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EXHIBIT 4.1



2004 Employee Stock Purchase Plan



 









 





TYLER TECHNOLOGIES, INC.

2004 EMPLOYEE STOCK PURCHASE PLAN



     1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.



          1.1 Establishment. The Tyler Technologies, Inc. 2004 Employee Stock
Purchase Plan (the “Plan”) is hereby established effective as of July 1, 2004
(the “Effective Date”).



          1.2 Purpose. The purpose of the Plan is to align the interests of the
Company with its stockholders by providing an incentive to attract, retain and
reward Eligible Employees of the Participating Company Group and by motivating
such persons to contribute to the growth and profitability of the Participating
Company Group. The Plan provides such Eligible Employees with an opportunity to
acquire a proprietary interest in the Company through the purchase of Stock.
The Company intends that the Plan qualify as an “employee stock purchase plan”
under Section 423 of the Code (including any amendments or replacements of such
section), and the Plan shall be so construed.



          1.3 Term of Plan. The Plan shall continue in effect until the earlier of
(a) its termination by the Board, (b) the date on which all of the shares of
Stock available for issuance under the Plan have been issued, or (c) the tenth
anniversary of the Effective Date.



     2. DEFINITIONS AND CONSTRUCTION.



          2.1 Definitions. Any term not expressly defined in the Plan but defined
for purposes of Section 423 of the Code shall have the same definition herein.
Whenever used herein, the following terms shall have their respective meanings
set forth below.



                  (a) “Board” means the Board of Directors of the Company.



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



                  (c) “Committee” means a committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the
Committee shall have all of the powers of the Board granted herein, except the
power to amend or terminate the Plan. If the Board does not appoint a
Committee, or if a Committee otherwise fails to exist at any time during the
term hereof, the Board shall perform the functions of the Committee.



                  (d) “Company” means Tyler Technologies, Inc., a Delaware corporation, or
any successor corporation thereto.



                  (e) “Compensation” means, with respect to any Offering Period, regular
base wages or salary, commissions and overtime paid during such Offering Period
before



 









 




deduction for any contributions to any plan maintained by a Participating
Company and described in Section 401(k) or Section 125 of the Code.



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



                  (g) “Employee” means a person treated as an employee of a Participating
Company for purposes of Section 423 of the Code. A Participant shall be deemed
to have ceased to be an Employee either upon an actual termination of
employment or upon the corporation employing the Participant ceasing to be a
Participating Company. For purposes of the Plan, an individual shall not be
deemed to have ceased to be an Employee while such individual is on any
military leave, sick leave, or other bona fide leave of absence approved by the
Company of 90 days or less. In the event an individual’s leave of absence
exceeds 90 days, the individual shall be deemed to have ceased to be an
Employee on the 91st day of such leave unless the individual’s right to
reemployment with the Participating Company Group is guaranteed either by
statute or by contract. The Company shall determine in good faith and in the
exercise of its discretion whether an individual has become or has ceased to be
an Employee and the effective date of such individual’s employment or
termination of employment, as the case may be. For purposes of an individual’s
participation in or other rights, if any, under the Plan as of the time of the
Company’s determination, all such determinations by the Company shall be final,
binding and conclusive, notwithstanding that the Company or any governmental
agency subsequently makes a contrary determination.



                  (h) “Fair Market Value” means, as of any date, the closing price of a
share of Stock on the New York Stock Exchange or such other principal national
securities exchange on which the Stock is then listed or admitted to trading,
if the stock is then listed or admitted to trading on any national securities
exchange. The closing price shall be the last reported sale price, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, as reported by said exchange. If the Stock is not then so listed on a
national securities exchange, the Fair Market Value shall be deemed to be the
closing price of a share of Stock (or the mean of the closing bid and asked
price if the Stock is so quoted instead) as quoted on the NASDAQ National
Market, the NASDAQ Small-Cap Market or such other market system or regional
securities exchange constituting the primary market for the Stock as reported
in The Wall Street Journal or such other source as the Company deems reliable.
If the relevant date does not fall on a day on which the Stock has traded on
such securities exchange or market system, the date on which the Fair Market
Value shall be established shall be the last day on which the Stock was so
traded to the relevant date, or such other appropriate day as shall be
determined by the Board, in its sole discretion. If there is no public market
for the Stock, the Fair Market Value on any relevant date shall be as
determined by the Board.



