Document:

Exhibit 10.5

 

GSI TECHNOLOGY, INC.

 

2007 Employee Stock Purchase Plan

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Establishment,
  Purpose and Term of Plan

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Establishment

  	
  1

  
	
   

  	
  1.2

  	
  Purpose

  	
  1

  
	
   

  	
  1.3

  	
  Term of Plan

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions and
  Construction

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Definitions

  	
  1

  
	
   

  	
  2.2

  	
  Construction

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Administration

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Administration
  by the Committee

  	
  5

  
	
   

  	
  3.2

  	
  Authority of
  Officers

  	
  6

  
	
   

  	
  3.3

  	
  Policies and
  Procedures Established by the Company

  	
  6

  
	
   

  	
  3.4

  	
  Indemnification

  	
  6

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Shares Subject
  to Plan

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Maximum Number
  of Shares Issuable

  	
  7

  
	
   

  	
  4.2

  	
  Adjustments for
  Changes in Capital Structure

  	
  7

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Eligibility

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Employees
  Eligible to Participate

  	
  7

  
	
   

  	
  5.2

  	
  Exclusion of
  Certain Stockholders

  	
  8

  
	
   

  	
  5.3

  	
  Determination by
  Company

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Offerings

  	
  8

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Participation in
  the Plan

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Initial
  Participation

  	
  9

  
	
   

  	
  7.2

  	
  Continued
  Participation

  	
  9

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Right to
  Purchase Shares

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Grant of
  Purchase Right

  	
  10

  
	
   

  	
  8.2

  	
  Calendar Year
  Purchase Limitation

  	
  10

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Purchase Price

  	
  10

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Accumulation of
  Purchase Price through Payroll Deduction

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Amount of
  Payroll Deductions

  	
  11

  
	
   

  	
  10.2

  	
  Commencement of
  Payroll Deductions

  	
  11

  
	
   

  	
  10.3

  	
  Election to
  Decrease or Stop Payroll Deductions

  	
  11

  
	
   

  	
  10.4

  	
  Administrative
  Suspension of Payroll Deductions

  	
  11

  
	
   

  	
  10.5

  	
  Participant
  Accounts

  	
  12

  

 

i

 

	
   

  	
  10.6

  	
  No Interest Paid

  	
  12

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Purchase of
  Shares

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Exercise of
  Purchase Right

  	
  12

  
	
   

  	
  11.2

  	
  Pro Rata
  Allocation of Shares

  	
  13

  
	
   

  	
  11.3

  	
  Delivery of Certificates

  	
  13

  
	
   

  	
  11.4

  	
  Return of Plan
  Account Balance

  	
  14

  
	
   

  	
  11.5

  	
  Tax Withholding

  	
  14

  
	
   

  	
  11.6

  	
  Expiration of
  Purchase Right

  	
  14

  
	
   

  	
  11.7

  	
  Provision of
  Reports and Stockholder Information to Participants

  	
  14

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Withdrawal from
  Plan

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Voluntary
  Withdrawal from the Plan

  	
  14

  
	
   

  	
  12.2

  	
  Return of Plan
  Account Balance

  	
  15

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Termination of
  Employment or Eligibility

  	
  15

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Effect of Change
  in Control on Purchase Rights

  	
  15

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Nontransferability
  of Purchase Rights

  	
  15

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Compliance with
  Securities Law

  	
  16

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Rights as a
  Stockholder and Employee

  	
  16

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Legends

  	
  16

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Notification of
  Disposition of Shares

  	
  17

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Designation of
  Beneficiary

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  20.1

  	
  Designation
  Procedure

  	
  17

  
	
   

  	
  20.2

  	
  Absence of
  Beneficiary Designation

  	
  17

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Notices

  	
  17

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Amendment or
  Termination of the Plan

  	
  18

  

 

ii

 

GSI TECHNOLOGY, INC.

