Document:

ZORAN CORPORATION

Exhibit

10.2

 

ZORAN CORPORATION

 

1995 OUTSIDE DIRECTORS STOCK OPTION

PLAN

 

(As Amended Through April 21, 2002)

 

1.                                        Establishment, Purpose and Term of Plan.

 

1.1           Establishment.  The Zoran Corporation 1995 Outside Directors

Stock Option Plan (the “Plan”) is hereby established effective as

of the effective date of the initial registration by the Company of its Stock

under Section 12 of the Exchange Act (the “Effective Date”).

 

1.2           Purpose.  The purpose of the Plan is to advance the

interests of the Participating Company Group and its stockholders by providing

an incentive to attract and retain highly qualified persons to serve as Outside

Directors of the Company and by creating additional incentive for Outside

Directors to promote the growth and profitability of the Participating Company

Group.

 

1.3           Term of Plan.  The Plan shall continue in effect until the

earlier of its termination by the Board or the date on which all of the shares

of Stock available for issuance under the Plan have been issued and all restrictions

on such shares under the terms of the Plan and the agreements evidencing

Options granted under the Plan have lapsed. 

However, all Options shall be granted, if at all, within ten (10) years

from the Effective Date.

 

2.             Definitions

and Construction.

 

2.1           Definitions.  Whenever used herein, the following terms

shall have their respective meanings set forth below:

 

(a)           “Board”

means the Board of Directors of the Company. 

If one or more Committees have been appointed by the Board to administer

the Plan, “Board” also means such Committee(s).

 

(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, including, without limitation, the power to amend or terminate the Plan

at any time, subject to the terms of the Plan and any applicable limitations

imposed by law.

 

(d)           “Company”

means Zoran Corporation, a Delaware corporation, or any successor corporation

thereto.

 

 

(e)           “Consultant”

means any person, including an advisor, engaged by a Participating Company to

render services other than as an Employee or a Director.

 

(f)            “Director”

means a member of the Board or the board of directors of any other

Participating Company.

 

(g)           “Employee”

means any person treated as an employee (including an officer or a Director who

is also treated as an employee) in the records of a Participating Company;

provided, however, that neither service as a Director nor payment of a

director’s fee shall be sufficient to constitute employment for purposes of the

Plan.

 

(h)           “Exchange Act”

means the Securities Exchange Act of 1934, as amended.

 

(i)            “Fair Market

Value” means, as of any date, if there is then a public market for

the Stock, the closing price of the Stock (or the mean of the closing bid and

asked prices of the Stock if the Stock is so reported instead) as reported on

the National Association of Securities Dealers Automated Quotation (“NASDAQ”)

System, the NASDAQ National Market System or such other national or regional

securities exchange or market system constituting the primary market for the

Stock.  If the relevant date does not

fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National

Market System or other national or regional 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 prior to the relevant date.  If there is then no public market for the

Stock, the Fair Market Value on any relevant date shall be as determined by the

Board without regard to any restriction other than a restriction which, by its

terms, will never lapse.

 

(j)            “Option”

means a right to purchase Stock (subject to adjustment as provided in

Section 4.2) pursuant to the terms and conditions of the Plan.

 

(k)           “Optionee”

means a person who has been granted one or more Options.

 

(l)            “Option

Agreement” means a written agreement between the Company and an

Optionee setting forth the terms, conditions and restrictions of the Option

granted to the Optionee.

 

(m)          “Outside

Director” means a Director of the Company who is not an Employee.

 

(n)           “Parent

Corporation” means any present or future “parent corporation” of the

Company, as defined in Section 424(e) of the Code.

 

(o)           “Participating

Company” means the Company or any Parent Corporation or Subsidiary

Corporation.

 

(p)           “Participating

Company Group” means, at any point in time, all corporations

collectively which are then Participating Companies.

 

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(q)           “Rule 16b-3”

means Rule 16b–3 as promulgated under the Exchange Act, as amended

from time to time, or any successor rule or regulation.

 

(r)            “Service”

means the Optionee’s service with the Participating Company Group, whether in

the capacity of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be deemed

to have terminated merely because of a change in the capacity in which the

Optionee renders Service to the Participating Company Group or a change in the

Participating Company for which the Optionee renders such Service, provided

that there is no interruption or termination of the Optionee’s Service.  The Optionee’s Service shall be deemed to

have terminated either upon an actual termination of Service or upon the

corporation for which the Optionee performs Service ceasing to be a

Participating Company.

 

(s)           “Stock”

means the common stock, par value $0.001, of the Company, as adjusted from time

to time in accordance with Section 4.2.

 

(t)            “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, the

plural shall include the singular, and use of the term “or” shall include the

conjunctive as well as the disjunctive.

 

3.             Administration.

 

3.1           Administration by the Board.  The Plan shall be administered by the Board,

including any duly appointed Committee of the Board.  All questions of interpretation of the Plan or of any Option

shall be determined by the Board, and such determinations shall be final and

binding upon all persons having an interest in the Plan or such Option.  Any officer of a Participating Company shall

have the authority to act on behalf of the Company with respect to any matter,

right, obligation, determination or election which is the responsibility of or

which is allocated to the Company herein, provided the officer has apparent

authority with respect to such matter, right, obligation, determination or

election.

 

3.2           Limitations on Authority of the

Board.  Notwithstanding

any other provision herein to the contrary, the Board shall have no authority,

discretion, or power to select the Outside Directors who will receive Options,

to set the exercise price of the Options, to determine the number of shares of

Stock to be subject to an Option or the time at which an Option shall be

granted, to establish the duration of an Option, or to alter any other terms or

conditions specified in the Plan, except in the sense of administering the Plan

subject to the provisions of the Plan.