                  (i) “Offering” means an Offering of Stock as provided in Section 6.



                  (j) “Offering Date” means, for any Offering, the first day of the Offering
Period with respect to such Offering.



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                  (k) “Offering Period” means a period established in accordance with
Section 6.1.



                  (l) “Parent Corporation” means any present or future “parent corporation”
of the Company as defined in Section 424(e) of the Code.



                  (m) “Participant” means an Eligible Employee who has become a participant
in an Offering Period in accordance with Section 7 and remains a participant in
accordance with the Plan.



                  (n) “Participating Company” means the Company and each Parent Corporation
or Subsidiary Corporation unless any such entity is designated by the Board as
not eligible to participate in the Plan. The Board shall have the sole and
absolute discretion to determine from time to time which Parent Corporations or
Subsidiary Corporations, if any, shall not be eligible to become Participating
Companies.



                  (o) “Participating Company Group” means, at any point in time, the Company
and all other corporations collectively which are then Participating Companies.



                  (p) “Purchase Date” means for any Offering Period (or Purchase Period, if
so determined by the Board in accordance with Section 6.2) the last day of such
period.



                  (q) “Purchase Period” means a period, if any, established in accordance
with Section 6.2.



                  (r) “Purchase Price” means the price at which a share of Stock may be
purchased under the Plan, as determined in accordance with Section 9.



                  (s) “Purchase Right” means an option granted to a Participant pursuant to
the Plan to purchase such shares of Stock as provided in Section 8, which the
Participant may or may not exercise during the Offering Period in which such
option is outstanding. Such option arises from the right of a Participant to
withdraw any accumulated payroll deductions of the Participant not previously
applied to the purchase of Stock under the Plan and to terminate participation
in the Plan at any time during an Offering Period.



                  (t) “Stock” means the Common Stock, $0.01 par value per share, of the
Company, as adjusted from time to time in accordance with Section 4.2.



                  (u) “Subscription Agreement” means a written agreement in such form as
specified by the Company, stating an Employee’s election to participate in the
Plan, authorizing payroll deductions under the Plan from the Employee’s
Compensation and requiring the Participant to notify the Company of the details
of a “Disqualifying Disposition” as described in Section 19 of any shares of
Stock.



                  (v) “Subscription Date” means the last business day prior to the Offering
Date of an Offering Period or such earlier date as the Company shall establish.



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                  (w) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.



          2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context
clearly requires otherwise.



     3. ADMINISTRATION.



          3.1 Administration by the Board. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of agreement or
other document employed by the Company in the administration of the Plan, or of
any Purchase Right shall be determined by the Board and shall be final and
binding upon all persons having an interest in the Plan or the Purchase Right.
Subject to the provisions of the Plan, the Board shall determine all of the
relevant terms and conditions of Purchase Rights granted pursuant to the Plan;
provided, however, that all Participants granted Purchase Rights pursuant to
the Plan shall have the same rights and privileges within the meaning of
Section 423(b)(5) of the Code. All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.



          3.2 Authority of Officers. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that is
allocated to the Company herein, provided that the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.



          3.3 Policies and Procedures Established by the Board. The Board may, from
time to time, consistent with the Plan and the requirements of Section 423 of
the Code, establish, change or terminate such rules, guidelines, policies,
procedures, limitations, or adjustments as deemed advisable by the Board, in
its sole discretion, for the proper administration of the Plan, including,
without limitation, (a) a minimum payroll deduction amount required for
participation in an Offering, (b) a limitation on the frequency or number of
changes permitted in the rate of payroll deduction during an Offering, (c) a
payroll deduction greater than or less than the amount designated by a
Participant in order to adjust for the Company’s delay or mistake in processing
a Subscription Agreement or in otherwise effecting a Participant election under
the Plan or as advisable to comply with the requirements of Section 423 of the
Code, (d) determination of the date and manner by which the Fair Market Value
of a share of Stock is determined for purposes of administration of the Plan,
and (e) increasing or decreasing the holding period as set forth in Section
11.3.