2007 Employee Stock Purchase Plan

 

1.                                      ESTABLISHMENT,
PURPOSE AND TERM OF PLAN.

 

1.1                               Establishment.  The GSI
Technology, Inc. 2007 Employee Stock Purchase 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 Securities Exchange Act of 1934, as
amended (the “Effective Date”).

 

1.2                               Purpose.  The purpose
of the Plan is to advance the interests of the Company and 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 its termination by the Committee.

 

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)                                 “Cash Exercise
Notice” means a written notice in such form as specified
by the Company which states a Participant’s election to exercise, as of the
next Purchase Date, a Purchase Right granted to such Participant with respect
to a Pre-Registration Offering Period.

 

(c)                                  “Change in Control” means the
occurrence of any of the following:

 

(i)                                     any
“person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the total combined
voting power of the Company’s then-outstanding securities entitled to vote
generally in the election of Directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (1) an acquisition
by any such person who on the Effective Date is the beneficial owner of more
than fifty percent (50%) of such voting power, (2) any acquisition
directly from the Company,

 

1

 

including, without limitation, a public offering of securities, (3) any
acquisition by the Company, (4) any acquisition by a trustee or other
fiduciary under an employee benefit plan of a Participating Company or (5) any
acquisition by an entity owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the
voting securities of the Company; or

 

(ii)                                  an
Ownership Change Event or series of related Ownership Change Events
(collectively, a “Transaction”) in which the stockholders of the
Company immediately before the Transaction do not retain immediately after the
Transaction direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding securities entitled
to vote generally in the election of Directors or, in the case of an Ownership
Change Event described in Section 2.1(o)(iii), the entity to which the
assets of the Company were transferred (the “Transferee”), as the case may
be; or

 

(iii)                               a liquidation or
dissolution of the Company;

 

provided, however, that a
Change in Control shall be deemed not to include a transaction described in
subsections (i) or (ii) of this Section 2.1(c) in which a
majority of the members of the board of directors of the continuing, surviving
or successor entity, or parent thereof, immediately after such transaction is
comprised of Incumbent Directors.

 

For purposes of the preceding sentence, indirect
beneficial ownership shall include, without limitation, an interest resulting
from ownership of the voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may be, either
directly or through one or more subsidiary corporations or other business
entities.  The Committee shall have the
right to determine whether multiple sales or exchanges of the voting securities
of the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.

 

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

 

(e)                                  “Committee” means the
Compensation Committee and such other committee or subcommittee of the Board,
if any, duly appointed to administer the Plan and having such powers in each
instance as shall be specified by the Board. 
If at any time there is no committee of the Board then authorized or
properly constituted to administer the Plan, the Board shall exercise all of
the powers of the Committee granted herein, and, in any event, the Board may in
its discretion exercise any or all of such powers.

 

(f)                                   “Company” means GSI
Technology, Inc., a Delaware corporation, or any successor corporation
thereto.

 

(g)                                  “Compensation” means, with
respect to any Offering Period, base wages or salary, overtime, bonuses,
commissions, shift differentials, payments for paid time off, payments in lieu
of notice, and compensation deferred under any program or plan, including,
without limitation, pursuant to Section 401(k) or Section 125 of the
Code.  Compensation shall be limited to
amounts actually payable in cash or deferred during the Offering Period.  Compensation shall not include moving
allowances, payments pursuant to a severance

 

2

 

agreement, termination pay, relocation payments, sign-on bonuses, any
amounts directly or indirectly paid pursuant to the Plan or any other stock
purchase or stock option plan, or any other compensation not included above.

 

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

 

(i)                                     “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 on any military leave, sick leave, or other bona fide leave of absence
approved by the Company of ninety (90) days or less.  If an individual’s leave of absence exceeds
ninety (90) days, the individual shall be deemed to have ceased to be an
Employee on the ninety-first (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.