 

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 three hundred fifty thousand (350,000) and shall

consist of authorized but unissued shares or reacquired shares of Stock or any

combination thereof.  If an outstanding

 

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Option for any reason expires or is terminated or canceled or shares of

Stock acquired, subject to repurchase, upon the exercise of an Option are

repurchased by the Company, the shares of Stock allocable to the unexercised

portion of such Option, or such repurchased shares of Stock, 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 change in the capital structure of the

Company, appropriate adjustments shall be made in the number and class of

shares subject to the Plan, to the “Initial Option” and “Annual Option” (as

defined in Section 6.1), and to any outstanding Options, and in the

exercise price of any outstanding Options. 

If a majority of the shares which are of the same class as the shares

that are subject to outstanding Options are exchanged for, converted into, or

otherwise become (whether or not pursuant to an Ownership Change Event as

defined in Section 8.1) shares of another corporation (the “New Shares”),

the Board may unilaterally amend the outstanding Options to provide that such

Options are exercisable for New Shares. 

In the event of any such amendment, the number of shares subject to, and

the exercise price of, the outstanding Options 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

exercise price of any Option be decreased to an amount less than the par value,

if any, of the stock subject to the Option.

 

5.             Eligibility

and Type of Options.

 

5.1           Persons Eligible for Options.  An Option shall be granted only to a person

who, at the time of grant, is an Outside Director.

 

5.2           Options Authorized.  Options shall be nonstatutory stock options;

that is, options which are not treated as incentive stock options within the

meaning of Section 422(b) of the Code.

 

6.             Terms and

Conditions of Options. 

Options shall be evidenced by Option Agreements specifying the number of

shares of Stock covered thereby, in such form as the Board shall from time to

time establish.  Option Agreements may

incorporate all or any of the terms of the Plan by reference and shall comply

with and be subject to the following terms and conditions:

 

6.1           Automatic Grant of Options.  Subject to execution by an Outside Director

of the appropriate Option Agreement, Options shall be granted automatically and

without further action of the Board, as follows:

 

(a)           Initial

Option.  Each person who is

(i) an Outside Director on the Effective Date, or (ii) first elected or

appointed as an Outside Director after the Effective Date shall be granted an

Option to purchase twenty thousand (20,000) shares of Stock on the Effective

Date or the date of such initial election or appointment, respectively (an “Initial

Option”).  Notwithstanding

anything herein to the contrary, a Director of the Company who previously did

 

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not qualify as an Outside Director shall not receive an Initial Option

in the event that such Director subsequently becomes an Outside Director.

 

(b)           Annual

Option.  Each Outside

Director (including any Director of the Company who previously did not qualify

as an Outside Director but who subsequently becomes an Outside Director) shall

be granted, on the date immediately following the date of each annual meeting

of the stockholders of the Company (an “Annual Meeting”) following which such

person remains an Outside Director, an Option to purchase ten thousand (10,000)

shares of Stock (an “Annual Option”).  Notwithstanding the foregoing, an Outside Director who has not

served continuously as a Director of the Company for at least six (6) months as

of the date immediately following such Annual Meeting shall not receive an

Annual Option on such date.

 

(c)           Right to

Decline Option. 

Notwithstanding the foregoing, any person may elect not to receive an

Option by delivering written notice of such election to the Board no later than

the day prior to the date such Option would otherwise be granted.  A person so declining an Option shall

receive no payment or other consideration in lieu of such declined Option.  A person who has declined an Option may

revoke such election by delivering written notice of such revocation to the

Board no later than the day prior to the date such Option would be granted

pursuant to Section 6.1(a) or (b), as the case may be.

 

6.2           Exercise Price.  The exercise price per share of Stock

subject to an Option shall be the Fair Market Value of a share of Stock on the

date the Option is granted.

 

6.3           Exercise Period.  Each Option shall terminate and cease to be

exercisable on the date ten (10) years after the date of grant of the Option

unless earlier terminated pursuant to the terms of the Plan or the Option

Agreement.

 

6.4           Right to Exercise Options.

 

(a)           Initial

Option.  Except as otherwise

provided in the Plan or in the Option Agreement, an Initial Option shall (i)

first become exercisable on the date which is one (1) year after the date on

which the Initial Option was granted (the “Initial Option Vesting Date”); and (ii) be

exercisable on and after the Initial Option Vesting Date and prior to the

termination thereof in an amount equal to the number of shares of Stock

initially subject to the Initial Option multiplied by the Vested Ratio as set

forth below, less the number of shares previously acquired upon exercise

thereof.  The Vested Ratio described in

the preceding sentence shall be determined as follows:

 

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  Vested Ratio

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Prior to Initial

  Option Vesting Date

  	

   

  	

  0

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  On Initial

  Option Vesting Date, provided the Optionee’s Service is continuous from the

  date of grant of the Initial Option until the Initial Option Vesting Date

  	

   

  	

  1/4

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Plus

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  For each full

  year of of the Optionee’s continuous Service from the Initial Option Vesting

  Date until the Vested Ratio equals 1/1, an additional

  	

   

  	

  1/4

  	

   

  

 

(b)           Annual

Option.  Except as otherwise

provided in the Plan or in the Option Agreement, an Annual Option shall first

become exercisable on the date which is one (1) year after the date on which

the Annual Option was granted (the “Annual Option Vesting Date”), provided the

Optionee’s Service is continuous from the date of grant of the Annual Option

until the    Annual Option Vesting

Date.  The Annual Option shall be

exercisable on and after the Annual Option Vesting Date and prior to the

termination thereof in an amount equal to the number of shares of Stock

initially subject to the Annual Option, less the number of shares previously

acquired upon exercise thereof.