     4. SHARES SUBJECT TO PLAN.



          4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be 1,000,000, and shall consist of authorized but
unissued or reacquired



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shares of Stock, or any combination thereof. If an outstanding Purchase
Right for any reason expires or is terminated or canceled, the shares of Stock
allocable to the unexercised portion of such Purchase Right shall again be
available for issuance under the Plan.



          4.2 Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar changes in the capital structure of
the Company, or in the event of any merger, sale of assets or other
reorganization in which the Company is a party, appropriate adjustments shall
be made in the number and class of shares subject to the Plan and each Purchase
Right and in the Purchase Price. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Purchase Rights are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event (as defined in Section 14)) shares of another
corporation (the “New Shares”), the Board may unilaterally amend the
outstanding Purchase Rights to provide that such Purchase Rights are
exercisable for New Shares. In the event of any such amendment the number of
shares subject to, and the Purchase Price of, the outstanding Purchase Rights
shall be adjusted in a fair and equitable manner, as determined by the Board,
in its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded down
to the nearest whole number, and in no event may the Purchase Price be
decreased in amount less than the par value, if any, of the stock subject to
the Purchase Right. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.



     5. ELIGIBILITY.



          5.1 Employees Eligible to Participate. Each Employee of a Participating
Company is eligible to participate in the Plan and shall be deemed an Eligible
Employee except the following:



                  (a) any Employee who is customarily employed by the Participating Company
Group for 20 hours or less per week; and



                  (b) any Employee who has not been continuously employed by the
Participating Company Group for six months. For this purpose, the Board may,
on a consistent and uniform basis, credit an Employee’s period of service with
an entity acquired by the Company or a Participating Company or with an entity
whose assets are acquired by the Company or a Participating Company as service
with the Participating Company Group.



          5.2 Exclusion of Certain Stockholders. Notwithstanding any provision of
the Plan to the contrary, no Employee shall be granted a Purchase Right under
the Plan if, immediately after such grant, such Employee would own or hold
options to purchase stock of the Company or of any Parent Corporation or
Subsidiary Corporation possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of such corporation, as
determined in accordance with Section 423(b)(3) of the Code. For purposes of
this Section 5.2, the attribution rules of Section 424(d) of the Code shall
apply in determining the stock ownership of such Employee.



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     6. OFFERINGS.



          6.1 Offering Periods. Except as otherwise set forth below, the Plan shall
be implemented by sequential Offerings of approximately three months duration,
each of which shall constitute an Offering Period for purposes of the Plan.
The first Offering Period shall commence on the Effective Date and end on
September 30, 2004. Subsequent Offerings shall commence on the first day of
October, January, April, and July of each year and end on the last day of the
following December, March, June and September, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board may establish a different
duration for one or more future Offering Periods or different commencing or
ending dates for such Offering Periods; provided, however, that no Offering
Period may have a duration exceeding twenty-seven (27) months. If the first or
last day of an Offering Period is not a day on which the national or regional
securities exchange or market system constituting the primary market for the
Stock is open for trading, the Company shall specify the trading day that will
be deemed the first or last day, as the case may be, of the Offering Period.



          6.2 Purchase Periods. If the Board so determines, in its discretion, each
Offering Period may consist of two or more consecutive Purchase Periods having
such duration as the Board shall specify, and the last day of each Purchase
Period shall be a Purchase Date. If the first or last day of a Purchase Period
is not a day on which the national or regional securities exchange or market
system for the Stock, as the case may be, is open for trading, the Company
shall specify the trading day that will be deemed the first or last day, as the
case may be, of the Purchase Period.