 

(j)                                    “Fair Market Value” means, as
of any date:

 

(i)                                     If
the Stock is then listed on a national or regional securities exchange or
market system or is regularly quoted by a recognized securities dealer, the
closing sale price of a share of Stock (or the mean of the closing bid and
asked prices if the Stock is so quoted instead) as quoted on the national or
regional securities exchange or market system constituting the primary market
for the Stock, or by such recognized securities dealer, 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 or has been quoted by such securities
dealer, the date on which the Fair Market Value is established shall be the
last day on which the Stock was so traded or quoted prior to the relevant date,
or such other appropriate day as determined by the Board, in its discretion.

 

(ii)                                  If,
on the relevant date, the Stock is not then listed on a national or regional
securities exchange or market system or regularly quoted by a recognized
securities dealer, the Fair Market Value of a share of Stock shall be as
determined in good faith by the Board.

 

(iii)                               Notwithstanding the
foregoing, if the initial Offering Period commences on the Effective Date, then
the Fair Market Value of a share of Stock on such 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 Company’s initial
public offering of the Stock.

 

(k)                                 “Incumbent Director” means a
director who either (i) is a member of the Board as of the Effective Date
or (ii) is elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination, but who was not elected or nominated in connection
with an actual or threatened proxy contest relating to the election of
directors of the Company.

 

3

 

(l)                                     “Offering” means an offering
of Stock pursuant to the Plan, as provided in Section 6.

 

(m)                             “Offering Date” means, for
any Offering Period, the first day of such Offering Period.

 

(n)                                 “Offering Period” means a
period, established by the Committee in accordance with Section 6, during
which an Offering is outstanding.

 

(o)                                 “Ownership Change Event” means
the occurrence of any of the following 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; or (iii) the sale, exchange, or transfer
of all or substantially all of the assets of the Company (other than a sale,
exchange or transfer to one or more subsidiaries of the Company).

 

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

 

(q)                                 “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.

 

(r)                                    “Participating Company” means
the Company and any Parent Corporation or Subsidiary Corporation designated by
the Board as a corporation the Employees of which may, if Eligible Employees,
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 shall be Participating
Companies.

 

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

 

(t)                                    “Pre-Registration
Offering Period” means an Offering Period commencing prior
to the Registration Date with respect to the shares of Stock issuable pursuant
to such Offering Period.

 

(u)                                 “Purchase Date” means, for
any Offering Period, the last day of such Offering Period, or, if so determined
by the Committee, the last day of each Purchase Period occurring within such
Offering Period.

 

(v)                                 “Purchase Period”
means a period, established by the Committee in accordance with Section 6,
included within an Offering Period and on the final date of which outstanding
Purchase Rights are exercised.

 

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

 

4

 

(x)                                 “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 payroll deductions or other funds accumulated on
behalf of the Participant and 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.

 

(y)                                 “Registration Date”
means the effective date of the registration on Form S-8 of shares of
Stock issuable pursuant to the Plan.

 

(z)                                  “Securities Act” means the Securities Act of 1933, as amended.

 

(aa)                          “Stock” means the common
stock of the Company, as adjusted from time to time in accordance with Section 4.2.

 

(bb)                          “Subscription Agreement”
means a written agreement in such form as specified by the Company, stating an
Employee’s election to participate in the Plan and authorizing payroll
deductions under the Plan from the Employee’s Compensation or other method of
payment authorized by the Committee pursuant to Section 11.1(c).

 

(cc)                            “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.