 

6.5           Payment of Exercise Price.

 

(a)           Forms of

Consideration Authorized. 

Except as otherwise provided below, payment of the exercise price for

the number of shares of Stock being purchased pursuant to any Option shall be

made (i) in cash, by check, or cash equivalent, (ii) by tender to the

Company of shares of Stock owned by the Optionee having a Fair Market Value not

less than the exercise price, (iii) by the assignment of the proceeds of a

sale or loan with respect to some or all of the shares being acquired upon the

exercise of the Option (including, without limitation, through an exercise

complying with the provisions of Regulation T as promulgated from time to

time by the Board of Governors of the Federal Reserve System) (a “Cashless

Exercise”), or (iv) by any combination thereof.

 

(b)           Tender of

Stock.  Notwithstanding the

foregoing, an Option may not be exercised by tender to the Company of shares of

Stock to the extent such tender of Stock would constitute a violation of the

provisions of any law, regulation or agreement restricting the redemption of

the Company’s stock.  Unless otherwise

provided by the Board, an Option may not be exercised by tender to the Company

of shares of Stock unless such shares either have been owned by the Optionee

for more than six (6) months or were not acquired, directly or indirectly, from

the Company.

 

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(c)           Cashless

Exercise.  The Company

reserves, at any and all times, the right, in the Company’s sole and absolute

discretion, to establish, decline to approve or terminate any program or

procedures for the exercise of Options by means of a Cashless Exercise.

 

6.6           Tax Withholding.  The Company shall have the right, but not

the obligation, to deduct from the shares of Stock issuable upon the exercise

of an Option, or to accept from the Optionee the tender of, a number of whole

shares of Stock having a Fair Market Value equal to all or any part of the

federal, state, local and foreign taxes, if any, required by law to be withheld

by the Participating Company Group with respect to such Option or the shares

acquired upon exercise thereof.  Alternatively

or in addition, in its sole discretion, the Company shall have the right to

require the Optionee to make adequate provision for any such tax withholding

obligations of the Participating Company Group arising in connection with the

Option or the shares acquired upon exercise thereof.  The Company shall have no obligation to deliver shares of Stock

until the Participating Company Group’s tax withholding obligations have been

satisfied.

 

7.             Standard

Form of Option Agreement.

 

7.1           Initial Option.  Unless otherwise provided for by the Board

at the time an Initial Option is granted, each Initial Option shall comply with

and be subject to the terms and conditions set forth in the form of

Nonstatutory Stock Option Agreement for Outside Directors (Initial Option)

adopted by the Board concurrently with its adoption of the Plan and as amended

from time to time.

 

7.2           Annual Option.  Unless otherwise provided for by the Board

at the time an Annual Option is granted, each Annual Option shall comply with

and be subject to the terms and conditions set forth in the form of

Nonstatutory Stock Option Agreement for Outside Directors (Annual Option)

adopted by the Board concurrently with its adoption of the Plan and as amended

from time to time.

 

7.3           Authority to Vary Terms.  Subject to the limitations set forth in

Section 3.2, the Board shall have the authority from time to time to vary

the terms of any of the standard forms of Option Agreement described in this

Section 7 either in connection with the grant or amendment of an

individual Option or in connection with the authorization of a new standard

form or forms; provided, however, that the terms and conditions of any such

new, revised or amended standard form or forms of Option Agreement are not

inconsistent with the terms of the Plan. 

Such authority shall include, but not by way of limitation, the

authority to grant Options which are immediately exercisable subject to the

Company’s right to repurchase any unvested shares of Stock acquired by the

Optionee upon the exercise of an Option in the event such Optionee’s Service is

terminated for any reason.  In no event,

however, shall the Board be permitted to vary the terms of any standard form of

Option Agreement if such change would cause the Plan to cease to qualify as a formula

plan pursuant to Rule 16b-3 at any such time as any class of equity security of

the Company is registered pursuant to Section 12 of the Exchange Act.

 

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8.             Transfer

of Control.

 

8.1           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 in which the Company is a party;

 

(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.

 

(b)           A

“Transfer

of 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.

 

8.2           Effect of Transfer of Control on

Options.  In the event of

a Transfer of Control, the surviving, continuing, successor, or purchasing

corporation or parent corporation thereof, as the case may be (the “Acquiring

Corporation”), may either assume the Company’s rights and

obligations under outstanding Options or substitute for outstanding Options

substantially equivalent options for the Acquiring Corporation’s stock.  In the event the Acquiring Corporation

elects not to assume or substitute for outstanding Options in connection with a

Transfer of Control, any unexercisable or unvested portion of the outstanding

Options shall be immediately exercisable and vested in full as of the date ten

(10) days prior to the date of the Transfer of Control.  The exercise or vesting of any Option that

was permissible solely by reason of this Section 8.2 shall be conditioned

upon the consummation of the Transfer of Control.  Any Options which are neither assumed or substituted for by the Acquiring

Corporation in connection with the Transfer of Control nor exercised as of the

date of the Transfer of Control shall terminate and cease to be outstanding

effective as of the date of the Transfer of Control.  Notwithstanding the foregoing, shares acquired upon exercise of

an Option

 

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prior to the Transfer of Control and any consideration received

pursuant to the Transfer of Control with respect to such shares shall continue

to be subject to all applicable provisions of the Option Agreement evidencing

such Option except as otherwise provided in such Option Agreement.  Furthermore, notwithstanding the foregoing,

if the corporation the stock of which is subject to the outstanding Options

immediately prior to an Ownership Change Event described in

Section 8.1(a)(i) constituting a Transfer of Control is the surviving or

continuing corporation and immediately after such Ownership Change Event less

than fifty percent (50%) of the total combined voting power of its voting stock

is held by another corporation or by other corporations that are members of an

affiliated group within the meaning of Section 1504(a) of the Code without

regard to the provisions of Section 1504(b) of the Code, the outstanding

Options shall not terminate.