     7. PARTICIPATION IN THIS PLAN.



          7.1 Initial Participation. An Eligible Employee may become a Participant
in an Offering Period by delivering a properly completed Subscription Agreement
to the office designated by the Company not later than the close of business
for such office on the Subscription Date established by the Company for such
Offering Period, which shall be before the first day of the relevant Offering
Period. An Eligible Employee who does not deliver a properly completed
Subscription Agreement on or before the Subscription Date for an Offering
Period shall not participate in the Plan for that Offering Period or for any
subsequent Offering Period unless such Eligible Employee subsequently delivers
a properly completed Subscription Agreement to the appropriate office of the
Company on or before the Subscription Date for such subsequent Offering Period.
An Employee who becomes an Eligible Employee after the Offering Date of an
Offering Period shall not be eligible to participate in such Offering Period
but may participate in any subsequent Offering Period provided that Employee is
still an Eligible Employee as of the Offering Date of such subsequent Offering
Period.



          7.2 Continued Participation. A Participant shall automatically
participate in the next Offering Period commencing immediately after the
Purchase Date of each Offering Period in which the Participant participates
provided that such Participant remains an Eligible Employee on the Offering
Date of the new Offering Period and has not (a) withdrawn from the Plan
pursuant to Section 12.1, (b) elected to stop deductions during the immediately
preceding Offering Period as provided in Section 10.3, or (c) terminated
employment as provided in



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Section 13. A Participant who may automatically participate in a
subsequent Offering Period, as provided in this Section, is not required to
deliver any additional Subscription Agreement for the subsequent Offering
Period in order to continue participation in the Plan. However, a Participant
may deliver a new Subscription Agreement for a subsequent Offering Period in
accordance with the procedures set forth in Section 7.1 if the Participant
desires to change any of the elections contained in the Participant’s then
effective Subscription Agreement.



     8. RIGHT TO PURCHASE SHARES.



          8.1 Grant of Purchase Right. Except as set forth below, on the Offering
Date of each Offering Period, each Participant in such Offering Period shall be
granted automatically a Purchase Right consisting of an option to purchase that
number of shares equal to the quotient of (i) the aggregate payroll deductions
withheld on behalf of such Participant during the Offering Period, divided by
(ii) the Purchase Price for that Offering Period. No Purchase Right shall be
granted on an Offering Date to any person who is not, on such Offering Date, an
Eligible Employee.



          8.2 Offering Period Purchase Limitation. Notwithstanding any provision of
the Plan to the contrary, the maximum number of shares of Stock that may be
purchased under the Plan by a Participant during any Offering Period is 750
shares.



          8.3 Calendar Year Purchase Limitation. Notwithstanding any provision of
the Plan to the contrary, no Participant shall be granted a Purchase Right
which permits his or her right to purchase shares of Stock under the Plan to
accrue at a rate which, when aggregated with such Participant’s rights to
purchase shares under all other employee stock purchase plans of a
Participating Company intended to meet the requirements of Section 423 of the
Code, exceeds $25,000 in Fair Market Value (or such other limit, if any, as may
be imposed by the Code) for each calendar year in which such Purchase Right is
outstanding at any time. For purposes of the preceding sentence, the Fair
Market Value of shares purchased during a given Offering Period shall be
determined as of the Offering Date for such Offering Period. The limitation
described in this Section 8.3 shall be applied in conformance with applicable
regulations under Section 423(b)(8) of the Code.



     9. PURCHASE PRICE.



          The Purchase Price at which each share of Stock may be acquired in an
Offering Period upon the exercise of all or any portion of a Purchase Right
shall be established by the Board; provided, however, that the Purchase Right
shall not be less than eighty-five percent (85%) of the lesser of (a) the Fair
Market Value of a share of Stock on the Offering Date of the Offering Period or
(b) the Fair Market Value of a share of Stock on the Purchase Date. Unless
otherwise provided by the Board prior to the commencement of an Offering
Period, the Purchase Price for that Offering Period shall be eighty-five
percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on
the Offering Date of the Offering Period, or (b) the Fair Market Value of a
share of Stock on the Purchase Date.