 

(dd)                          “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 Committee.  The Plan shall be administered by the
Committee.  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 Committee, and such determinations shall be final,
binding and conclusive upon all persons having an interest in the Plan or the
Purchase Right, unless fraudulent or made in bad faith.  Subject to the provisions of the Plan, the
Committee shall determine all of the relevant terms and conditions of Purchase
Rights; provided, however, that all Participants granted Purchase Rights
pursuant to an Offering shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code.  Any and all actions, decisions and
determinations taken or made by the Committee in the exercise of its discretion
pursuant to the Plan or any agreement thereunder (other than determining
questions of interpretation pursuant to the second sentence of this Section 3.1)
shall be final, binding and conclusive upon

 

5

 

all persons having an interest therein. 
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 Company.  Without regard to whether any Participant’s
Purchase Right may be considered adversely affected, the Company 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 Company, in
its 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) an
exchange ratio applicable to amounts withheld or paid in a currency other than
United States dollars, (d) 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’s election under the Plan or as advisable to comply
with the requirements of Section 423 of the Code, and (e) 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.  All such actions by the Company shall be
taken consistent with the requirement under Section 423(b)(5) of the
Code that all Participants granted Purchase Rights pursuant to an Offering
shall have the same rights and privileges within the meaning of such section.

 

3.4                               Indemnification.  In
addition to such other rights of indemnification as they may have as members of
the Board or the Committee or as officers or employees of the Participating
Company Group, members of the Board or the Committee and any officers or
employees of the Participating Company Group to whom authority to act for the
Board, the Committee 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.

 

6

 

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 five hundred thousand (500,000), cumulatively increased on April 1,
2008 and on each subsequent April 1, through and including April 1,
2017, by a number of shares(the “Annual Increase”)equal to the smallest of (a) one
percent (1.0%) of the number of shares of Stock issued and outstanding on the
immediately preceding March 31, (b) two hundred fifty thousand
(250,000) sharesor (c) an
amount determined by the Board, and shall consist of authorized but unissued or
reacquired 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 that Purchase Right shall again be available for
issuance under the Plan.

 

4.2                               Adjustments for Changes in Capital Structure.  Subject
to any required action by the stockholders of the Company, in the event of any
change in the Stock effected without receipt of consideration by the Company,
whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the
event of payment of a dividend or distribution to the stockholders of the
Company in a form other than Stock (excepting normal cash dividends) that has a
material effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and kind of shares
subject to the Plan, the Annual Increase, the limit on the shares which may be
purchased by any Participant during an Offering (as described in
Sections 8.1 and 8.2) and each Purchase Right, and in the Purchase Price
in order to prevent dilution or enlargement of Participants’ rights under the
Plan.  For purposes of the foregoing,
conversion of any convertible securities of the Company shall not be treated as
“effected without receipt of consideration by the Company.”  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) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding
Purchase Rights to provide that such Purchase Rights are for New Shares.  In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Purchase Rights shall be adjusted in a fair and equitable manner as
determined by the Committee, in its discretion. 
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 to an amount less than the par value, if any, of
the stock subject to the Purchase Right. 
The adjustments determined by the Committee 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:

 

7

 

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

 

(b)                                 Any
Employee who is customarily employed by the Participating Company Group for not
more than five (5) months in any calendar year.

 

5.2                               Exclusion of Certain Stockholders.  Notwithstanding any provision of the Plan to
the contrary, no Employee shall be treated as an Eligible Employee and granted
a Purchase Right under the Plan if, immediately after such grant, the 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.

 

5.3                               Determination by Company. 
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 or
an Eligible Employee and the effective date of such individual’s attainment or
termination of such status, 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 of whether or
not the individual is an Employee, all such determinations by the Company shall
be final, binding and conclusive as to such rights, if any, notwithstanding
that the Company or any court of law or governmental agency subsequently makes
a contrary determination as to such individual’s status as an Employee.

 

6.                                      OFFERINGS.

 

The
Plan shall be implemented by sequential Offerings of approximately six (6) months
duration or such other duration as the Committee shall determine.  However, the initial Offering Period shall
commence on the Effective Date and end on or about October 31, 2007,
provided that the Committee may establish different commencement or ending
dates.  Subsequent Offering Periods shall
commence on or about May 1 and November 1 of each year and end on or
about the last day of the next October and April, respectively, occurring
thereafter.  Notwithstanding the
foregoing, the Committee may establish additional or alternative sequential or
overlapping Offering Periods, a different duration for one or more 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
Committee shall so determine in its discretion, each Offering Period may
consist of two (2) or more consecutive Purchase Periods having such
duration as the Committee shall specify, and the last day of each such Purchase
Period shall be a Purchase Date.  If the
first or last day of an Offering Period or a Purchase Period is not a day on
which the principal stock exchange or market system on which the Stock is then
listed 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 or
Purchase Period.