 

9.             Nontransferability

of Options.  During the

lifetime of the Optionee, an Option shall be exercisable only by the Optionee

or the Optionee’s guardian or legal representative.  No Option shall be assignable or transferable by the Optionee,

except by will or by the laws of descent and distribution.

 

10.           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 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.

 

11.           Termination

or Amendment of Plan. 

The Board may terminate or amend the Plan at any time.  However, subject to changes in the law or

other legal requirements that would permit otherwise, without the approval of

the Company’s stockholders, there shall be (a) no increase in the total

number of shares of Stock that may be issued under the Plan (except by

operation of the provisions of Section 4.2), and (b) no expansion in

the class of persons eligible to receive Options.  Furthermore, to the extent required by Rule 16b-3, provisions of

the Plan addressing eligibility to participate in the Plan and the amount,

price and timing of Options shall not be amended more than once every six (6)

months, other than to comport with changes in the Code, the Employee Retirement

Income Security Act of 1974, as amended, or the rules thereunder.  In any event, no termination or amendment of

the Plan may adversely affect any then outstanding Option, or any unexercised

portion thereof, without the consent of the Optionee, unless such termination

or amendment is necessary to comply with any applicable law or government regulation.

 

9

 

IN WITNESS WHEREOF, the undersigned Secretary of the

Company certifies that the foregoing sets forth the Zoran Corporation 1995

Outside Directors Stock Option Plan was duly adopted and amended by the Board

through April 21, 2002.

 

 

	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Secretary

  

 

10ZORAN CORPORATION

Exhibit

10.3

 

ZORAN CORPORATION

 

AMENDED AND RESTATED

 

1995 EMPLOYEE STOCK PURCHASE PLAN

 

(As Amended Through April 21, 2002)

 

1.             Establishment, Purpose and Term of Plan.

 

1.1           Establishment.  The Zoran Corporation 1995 Employee Stock

Purchase Plan was initially established effective December 14, 1995 (the “Effective

Date”), the effective date of the initial registration by the

Company of its Stock under Section 12 of the Exchange Act (the “Initial Plan”).  The Initial Plan was amended and restated in

its entirety as the Zoran Corporation Amended and Restated 1995 Employee Stock

Purchase Plan (the “Plan”) effective as of the date of

commencement of the first Offering under the Plan following approval of the

Plan by the stockholders of the Company on June 6, 1996.

 

1.2           Purpose.  The purpose of the Plan to provide Eligible

Employees of the Participating Company Group with an opportunity to acquire a

proprietary interest in the Company through the purchase of Stock.  The Company intends that the Plan shall

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 its termination by the Board or the date on which all of the shares

of Stock available for issuance under the Plan have been issued.

 

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. 

If one or more Committees have been appointed by the Board to administer

the Plan, “Board” also means such Committee(s).

 

(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,

including, without limitation, the power to amend or

 

 

terminate the Plan at any time, subject to the terms of the Plan and

any applicable limitations imposed by law.

 

(d)           “Company”

means Zoran Corporation, a Delaware corporation, or any successor corporation

thereto.

 

(e)           “Compensation”

means, with respect to an Offering Period under the Plan, all amounts paid in

cash in the form of base salary 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.  Compensation shall not include commissions,

overtime, bonuses, annual awards, other incentive payments, shift premiums,

reimbursements of expenses, allowances, long-term disability, workers’

compensation or any amount deemed received without the actual transfer of cash

or any amounts directly or indirectly paid pursuant to the Plan or any other

stock purchase or stock option plan.

 

(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 any person treated as an employee (including an officer or a Director who

is also treated as an employee) in the records of a Participating Company and

for purposes of Section 423 of the Code; provided, however, that neither

service as a Director nor payment of a director’s fee shall be sufficient to

constitute employment for purposes of the Plan.

 

(h)           “Exchange Act”

means the Securities Exchange Act of 1934, as amended.

 

(i)            “Fair Market

Value” means, as of any date, if there is then a public market for

the Stock, the closing price of a share of Stock (or the mean of the closing

bid and asked prices of a share of Stock if the Stock is so reported instead)

as reported on the National Association of Securities Dealers Automated

Quotation (“NASDAQ”) System, the NASDAQ National Market System or such

other national or regional securities exchange or market system constituting

the primary market for the Stock.  If

the relevant date does not fall on a day on which the Stock is trading on

NASDAQ, the NASDAQ National Market System or other national or regional

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

prior to the relevant date, or such other appropriate day as shall be

determined by the Board, in its sole discretion.  If there is then no public market for the Stock, the Fair Market

Value on any relevant date shall be as determined by the Board without regard

to any restriction other than a restriction which, by its terms, will never

lapse.  Notwithstanding the foregoing,

the Fair Market Value per share of Stock on the Effective Date shall be deemed

to be the public offering price set forth in the final prospectus filed with

the Securities and Exchange Commission in connection with the initial public

offering of the Stock.