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     10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.



          Shares of Stock acquired pursuant to the exercise of all or any portion of
a Purchase Right may be paid for only by means of payroll deductions from the
Participant’s Compensation accumulated during the Offering Period for which
such Purchase Right was granted, subject to the following:



          10.1 Amount of Payroll Deductions. Except as otherwise provided herein,
the amount to be deducted under the Plan from a Participant’s Compensation on
each payday during an Offering Period shall be determined by the Participant
Subscription Agreement. The Subscription Agreement shall set forth the
percentage of the Participant’s Compensation to be deducted on each payday
during an Offering Period in whole percentages of not less than one percent
(1%) (except as a result of a election pursuant to Section 10.3 to stop
deductions made effective following the first payday during an Offering) or
more than fifteen percent (15%). Notwithstanding the foregoing, the Board may
change the limits on payroll deductions effective as of any future Offering
Date.



          10.2 Commencement of Payroll Deductions. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
herein.



          10.3 Election to Change or Stop Payroll Deductions. A Participant may not
elect to increase or decrease the rate of deduction from his or her
Compensation during an Offering Period. However, at any time prior to the
two-week period ending on the last day of an Offering Period, a Participant may
elect to stop deductions from his or her Compensation for such Offering Period
by delivering to the Company’s designated office a written notice on a form
provided by the Company authorizing such cessation of deductions on or before
the “Change Notice Date.” The “Change Notice Date” shall be a date prior to
the beginning of the first payday period for which such election is to be
effective as established by the Company from time to time and announced to the
Participants. Unless otherwise established by the Company, the Change Notice
Date shall be the seventh day prior to the beginning of the first pay period
for which such election is to be effective. A Participant who elects to cease
his or her payroll deductions shall nevertheless remain a Participant in the
current Offering Period with respect to deductions made before the effective
date of such change unless such Participant withdraws from the Plan as provided
in Section 12.1.



          10.4 Administrative Suspension of Payroll Deductions. The Company may, in
its sole discretion, suspend a Participant’s payroll deductions under the Plan
as the Company deems advisable to avoid accumulating payroll deductions in
excess of the amount that could reasonably be anticipated to purchase the
maximum number of shares of Stock permitted during a calendar year under the
limit set forth in Section 8.3. Payroll deductions shall be resumed at the
rate specified in the Participant’s then effective Subscription Agreement at
the beginning of the next Offering Period the Purchase Date of which falls in
the following calendar year.



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          10.5 Participant Accounts. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a Participant’s
Compensation shall be credited to such Participant’s Plan account and shall be
deposited with the general funds of the Company. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.



          10.6 No Interest Paid. Interest shall not be paid on sums deducted from a
Participant’s Compensation pursuant to the Plan.



          10.7 Voluntary Withdrawal from Plan Account. A Participant may, during an
Offering Period, withdraw all of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock by
delivering to the Company’s designated office a written notice on a form
provided by the Company for such purpose at any time prior to the two-week
period ending on the last day of the Offering Period. A Participant who
withdraws the entire remaining balance credited to his or her Plan account
shall be deemed to have withdrawn from the Plan in accordance with Section
12.1. Amounts withdrawn shall be returned to the Participant as soon as
practicable after the Participant’s notice of withdrawal and the Company may
from time to time establish or change limitations on the frequency of
withdrawals permitted under this Section 10.7, establish a minimum dollar
amount that must be retained in the Participant’s Plan account, or terminate
the withdrawal right provided by this Section.