 

8

 

7.                                      PARTICIPATION
IN THE PLAN.

 

7.1                               Initial Participation.

 

(a)                                 Generally. 
Except as provided in Section 7.1(b), an Eligible Employee may
become a Participant in an Offering Period by delivering a properly completed written
or electronic 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 that Offering Period.  An Eligible Employee who does not deliver a
properly completed Subscription Agreement to the Company’s designated office 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
the 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 that Offering Period but may participate in any subsequent
Offering Period provided the Employee is still an Eligible Employee as of the
Offering Date of such subsequent Offering Period.

 

(b)                                 Automatic Participation in Pre-Registration Offering
Period.  Notwithstanding Section 7.1(a),
each Employee who is an Eligible Employee as of the Offering Date of a
Pre-Registration Offering Period shall automatically become a Participant in
the Pre-Registration Offering Period and shall be granted automatically a
Purchase Right consisting of an option to purchase the lesser of (a) a
number of whole shares of Stock determined in accordance with Section 8 or
(b) a number of whole shares of Stock determined by dividing fifteen
percent (15%)of such Participant’s
Compensation paid during the Pre-Registration Offering Period by the Purchase
Price applicable to the Pre-Registration Offering Period.  The Company shall not require or permit any
Participant to deliver a Subscription Agreement for participation in the Pre-Registration
Offering Period; provided, however, that following the applicable Registration
Date a Participant may deliver a Subscription Agreement to the office
designated by the Company if the Participant wishes to change the terms of the
Participant’s participation in the Pre-Registration Offering Period.  Such changes may include, for example, an
election to commence payroll deductions in accordance with Section 10.

 

7.2                               Continued Participation.

 

(a)                                 Generally. 
Except as provided in Section 7.2(b), a Participant shall
automatically participate in the next Offering Period commencing immediately
after the final Purchase Date of each Offering Period in which the Participant
participates provided that the Participant remains an Eligible Employee on the
Offering Date of the new Offering Period and has not either (a) withdrawn
from the Plan pursuant to Section 12.1 or (b) terminated employment
or otherwise ceased to be an Eligible Employee as provided in 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(a) if the Participant desires to change any
of the elections contained in the Participant’s then effective Subscription
Agreement.

 

9

 

(b)                                 Participation Following Pre-Registration Offering Period.  Notwithstanding Section 7.2(a), an
Eligible Employee who was automatically enrolled in a Pre-Registration Offering
Period and who wishes to participate in an Offering Period which begins after
the Pre-Registration Offering Period shall deliver a Subscription Agreement in
accordance with Section 7.1(a) no earlier than the applicable
Registration Date and no later than the Subscription Date for such Offering
Period, unless such Employee was a Participant in the Pre-Registration Offering
Period who delivered a Subscription Agreement with respect to the
Pre-Registration Offering Period as provided in Section 7.1(b).

 

8.                                      RIGHT
TO PURCHASE SHARES.

 

8.1                               Grant of Purchase Right. 
Except as provided in Section 7.1 with respect to a
Pre-Registration Offering Period or as otherwise provided 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 the lesser of (a) that number of whole shares of Stock determined
by dividing the Dollar Limit (determined as provided below) by the Fair Market
Value of a share of Stock on such Offering Date or (b) Share Limit
(determined as provided below).  The
Committee may, in its discretion and prior to the Offering Date of any Offering
Period, (i) change the method of, or any of the foregoing factors in,
determining the number of shares of Stock subject to Purchase Rights to be
granted on such Offering Date or (ii) specify a maximum aggregate number
of shares that may be purchased by all Participants in an Offering or on any
Purchase Date within an 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.  For the purposes of this Section, the Dollar
Limit shall be determined by multiplying $2,083.33 by the number of months
(rounded to the nearest whole month) in the Offering Period and rounding to the
nearest whole dollar, and the Share Limit shall be determined by multiplying 1,000
shares by the number of months (rounded to the nearest whole month) in the
Offering Period and rounding to the nearest whole share.