 

(j)            “Offering”

means an offering of Stock as provided in Section 6.

 

(k)           “Offering

Date” means, for any Offering Period, the first day of such Offering

Period.

 

2

 

(l)            “Offering

Period” means a period determined in accordance with

Section 6.1.

 

(m)          “Parent

Corporation” means any present or future “parent corporation” of the

Company, as defined in Section 424(e) of the Code.

 

(n)           “Participant”

means an Eligible Employee participating in the Plan.

 

(o)           “Participating

Company” means the Company or any Parent Corporation or Subsidiary

Corporation which the Board determines should be included in the Plan.  The Board shall have the sole and absolute

discretion to determine from time to time what Parent Corporations or

Subsidiary Corporations shall be Participating Companies.

 

(p)           “Participating

Company Group” means, at any point in time, the Company and all

other corporations collectively which are then Participating Companies.

 

(q)           “Purchase

Date” means, for any Purchase Period, the last day of such Purchase

Period.

 

(r)            “Purchase

Period” means a period determined in accordance with Section 6.2.

 

(s)           “Purchase

Price” means the price at which a share of Stock may be purchased

pursuant to the Plan, as determined in accordance with Section 9.

 

(t)            “Purchase

Right”  means an option

pursuant to the Plan to purchase such shares of Stock as provided in

Section 8 which may or may not be exercised during an Offering

Period.  Such option arises from the

right of a Participant to withdraw such Participant’s accumulated payroll

deductions not previously applied to the purchase of Stock under the Plan (if

any) and terminate participation in the Plan or any Offering therein at any

time during an Offering Period.

 

(u)           “Stock”

means the common stock, par value $0.001, of the Company, as adjusted from time

to time in accordance with Section 4.2.

 

(v)           “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, the

plural shall include the singular, and use of the term “or” shall include the

conjunctive as well as the disjunctive.

 

3

 

3.             Administration.  The Plan shall be administered by the Board,

including any duly appointed Committee of the Board.  All questions of interpretation 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 such 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.

 

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 six hundred thousand (600,000) and shall consist

of authorized but unissued or reacquired shares of the 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 change in the capital structure of the

Company, or in the event of any merger (including a merger effected for the

purpose of changing the Company’s domicile), 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, to the Offering

Share Limit set forth in Section 8.1 and to each Purchase Right and in the

Purchase Price.

 

5.             Eligibility.

 

5.1           Employees Eligible to Participate.  Any Employee of a Participating Company

is eligible to participate in the Plan except the following:

 

(a)           Employees

who are customarily employed by the Participating Company Group for twenty (20)

hours or less per week;

 

(b)           Employees

who are customarily employed by the Participating Company Group for not more

than five (5) months in any calendar year; and

 

(c)           Employees

who own or hold options to purchase or who, as a result of participation in the

Plan, 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 within the meaning of Section 423(b)(3) of the Code.

 

5.2           Leased Employees Excluded.  Notwithstanding anything herein to the

contrary, any individual performing services for a Participating Company solely through a

 

4

 

leasing agency or employment agency shall not be deemed an “Employee”

of such Participating Company.

 

6.             Offerings.

 

6.1           Offering Periods.  Except as otherwise set forth below, the

Plan shall be implemented by sequential Offerings of approximately twenty-four

(24) months duration (an “Offering Period”); provided, however that

the first Offering Period shall commence on the Effective Date and end on

October 31, 1997 (the “Initial Offering Period”).  Subsequent Offerings shall commence on the

first days of May and November of each year and end on the last days of the

second April and October, respectively, occurring thereafter.  Notwithstanding the foregoing, the Board may

establish a different term for one or more Offerings or different commencing or

ending dates for such Offerings; provided, however, that no Offering may exceed

a term of twenty-seven (27) months.  An

Employee who becomes an Eligible Employee after an Offering Period has

commenced shall not be eligible to participate in such Offering but may

participate in any subsequent Offering provided such Employee is still an

Eligible Employee as of the commencement of any such subsequent Offering.  Eligible Employees may not participate in

more than one Offering at a time.  In

the event the first or last day of an Offering Period is not a business day,

the Company shall specify the business day that will be deemed the first or

last day, as the case may be, of the Offering Period.

 

6.2           Purchase Periods.  Each Offering Period shall consist of four

(4) consecutive purchase periods of approximately six (6) months duration

(individually, a “Purchase Period”).  The Purchase Period commencing on the

Offering Date of the Initial Offering Period shall end on April 30, 1996.  A Purchase Period commencing on the first

day of May shall end on the last day of the next following October.  A Purchase Period commencing on the first

day of November shall end on the last day of the next following April.  Notwithstanding the foregoing, the Board may

establish a different term for one or more Purchase Periods or different

commencing or ending dates for such Purchase Periods.  In the event the first or last day of a Purchase Period is not a

business day, the Company shall specify the business day that will be deemed

the first or last day, as the case may be, of the Purchase Period.

 

6.3           Governmental Approval; Stockholder

Approval. 

Notwithstanding any other provision of the Plan to the contrary, any

Purchase Right granted pursuant to the Plan shall be subject to

(a) obtaining all necessary governmental approvals or qualifications of

the sale or issuance of the Purchase Rights or the shares of Stock and

(b) obtaining stockholder approval of the Plan.  Notwithstanding the foregoing, stockholder approval shall not be

necessary in order to grant any Purchase Right granted in the Plan’s Initial

Offering Period; provided, however, that the exercise of any such Purchase

Right shall be subject to obtaining stockholder approval of the Plan.

 

7.             Participation

in the Plan.