     11. PURCHASE OF SHARES.



          11.1 Exercise of Purchase Right. On each Purchase Date of a Offering
Period, each Participant who has not withdrawn from the Plan and whose
participation in the Offering has not terminated before such Purchase Date
shall automatically acquire pursuant to the exercise of the Participant’s
Purchase Right the number of whole shares of Stock determined by dividing (a)
the total amount of the Participant’s payroll deductions accumulated in the
Participant’s Plan account during the Offering Period and not previously
applied toward the purchase of Stock by (b) the Purchase Price. However, in no
event shall the number of shares purchased by the Participant during an
Offering Period exceed the number of shares subject to the Participant’s
Purchase Right. No shares of Stock shall be purchased on a Purchase Date on
behalf of a Participant whose participation in the Offering or the Plan has
terminated before the Purchase Date.



          11.2 Pro Rata Allocation of Shares. In the event that the number of
shares of Stock which might be purchased by all Participants in the Plan on a
Purchase Date exceeds the number of shares of Stock available in the Plan as
provided in Section 4.1, the Company shall make a pro rata allocation of the
remaining shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable. Any fractional share resulting from
such pro rata allocation to any Participant shall be disregarded and the amount
associated with such fractional share shall be returned to the Participant as
soon as administratively practicable.



          11.3 Issuance of Certificates and Required Holding Period. As soon as
practicable after each Purchase Date, the Company shall arrange the issuance on
behalf of each Participant, as appropriate, of a certificate representing the
shares acquired by the Participant on



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such Purchase Date. Such certificate shall be held by the Company, its
transfer agent or other Company designee, as a custodian on behalf of the
Participant for the period described in this Section 11.3. Unless determined
otherwise by the Board before the beginning of an Offering Period and
communicated to Participants, Stock acquired by a Participant pursuant to an
Offering may not be sold or transferred by the Participant during the 180-day
period following the Purchase Date applicable to the Stock (the “Holding
Period”). Notwithstanding the foregoing provision, the sale and transfer
restrictions applicable to a Holding Period will cease to apply to Stock held
on behalf of a Participant who terminates employment with the Participating
Company Group during the Holding Period. At any time following the Holding
Period or, if earlier, the date the Participant ceases to be an Employee, the
Participant may request the Stock be delivered to the Participant or to a
brokerage account established by the Participant to hold the Stock. As
provided in Section 19 and in a Participant’s Subscription Agreement, a
Participant may be required to notify the Company if any shares of Stock are
sold prior to the expiration of the dates described in Section 423(a)(1) of the
Code. Shares issued under the Plan shall be registered in the name of the
Participant, or if requested by the Participant in the name of the Participant
and his or her spouse, or, if applicable, in the names of the heirs of the
Participant.



          11.4 Return of Cash Balance. Any cash balance remaining in a
Participant’s Plan account following any Purchase Date shall be refunded to the
Participant as soon as practicable after such Purchase Date. However, if the
cash to be returned to a Participant pursuant to the preceding sentence is an
amount less than the amount that would have been necessary to purchase an
additional whole share of Stock on such Purchase Date, the Company may retain
such amount in the Participant’s Plan account to be applied toward the purchase
of shares of Stock in the subsequent Purchase Period or Offering Period, as the
case may be.



          11.5 Tax Withholding. At the time a Participant’s Purchase right is
exercised, in whole or in part, or at the time a Participant disposes of some
or all of the shares of Stock he or she acquires under the Plan, the
Participant shall make adequate provisions for the federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant’s compensation the amount necessary to meet
such withholding obligations.



          11.6 Expiration of Purchase Right. Any portion of a Participant’s
Purchase Right remaining unexercised after the end of the Offering Period to
which the Purchase Right relates shall expire immediately upon the end of the
Offering Period.



          11.7 Reports to Participants. Each Participant who has exercised all of
his or her Purchase Right shall receive, as soon as practicable after the
Purchase Date, a report of such Participant’s Plan account setting forth the
total payroll deductions accumulated prior to such exercise, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the cash balance, if any, remaining immediately after such
purchase that is to be refunded or retained in the Participant’s Plan account
pursuant to Section 11.4. The report required by this Section 11.7 may be
delivered in such form and by such means, including by electronic
transmissions, as the Company may determine.