 

8.2                               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 Twenty-Five
Thousand Dollars ($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 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 Committee; provided, however, that
the Purchase Price on each Purchase Date shall not be less than eighty-five
percent (85%) of the lesser of (a) the Fair Market Value of a share of
Stock on

 

10

 

the Offering Date of the
Offering Period or (b) the Fair Market Value of a share of Stock on the
Purchase Date.  Subject to adjustment as
provided below or in Section 22 and unless otherwise provided by the
Committee, the Purchase Price for each 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.

 

10.                               ACCUMULATION
OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.

 

Except as provided in Section 11.1(b) with
respect to a Pre-Registration Offering Period and in Section 11.1(c) with
respect to non-United States Participants for whom payroll deductions are
prohibited by applicable law, 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
pay day during an Offering Period shall be determined by the Participant’s
Subscription Agreement.  The Subscription
Agreement shall set forth the percentage of the Participant’s Compensation to
be deducted on each pay day during an Offering Period in whole percentages of
not less than one percent (1%) (except as a result of an election pursuant to Section 10.3
to stop payroll deductions effective following the first pay day during an
Offering) or more than fifteen percent (15%). 
The Committee may change the foregoing limits on payroll deductions
effective as of any Offering Date.

 

10.2                        Commencement of Payroll Deductions.  Payroll deductions shall commence on the
first pay day following the Offering Date and shall continue to the end of the
Offering Period unless sooner altered or terminated as provided herein;
provided, however, that with respect to a Pre-Registration Offering Period,
payroll deductions shall commence as soon as practicable following the Company’s
receipt of the Participant’s Subscription Agreement (delivered no earlier than
the applicable Registration Date), if any.

 

10.3                        Election to Decrease or Stop Payroll Deductions.  During an Offering Period, a Participant may
elect to decrease the rate of or to stop deductions from his or her
Compensation by delivering to the Company’s designated office an amended
Subscription Agreement authorizing such change on or before the “Change Notice
Date.”  The “Change Notice Date” shall be a date prior to the
beginning of the first pay period for which such election is to be effective as
established by the Company from time to time and announced to the
Participants.  A Participant who elects,
effective following the first pay day of an Offering Period, to decrease the
rate of his or her payroll deductions to zero percent (0%) shall nevertheless
remain a Participant in such Offering Period unless the 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

 

11

 

(a) under the Participant’s Purchase Right or (b) during a
calendar year under the limit set forth in Section 8.2.  Unless the Participant has either withdrawn
from the Plan as provided in Section 12.1 or has ceased to be an Eligible
Employee, payroll deductions shall be resumed at the rate specified in the
Participant’s then effective Subscription Agreement either (i) at the
beginning of the next Offering Period if the reason for suspension was clause (a) in
the preceding sentence or (ii) at the beginning of the next Offering
Period having a first Purchase Date that falls within the subsequent calendar
year if the reason for suspension was clause (b) in the preceding sentence.

 

10.5                        Participant Accounts. 
Individual bookkeeping accounts shall be maintained for each
Participant.  All payroll deductions from
a Participant’s Compensation (and other amounts received from the Participant
in a Pre-Registration Offering Period pursuant to Section 11.1(b) or
a non-United States Participant pursuant to Section 11.1(c)) shall be
credited to such Participant’s Plan account and shall be deposited with the
general funds of the Company.  All such
amounts 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 or otherwise credited to the Participant’s
Plan account.