 

7.1           Initial Participation.  An Eligible Employee shall become a

Participant on the first Offering Date after satisfying the eligibility

requirements of Section 5 and delivering to the Company’s payroll office

or other office designated by the Company not later than the close of business

for such office on the last business day before such Offering Date (the “Subscription

 

5

 

Date”)

a subscription agreement indicating the Employee’s election to participate in

the Plan and authorizing payroll deductions. 

An Eligible Employee who does not deliver a subscription agreement to

the Company’s payroll or other designated office on or before the Subscription

Date shall not participate in the Plan for that Offering Period or for any

subsequent Offering Period unless such Employee subsequently enrolls in the

Plan by filing a subscription agreement with the Company by the Subscription

Date for such subsequent Offering Period. 

The Company may, from time to time, change the Subscription Date as

deemed advisable by the Company in its sole discretion for proper

administration of the Plan.

 

7.2           Continued Participation.  A Participant shall automatically

participate in the Offering Period commencing immediately after the final

Purchase Date of each Offering Period in which the Participant participates until

such time as such Participant (a) ceases to be an Eligible Employee,

(b) withdraws from the Plan pursuant to Section 13.2 or

(c) terminates employment as provided in Section 14.  If a Participant automatically may

participate in a subsequent Offering Period pursuant to this Section 7.2,

then the Participant is not required to file any additional subscription

agreement for such subsequent Offering Period in order to continue

participation in the Plan.  However, a

Participant may file a subscription agreement with respect to a subsequent

Offering Period if the Participant desires to change any of the Participant’s

elections contained in the Participant’s then effective subscription agreement.

 

8.             Right to

Purchase Shares.

 

8.1           Purchase Right.  Except as set forth below, during an

Offering Period each Participant in such Offering Period shall have a Purchase

Right consisting of the right to purchase that number of whole shares of Stock

arrived at by dividing Fifty Thousand Dollars ($50,000) by the Fair Market

Value of a share of Stock on the Offering Date of such Offering Period;

provided, however, that such number shall not exceed 5,000 shares (the “Offering

Share Limit”).  Shares of

Stock may only be purchased through a Participant’s payroll deductions pursuant

to Section 10.

 

8.2           Pro Rata Adjustment of Purchase

Right.  Notwithstanding

the foregoing, if the Board shall establish an Offering Period of less than

twenty-three and one-half (231⁄2) months in duration or more than twenty-four and

one-half (241⁄2) months in duration, (a) the dollar amount in

Section 8.1 shall be determined by multiplying $2,083.33 by the number of

months in the Offering Period and rounding to the nearest whole dollar, and

(b) the Offering Share Limit shall be determined by multiplying 208.33

shares by the number of months in the Offering Period and rounding to the

nearest whole share.  For purposes of

the preceding sentence, fractional months shall be rounded to the nearest whole

month.

 

9.             Purchase Price.  The Purchase Price at which each share of

Stock may be acquired in a given Offering Period pursuant to the exercise of

all or any portion of a Purchase Right granted under the Plan shall be set by

the Board; provided, however, that the Purchase Price 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 of the Offering

Period.  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

 

6

 

Stock on the Offering Date of the Offering Period, or (b) the Fair

Market Value of a share of Stock on the Purchase Date of the Offering Period.

 

10.           Accumulation of Purchase Price

through Payroll Deduction. 

Shares of Stock which are acquired pursuant to the exercise of all or

any portion of a Purchase Right for an Offering Period may be paid for only by

means of payroll deductions from the Participant’s Compensation accumulated

during the Offering Period.  Except as

set forth below, the amount of Compensation to be deducted from a Participant’s

Compensation during each pay period shall be determined by the Participant’s

subscription agreement.

 

10.1         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 in the Plan.

 

10.2         Limitations on Payroll Deductions.  The amount of payroll deductions with

respect to the Plan for any Participant during any pay period shall be in one

percent (1%) increments not to exceed ten percent (10%) of the Participant’s

Compensation for such pay period. 

Notwithstanding the foregoing, the Board may change the limits on

payroll deductions effective as of a future Offering Date, as determined by the

Board.  Amounts deducted from

Compensation shall be reduced by any amounts contributed by the Participant and

applied to the purchase of Company stock pursuant to any other employee stock

purchase plan qualifying under Section 423 of the Code.

 

10.3         Election to Change or Stop Payroll

Deductions.  During an

Offering Period, a Participant may elect to increase or decrease the amount

deducted or stop deductions from his or her Compensation by filing an amended

subscription agreement with the Company on or before the “Change Notice

Date.”  The “Change Notice Date” shall

initially be the seventh (7th) day prior to the end of the first pay period for

which such election is to be effective; however, the Company may change such

Change Notice Date from time to time.  A

Participant who elects to decrease the rate of his or her payroll deductions to

zero percent (0%) shall nevertheless remain a Participant in the current

Offering Period unless such Participant subsequently withdraws from the

Offering or the Plan as provided in Sections 13.1 and 13.2, respectively,

or is automatically withdrawn from the Offering as provided in

Section 13.4.

 

10.4         Participant Accounts.  Individual Plan accounts shall be maintained

for each Participant.  All payroll

deductions from a Participant’s Compensation shall be credited to such 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.

 

10.5         No Interest Paid.  Interest shall not be paid on sums deducted

from a Participant’s Compensation pursuant to the Plan.

