cash to the spouse or to any one or moredependents or relatives of the participant, or if no spouse, dependent or relative is known to theCompany, then to such other person as the Company may designate.          (c) All beneficiary designations under this Section 14 shall be made in such form and manneras the Administrator may prescribe from time to time.     15. Transferability. Neither payroll deductions credited to a participant’s accountnor any rights with regard to the exercise of a purchase right or to receive shares of Common Stockunder the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (otherthan by will, the laws of descent and distribution or as provided in Section 14) by theparticipant. Any such attempt at assignment, transfer, pledge or other disposition shall bewithout effect, except that the Company may treat such act as an election to withdraw from anOffering Period in accordance with Section 9.     16. Use of Funds. All payroll deductions received or held by the Company under thePlan may be used by the Company for any corporate purpose, and the Company shall not be obligatedto segregate such payroll deductions. Until shares of Common Stock are issued under the Plan (asevidenced by the appropriate entry on the books of the Company or of a duly authorized transferagent of the Company), a participant shall only have the rights of an unsecured creditor withrespect to such shares.     17. Reports. Individual accounts shall be maintained for each participant in thePlan. Statements of account shall be given to participating Employees at least annually, whichstatements shall set forth the amounts of payroll deductions, the Purchase Price, the number ofshares of Common Stock purchased and the remaining cash balance, if any.     18. Adjustments, Dissolution, Liquidation, Merger or Change of Control.          (a) Adjustments. In the event that any dividend or other distribution (whether in theform of cash, Common Stock, other securities, or other property), recapitalization, stock split,reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination,repurchase, or exchange of Common Stock or other securities of the Company, or other change in thecorporate structure of the Company affecting the Common Stock such that an adjustment is determinedby the Administrator (in its sole discretion) to be appropriate in order to prevent dilution orenlargement of the benefits or potential benefits intended to be made available under the Plan,then the Administrator shall, in such manner as it may deem equitable, adjust the number and classof Common Stock which may be delivered under the Plan, the Purchase Price per share and the
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number of shares of Common Stock covered by each purchase right under the Plan which has notyet been exercised, and the numerical limits of Section 6.          (b) Dissolution or Liquidation. In the event of the proposed dissolution orliquidation of the Company, the Offering Period then in progress shall be shortened by setting anew Purchase Date (the “New Purchase Date”), and shall terminate immediately prior to theconsummation of such proposed dissolution or liquidation, unless provided otherwise by the Board.The New Purchase Date shall be before the date of the Company’s proposed dissolution orliquidation. The Board shall notify each participant in writing, at least ten (10) business daysprior to the New Purchase Date, that the Purchase Date for the participant’s purchase right hasbeen changed to the New Purchase Date and that the participant’s purchase right shall be exercisedautomatically on the New Purchase Date, unless prior to such date the participant has withdrawnfrom the Offering Period as provided in Section 9.          (c) Merger or Change of Control. In the event of a merger of the Company with or intoanother corporation or a Change of Control, each outstanding purchase right shall be assumed or anequivalent purchase right substituted by the successor corporation or a Parent or Subsidiary of thesuccessor corporation. In the event that the successor corporation refuses to assume or substitutefor the purchase right, the Purchase Interval then in progress shall be shortened by setting a newPurchase Date (the “New Purchase Date”) and the Offering Period then in progress shall end on theNew Purchase Date. The New Purchase Date shall be before the date of the Company’s proposed mergeror Change of Control. The Administrator shall notify each participant in writing, at least ten(10) business days prior to the New Purchase Date, that the Purchase Date for the participant’spurchase right has been changed to the New Purchase Date and that the participant’s purchase rightshall be exercised automatically on the New Purchase Date, unless prior to such date theparticipant has withdrawn from the Offering Period as provided in Section 9.     19. Amendment or Termination.          (a) The Administrator may at any time and for any reason terminate or amend the Plan. Exceptas otherwise provided in the Plan, no such termination can affect purchase rights previouslygranted under the Plan, provided that an Offering Period may be terminated by the Administrator onany Purchase Date if the Administrator determines that the termination of the Plan is in the bestinterests of the Company and its stockholders. Except as provided in Section 18 and this Section19, no amendment may make any change in any purchase right theretofore granted which adverselyaffects the rights of any participant. To the extent necessary to comply with Section 423 of theCode (or any successor rule or provision or any other applicable law, regulation or stock exchangerule), the Company shall obtain stockholder approval in such a manner and to such a degree asrequired.          (b) Without stockholder consent and without regard to whether any participant rights may beconsidered to have been “adversely affected,” the Administrator shall be entitled to change theOffering Periods, limit the frequency and/or number of changes in the amount withheld during anOffering Period, establish the exchange ratio applicable to amounts withheld in a currency otherthan U.S. dollars, permit payroll withholding in excess of the amount designated by a participantin order to adjust for delays or mistakes in the Company’s processing of properly completedwithholding elections, establish reasonable waiting and adjustment periods and/or
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accounting and crediting procedures to ensure that amounts applied toward the purchase ofCommon Stock for each participant properly correspond with amounts withheld from the participant’sCompensation, and establish such other limitations or procedures as the Administrator determines inits sole discretion advisable which are consistent with the Plan.          (c) In the event the Administrator determines that the ongoing operation of the Plan mayresult in unfavorable financial accounting consequences, the Board may, in its discretion and, tothe extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accountingconsequence including, but not limited to:               (i) altering the Purchase Price for any Offering Period including an Offering Period underwayat the time of the change in Purchase Price;               (ii) shortening any Offering Period so that Offering Period ends on a new Purchase Date,including an Offering Period underway at the time of the Board action; and               (iii) allocating shares.Such modifications or amendments shall not require stockholder approval or the consent of any Planparticipants.     20. Notices. All notices or other communications by a participant to the Companyunder or in connection with the Plan shall be deemed to have been duly given when received in theform specified by the Company at the location, or by the person, designated by the Company for thereceipt thereof.     21. Conditions Upon Issuance of Shares. Shares of Common Stock shall not be issuedwith respect to a purchase right under the Plan unless the exercise of such purchase right and theissuance and delivery of such shares pursuant thereto shall comply with all applicable provisionsof law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended,including the rules and regulations promulgated thereunder, the Exchange Act and the requirementsof any stock exchange upon which the shares may then be listed, and shall be further subject to theapproval of counsel for the Company with respect to such compliance.          As a condition to the exercise of a purchase right, the Company may require the personexercising such purchase right to represent and warrant at the time of any such exercise that theshares are being purchased only for investment and without any present intention to sell ordistribute such shares if, in the opinion of counsel for the Company, such a representation isrequired by any of the aforementioned applicable provisions of law.     22. Term of Plan. The Plan shall become effective upon the earlier to occur of itsadoption by the Board or its approval by the stockholders of the Company. It shall continue ineffect until terminated pursuant to Section 19.     23. Automatic Transfer to Low Price Offering Period. To the extent permitted by anyapplicable laws, regulations, or stock exchange rules if the Fair Market Value of the Common Stockon any Purchase Date in an Offering Period is lower than the Fair Market Value of the Common Stockon the Enrollment Date of such Offering Period, then all participants in such Offering Period
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shall be automatically withdrawn from such Offering Period immediately after the exercise oftheir purchase right on such Purchase Date and automatically re-enrolled in the immediatelyfollowing Offering Period and the current Offering Period shall automatically terminate after suchpurchase of shares on the Purchase Date. The Administrator may shorten the duration of such newOffering Period within five (5) business days following the start date of such new Offering Period.