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     12. WITHDRAWAL FROM THE PLAN.



          12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw from
the Plan by signing and delivering to the Company’s designated office a written
notice of withdrawal on a form provided by the Company for such purpose. Such
withdrawal may be elected at any time prior to the two-week period ending on
the last day of an Offering Period. A Participant who voluntarily withdraws
from the Plan is prohibited from resuming participation in the Plan in the same
Offering from which he or she withdrew, but may participate in any subsequent
Offering by again satisfying the requirements of Sections 5 and 7.1. The
Company may impose from time to time, a requirement that the notice of
withdrawal from the Plan be on file with the Company’s designated office for a
reasonable period prior to the effectiveness of the Participant’s withdrawal.



          12.2 Return of Payroll Deductions. Upon a Participant’s voluntary
withdrawal from the Plan pursuant to Section 12.1, the Participant’s
accumulated payroll deductions which have not been applied toward the purchase
of shares of Stock shall be refunded to the Participant as soon as practicable
after the withdrawal, without the payment of any interest, and the
Participant’s interest in the Plan shall terminate. Such accumulated payroll
deductions to be refunded in accordance with this Section 12.2 may not be
applied to any other Offering under the Plan.



     13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.



          Upon a Participant’s ceasing, prior to a Purchase Date, to be an Employee
of the Participating Company Group for any reason, including retirement,
disability or death, or the failure of a Participant to remain an Eligible
Employee, the Participant’s participation in the Plan shall terminate
immediately. In such event, the payroll deductions credited to the
Participant’s Plan account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or in the case of the Participant’s
death, to the Participant’s legal representative, and all of the Participant’s
rights under the Plan shall terminate. Interest shall not be paid on sums
returned pursuant to this Section 13. A Participant whose participation has
been so terminated may again become eligible to participate in the Plan by
satisfying the requirement of Sections 5 and 7.1.



     14. CHANGE IN CONTROL.



          14.1 Definitions.



                  (a) An “Ownership Change Event” shall be deemed to have occurred if any of
the following occurs with respect to the Company: (i) the direct or indirect
sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting
stock of the Company; (ii) a merger or consolidation of the Company with or
into another entity; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.



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                  (b) A “Change in Control” shall mean an Ownership Change Event or a series
of related Ownership Change Events (collectively, the “Transaction”) wherein
the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction, in substantially the same proportions
as their ownership of shares of the Company’s voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting
stock of the Company or the corporation or corporations to which the assets of
the Company were transferred (the “Transferee Corporation(s)”), as the case may
be. For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the Transaction,
own the Company or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.



          14.2 Effect of Change in Control on Purchase Rights. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation, or parent corporation thereof, as the case may be (the “Acquiring
Corporation”), may assume the Company’s rights and obligations under the Plan.
If the Acquiring Corporation elects not to assume the Company’s rights and
obligations under outstanding Purchase Rights, the Purchase Date of the then
current Offering Period (or Purchase Price) shall be accelerated to a date
before the date of the Change in Control specified by the Board, but the number
of shares of Stock subject to outstanding Purchase Rights shall not be
adjusted. All Purchase Rights which are neither assumed by the Acquiring
Corporation in connection with the Change in Control nor exercised as of the
date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control.



     15. NONTRANSFERABILITY OF PURCHASE RIGHTS.



     A Purchase Right may not be transferred in any manner otherwise than by
will or the laws of descent and distribution and shall be exercisable during
the lifetime of the Participant only by the Participant.