 

10.6         Company Established Procedures.  The Company may, from time to time,

establish or change (a) a minimum required payroll deduction amount for participation

in an Offering, (a) limitations on the frequency or number of changes in

the rate of payroll deduction during an Offering, (c) an exchange ratio

applicable to amounts withheld in a currency

 

7

 

other than U.S. dollars, (d) payroll deduction in excess of or

less than the amount designated by a Participant in order to adjust for delays

or mistakes in the Company’s processing of subscription agreements,

(e) the date(s) and manner by which the Fair Market Value of a share of

Stock is determined for purposes of administration of the Plan, or

(vi) such other limitations or procedures as deemed advisable by the

Company in the Company’s sole discretion which are consistent with the Plan and

in accordance with the requirements of Section 423 of the Code.

 

11.           Purchase of Shares.

 

11.1         Exercise of Purchase Right.  On each Purchase Date of an Offering Period,

each Participant who has not withdrawn from the Offering or whose participation

in the Offering has not terminated on or before such Purchase Date shall

automatically acquire pursuant to the exercise of the Participant’s Purchase

Right the number of whole shares of Stock arrived at by dividing the total

amount of the Participant’s accumulated payroll deductions for the Purchase

Period by the Purchase Price; provided, 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 on or before such Purchase Date.

 

11.2         Return of Cash Balance.  Any cash balance remaining in the

Participant’s Plan account shall be refunded to the Participant as soon as

practicable after the Purchase Date.  In

the event the cash to be returned to a Participant pursuant to the preceding

sentence is an amount less than the amount necessary to purchase a whole share

of Stock, the Company may establish procedures whereby such cash is maintained

in the Participant’s Plan account and applied toward the purchase of shares of

Stock in the subsequent Purchase Period or Offering Period.

 

11.3         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 provision for the foreign, 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.

 

11.4         Expiration of Purchase Right.  Any portion of a Participant’s Purchase

Right remaining unexercised after the end of the Offering Period to which such

Purchase Right relates shall expire immediately upon the end of such Offering

Period.

 

8

 

12.           Limitations

on Purchase of Shares; Rights as a Stockholder.

 

12.1         Fair Market Value Limitation.  Notwithstanding any other provision of the

Plan, no Participant shall be entitled to purchase shares of Stock under the

Plan (or any other employee stock purchase plan which is intended to meet the

requirements of Section 423 of the Code sponsored by the Company or a

Parent Corporation or Subsidiary Corporation) at a rate which exceeds $25,000

in Fair Market Value, which Fair Market Value is determined for shares

purchased during a given Offering Period as of the Offering Date for such

Offering Period (or such other limit as may be imposed by the Code), for each

calendar year in which the Participant participates in the Plan (or any other

employee stock purchase plan described in this sentence).

 

12.2         Pro Rata Allocation.  In the event the number of shares of Stock

which might be purchased by all Participants in the Plan exceeds the number of

shares of Stock available in the Plan, 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.

 

12.3         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 stock certificate

for the shares of Stock being purchased pursuant to the exercise of the

Participant’s Purchase Right.  No

adjustment shall be made for cash dividends or distributions or other rights

for which the record date is prior to the date such stock certificate is issued.  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.

 

13.           Withdrawal.

 

13.1         Withdrawal From an Offering.  A Participant may withdraw from an Offering

by signing and delivering to the Company’s payroll or other 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 end of an Offering Period; provided, however, if a

Participant withdraws after a Purchase Date, the withdrawal shall not affect

shares of Stock acquired by the Participant on such Purchase Date.  Unless otherwise indicated, withdrawal from

an Offering shall not result in a withdrawal from the Plan or any succeeding

Offering therein.  By withdrawing from

an Offering effective as of the close of a given Purchase Date, a Participant

may have shares of Stock purchased on such Purchase Date and immediately

commence participation in the new Offering commencing immediately after such

Purchase Date.  A Participant is

prohibited from again participating in an Offering at any time following

withdrawal from such Offering.  The

Company may impose, from time to time, a requirement that the notice of

withdrawal be on file with the Company’s payroll office or other designated

office for a reasonable period prior to the effectiveness of the Participant’s

withdrawal from an Offering.

 

13.2         Withdrawal from the Plan.  A Participant may withdraw from the Plan by

signing and delivering to the Company’s payroll office or other designated

office a written notice of withdrawal on a form provided by the Company for

such purpose.  Withdrawals made after a

Purchase Date shall not affect shares of Stock acquired by the Participant on

such Purchase Date.

 

9

 

In the event a Participant voluntarily elects to withdraw from the

Plan, the Participant may not resume participation in the Plan during the same

Offering Period, but may participate in any subsequent Offering under the Plan

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 be on file with the Company’s payroll

office or other designated office for a reasonable period prior to the

effectiveness of the Participant’s withdrawal from the Plan.

 

13.3         Return of Payroll Deductions.  Upon a Participant’s withdrawal from an

Offering or the Plan pursuant to Sections 13.1 or 13.2, respectively, the

Participant’s accumulated payroll deductions which have not been applied toward

the purchase of shares of Stock shall be returned as soon as practicable after

the withdrawal, without the payment of any interest, to the Participant, and

the Participant’s interest in the Offering or the Plan, as applicable, shall

terminate.  Such accumulated payroll

deductions may not be applied to any other Offering under the Plan.

 

13.4         Automatic Withdrawal From an

Offering.  If the Fair

Market Value of a share of Stock on a Purchase Date of an Offering (other than

the final Purchase Date of such Offering) is less than the Fair Market Value of

a share of Stock on the Offering Date for such Offering, then every Participant

shall automatically (a) be withdrawn from such Offering at the close of

such Purchase Date and after the acquisition of shares of Stock for such

Purchase Period and (b) be enrolled in the Offering commencing on the

first business day subsequent to such Purchase Period.  A Participant may elect not to be

automatically withdrawn from an Offering Period pursuant to this

Section 13.4 by delivering to the Company not later than the close of

business on the last day before the Purchase Date a written notice indicating

such election.