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**APPENDIX**  The following definitions shall be in effect under the Plan:          Definitions.          (a) “Administrator” means the Board or any committee thereof designated by the Boardin accordance with Section 13.          (b) “Board” means the Board of Directors of the Company.          (c) “Change of Control” means the occurrence of any of the following events:               (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly orindirectly, of securities of the Company representing fifty percent (50%) or more of the totalvoting power represented by the Company’s then outstanding voting securities; or               (ii) The consummation of the sale or disposition by the Company of all or substantially all ofthe Company’s assets; or               (iii) The consummation of a merger or consolidation of the Company, with any othercorporation, other than a merger or consolidation which would result in the voting securities ofthe Company outstanding immediately prior thereto continuing to represent (either by remainingoutstanding or by being converted into voting securities of the surviving entity or its parent) atleast fifty percent (50%) of the total voting power represented by the voting securities of theCompany, or such surviving entity or its parent outstanding immediately after such merger orconsolidation.               (iv) A change in the composition of the Board, as a result of which fewer than a majority ofthe Directors are Incumbent Directors. “Incumbent Directors” means Directors who either (A) areDirectors as of the effective date of the Plan (pursuant to Section 22), or (B) are elected, ornominated for election, to the Board with the affirmative votes of at least a majority of thoseDirectors whose election or nomination was not in connection with any transaction described insubsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relatingto the election of Directors of the Company.          (d) “Code” means the Internal Revenue Code of 1986, as amended.          (e) “Common Stock” means the common stock of the Company.          (f) “Company” means Intevac, Inc., a California corporation.          (g) “Compensation” means an Employee’s base straight time gross earnings, butexclusive of payments for commissions, overtime, shift premium and other compensation.
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          (h) “Designated Subsidiary” means any Subsidiary that has been designated by theAdministrator from time to time in its sole discretion as eligible to participate in the Plan.          (i) “Director” means a member of the Board.          (j) “Employee” means any individual who is a common law employee of an Employer and iscustomarily employed for at least twenty (20) hours per week and more than five (5) months in anycalendar year by the Employer. For purposes of the Plan, the employment relationship shall betreated as continuing intact while the individual is on sick leave or other leave of absenceapproved by the Company. Where the period of leave exceeds 90 days and the individual’s right toreemployment is not guaranteed either by statute or by contract, the employment relationship shallbe deemed to have terminated on the 91st day of such leave.          (k) “Employer” means any one or all of the Company and its Designated Subsidiaries.          (l) “Enrollment Date” means the first Trading Day of each Offering Period.          (m) “Entry Date” means the Enrollment Date or Semi-Annual Entry Date on which anindividual becomes a participant in the Plan.          (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.          (o) “Fair Market Value” means, as of any date, the value of Common Stock determined asfollows:               (i) If the Common Stock is listed on any established stock exchange or a national marketsystem, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market ofThe Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for the CommonStock (or the closing bid, if no sales were reported) as quoted on such exchange or system on thedate of determination, as reported in *The Wall Street Journal*or such other source as theAdministrator deems reliable, or;               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but sellingprices are not reported, its Fair Market Value shall be the mean of the closing bid and askedprices for the Common Stock on the date of determination, as reported in *The Wall Street Journal*orsuch other source as the Administrator deems reliable, or;               (iii) In the absence of an established market for the Common Stock, its Fair Market Valueshall be determined in good faith by the Administrator.          (p) “Offering Periods” means the successive periods of approximately twenty-four (24)months, each comprised of one or more successive Purchase Intervals. The duration and timing ofOffering Periods may be changed pursuant to Section 3 of this Plan.          (q) “Parent” means a “parent corporation,” whether now or hereafter existing, asdefined in Section 424(e) of the Code.
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          (r) “Plan” means this 2003 Employee Stock Purchase Plan.          (s) “Purchase Date” means the last Trading Day in January and July of each year. Thefirst Purchase Date under the Plan shall be January 30, 2004.          (t) “Purchase Interval” shall mean the approximately six (6) month period running fromthe first Trading Day in February of each year through the last Trading Day in July of each year orfrom the first Trading Day in August of each year through the last Trading Day in January of thefollowing year. However, the initial Purchase Interval shall commence on the Enrollment Date ofthe first Offering Period and end on the last Trading Day in January 2004.          (u) “Purchase Price” means, for each participant, an amount equal to eighty-fivepercent (85%) of the Fair Market Value of a share of Common Stock on (i) the Participant’s EntryDate into that Offering Period, or (ii) on the Purchase Date, whichever is lower; provided however,that the Purchase Price may be adjusted by the Administrator pursuant to Section 19.          (v) “Semi-Annual Entry Date” means the first Trading Day of each Purchase Intervalprovided that such Trading Day is not an Enrollment Date.          (w) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,as defined in Section 424(f) of the Code.          (x) “Trading Day” means a day on which the U.S. national stock exchanges and theNasdaq System are open for trading.
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