     16. COMPLIANCE WITH SECURITIES LAW.



     The issuance of shares under the Plan shall be subject to compliance with
all applicable requirements of federal and state law with respect to such
securities. A Purchase Right may not be exercised if the issuance of shares
upon such exercise would constitute a violation of any applicable federal or
state securities laws or other law or regulations or the requirements of any
securities exchange or market system upon which the Stock may then be listed.
In addition, no Purchase Right may be exercised unless (a) a registration
statement under the Securities Act of 1933, as amended, shall at the time of
exercise of the Purchase Right be in effect with respect to the shares issuable
upon exercise of the Purchase Right, or (b) in the opinion of legal counsel to
the Company, the shares issuable upon exercise of the Purchase Right may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of said Act. The inability of the Company to obtain
from any regulatory body having jurisdiction the



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authority, if any, deemed by the Company’s legal counsel to be necessary
to the lawful issuance and sale of any shares under the Plan shall relieve the
Company of any liability in respect of the failure to issue or sell such shares
as to which such requisite authority shall not have been obtained. As a
condition to the exercise of a Purchase Right, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate
to evidence compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.



     17. RIGHTS AS A STOCKHOLDER AND EMPLOYEE.



     A Participant shall have no rights as a stockholder by virtue of the
Participant’s participation in the Plan until the date of the issuance of a
certificate for the shares purchased pursuant to the exercise of the
Participant’s Purchase Right (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company).
No adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date such certificate is issued, except
as provided in Section 4.2. Nothing herein shall confer upon a Participant any
right to continue in the employ of the Participating Company Group or interfere
in any way with any right of the Participating Company Group to terminate the
Participant’s employment at any time and for any reason.



     18. LEGENDS.



     The Company may at any time place legends or other identifying symbols
referencing any applicable federal or state securities law restrictions or any
provision convenient in the administration of the Plan on some or all of the
certificates representing shares of Stock issued under the Plan. The
Participant shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section.



     19. NOTIFICATION OF SALE OF SHARES.



     The Company may require the Participant to give the Company prompt notice
of any disposition of shares acquired by exercise of a Purchase Right within
two years from the date of granting such Purchase Right or one year from the
date of exercise of such Purchase Right (a “Disqualifying Disposition”),
whichever is later. Any such notice requirement regarding a Disqualifying
Disposition will be contained in the Participant’s Subscription Agreement. The
Company may require that until such time as a Participant disposes of shares
acquired upon exercise of a Purchase Right, the Participant shall hold all such
shares in the Participant’s name (or, if elected by the Participant, in the
name of the Participant and his or her spouse but not in the name of any
nominee) until the lapse of the Disqualifying Disposition time periods with
respect to such Purchase Right. The Company may direct that the certificates
evidencing shares acquired by exercise of a Purchase Right refer to such
requirement to give prompt notice of disposition.



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     20. NOTICES.



     All notices or other communications by a Participant to the Company under
or in connection with the 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. INDEMNIFICATION.



     In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.



     22. AMENDMENT OR TERMINATION OF THE PLAN.



     The Board may at any time amend or terminate the Plan, except that (a)
such termination shall not affect Purchase Rights previously granted under the
Plan, other than as permitted under the Plan, and (b) no amendment may
adversely affect a Purchase Right previously granted under the Plan (except to
the extent permitted by the Plan or as may be necessary to qualify the Plan as
an employee stock purchase plan pursuant to Section 423 of the Code or to
obtain qualification or registration of the shares of Stock under applicable
federal or state securities laws). In addition, an amendment to the Plan must
be approved by the stockholders of the Company within 12 months of the adoption
of such amendment if such amendment would authorize the sale of more shares
than are authorized for issuance under the Plan, would change the definition of
the corporations that may be designated by the Board as Participating Companies
or would be required under the Code, applicable securities laws or the rules of
any securities exchange or market system upon which the Stock may then be
listed. In the event that the Board approves an amendment to increase the
number of shares authorized for issuance under the Plan (the “Additional
Shares”), the Board, in its sole discretion, may specify that such Additional
Shares may only be issued pursuant to Purchase Rights granted after the date on
which the stockholders of the Company approve such amendment, and such
designation by the Board shall not be deemed to have adversely affected any
Purchase Right granted prior to the date on which the stockholders approve the
amendment.




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