 

13.5         Waiver of Withdrawal Right.  The Company may, from time to time,

establish a procedure pursuant to which a Participant may elect, at least six

(6) months prior to a Purchase Date, to have all payroll deductions accumulated

in his or her Plan account as of such Purchase Date applied to purchase shares

of Stock under the Plan, and (a) to waive his or her right to withdraw

from the Offering or the Plan and (b) to waive his or her right to

increase, decrease, or cease payroll deductions under the Plan from his or her

Compensation during the Purchase Period ending on such Purchase Date.  Such election shall be made in writing on a

form provided by the Company for such purpose and must be delivered to the

Company not later than the close of business on the day preceding the date

which is six (6) months before the Purchase Date for which such election is to

first be effective.

 

14.           Termination

of Employment or Eligibility. 

Termination of a Participant’s employment with the Company for any

reason, including retirement, disability or death or the failure of a

Participant to remain an Eligible Employee, shall terminate the Participant’s

participation in the Plan 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 to a Participant pursuant to this

Section 14.  A Participant whose

participation has been so terminated may again become eligible to participate

in the Plan by again satisfying the requirements of Sections 5 and 7.1.

 

10

 

15.           Transfer

of Control.

 

15.1         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 in which the Company a party; (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.

 

(b)           A

“Transfer

of 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.

 

15.2         Effect of Transfer of Control on

Purchase Rights.  In the

event of a Transfer of 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 or substitute substantially equivalent Purchase Rights for stock of

the Acquiring Corporation.  If the

Acquiring Corporation elects not to assume or substitute for the outstanding

Purchase Rights, the Board may, in its sole discretion and notwithstanding any

other provision herein to the contrary, adjust the Purchase Date of the then

current Purchase Period to a date on or before the date of the Transfer of

Control, but shall not adjust the number of shares of Stock subject to any

Purchase Right.  All Purchase Rights

which are neither assumed or substituted for by the Acquiring Corporation in

connection with the Transfer of Control nor exercised as of the date of the

Transfer of Control shall terminate and cease to be outstanding effective as of

the date of the Transfer of Control. 

Notwithstanding the foregoing, if the corporation the stock of which is

subject to the outstanding Purchase Rights immediately prior to an Ownership

Change Event described in Section 15.1(a)(i) constituting a Transfer of Control

is the surviving or continuing corporation and immediately after such Ownership

Change Event less than fifty percent (50%) of the total combined voting power

of its voting stock is held by another corporation or by other corporations

that are members of an affiliated group within the meaning of Section 1504(a) of

the Code without regard to the provisions of Section 1504(b) of the Code, the

outstanding Purchase Rights shall not terminate unless the Board otherwise

provides in its sole discretion.

 

11

 

16.           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.  The Company, in its absolute discretion, may impose such

restrictions on the transferability of the shares purchasable upon the exercise

of a Purchase Right as it deems appropriate and any such restriction shall be

set forth in the respective subscription agreement and may be referred to on

the certificates evidencing such shares.

 

17.           Reports.  Each Participant who exercised all or part

of his or her Purchase Right for a Purchase Period shall receive, as soon as

practicable after the Purchase Date of such Purchase Period, a report of such

Participant’s Plan account setting forth the total payroll deductions

accumulated, the number of shares of Stock purchased, the Purchase Price for

such shares, the date of purchase and the remaining cash balance to be refunded

or retained in the Participant’s Plan account pursuant to Section 11.2, if

any.  Each Participant shall be provided

information concerning the Company equivalent to that information generally

made available to the Company’s common stockholders.

 

18.           Restriction

on Issuance of Shares. 

The issuance of shares under the Plan shall be subject to compliance

with all applicable requirements of foreign, federal or 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 foreign, federal or state securities

laws or other law or regulations.  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 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.

 

19.           Legends.  The Company may at any time place legends or

other identifying symbols referencing any applicable foreign, 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.  Unless otherwise specified by

the Company, legends placed on such certificates may include but shall not be

limited to the following:

 

“THE SHARES

EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED

HOLDER UPON

 

12

 

THE PURCHASE OF SHARES

UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL

REVENUE CODE OF 1986, AS AMENDED.  THE

TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION

IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF MADE

ON OR BEFORE               ,

19   .  THE REGISTERED

HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED

HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE.”

 

20.           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.  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 (and not in the name of any nominee) until the

lapse of the time periods with respect to such Purchase Right referred to in the

preceding sentence.  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.

 

21.           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, except 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

foreign, federal or state securities laws). 

In addition, an amendment to the Plan must be approved by the

stockholders of the Company within twelve (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 or would change the definition of the corporations

that may be designated by the Board as Participating Companies.

 

22.           Continuation of Initial Plan as to

Outstanding Purchase Rights. 

Any other provision of the Plan to the contrary notwithstanding, the

terms of the Initial Plan shall remain in effect and apply to all Purchase

Rights granted pursuant to the Initial Plan.

 

IN WITNESS WHEREOF, the undersigned Secretary of the

Company certifies that the foregoing sets forth the Zoran Corporation Amended

and Restated 1995 Employee Stock Purchase Plan as duly adopted by the Board of

Directors of the Company on January 24, 1996 and amended through April 21,

2002.

 

 

	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Secretary

  

 

13

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