 

11.                               PURCHASE
OF SHARES.

 

11.1                        Exercise of Purchase Right.

 

(a)                                 Generally. 
Except as provided in Section 11.1(b) and Section 11.1(c),
on each Purchase Date of an Offering Period, each Participant who has not
withdrawn from the Plan and whose participation in the Offering has not
otherwise 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 such Purchase Date.

 

(b)                                 Purchase in Pre-Registration Period.  Notwithstanding Section 11.1(a), on the
Purchase Date of a Pre-Registration Offering Period, each Participant who has
not withdrawn from the Plan and whose participation in such Offering Period has
not otherwise terminated before such Purchase Date shall automatically acquire
pursuant to the exercise of the Participant’s Purchase Right (i) a number
of whole shares of Stock determined in accordance with Section 11.1(a) to
the extent of the total amount of the Participant’s payroll deductions
accumulated in the Participant’s Plan account during the Pre-Registration
Offering Period, if any, and not previously applied toward the purchase of
Stock and (ii) such additional shares of Stock (not exceeding in the
aggregate the Participant’s Purchase Right) as determined

 

12

 

in accordance with a Cash Exercise Notice delivered to the office
designated by the Company no earlier than the applicable Registration Date and
not later than the close of business for such office on the business day
immediately preceding the Purchase Date or such earlier date as the Company
shall establish, accompanied by payment of the Purchase Price for such
additional shares in cash or by check. 
However, in no event shall the number of shares purchased by a
Participant during the Pre-Registration Offering Period exceed the number of
shares subject to the Participant’s Purchase Right.  In addition, if a Participant delivers a
Subscription Agreement to the Company after the applicable Registration Date,
the Participant may not elect to exercise a Purchase Right pursuant to a Cash
Exercise Notice in an amount which, when aggregated with payroll deductions
pursuant to such Subscription Agreement, exceeds fifteen percent (15%) of the
Participant’s Compensation during the Pre-Registration Offering Period.  The Company shall refund to the Participant
in accordance with Section 11.4 any excess Purchase Price payment received
from the Participant.

 

(c)                                  Purchase by Non-United States Participants for Whom Payroll Deduction Are
Prohibited by Applicable Law. 
Notwithstanding Section 11.1(a), where payroll deductions on behalf
of Participants who are residents for income tax purposes of countries other
than the United States are prohibited by applicable law (each, a “non-United States Participant”),
the Committee shall provide another method for payment of the Purchase Price of
the shares with such terms and conditions as shall be administratively
convenient and comply with applicable law. 
On each Purchase Date of an Offering Period, each such non-United States
Participant who has not withdrawn from the Plan and whose participation in such
Offering Period has not otherwise terminated before such Purchase Date shall
automatically acquire pursuant to the exercise of the Participant’s Purchase
Right (i) a number of whole shares of Stock determined in accordance with Section 11.1(a) to
the extent of the total amount of the Participant’s Plan account balance
accumulated during the Offering Period in accordance with the method
established by the Committee and not previously applied toward the purchase of
Stock.  However, in no event shall the
number of shares purchased by a non-United States Participant during the
Offering Period exceed the number of shares subject to the Participant’s
Purchase Right.  The Company shall refund
to the non-United States Participant in accordance with Section 11.4 any
excess Purchase Price payment received from such Participant.

 

11.2                        Pro Rata Allocation of Shares.  If the number of shares of Stock which might
be purchased by all Participants on a Purchase Date exceeds the number of
shares of Stock available in the Plan as provided in Section 4.1 or the
maximum aggregate number of shares of Stock that may be purchased on such
Purchase Date pursuant to a limit established by the Committee pursuant to Section 8.1,
the Company shall make a pro rata allocation of the shares available in as
uniform a manner as practicable and as the Company determines to be
equitable.  Any fractional share
resulting from such pro rata allocation to any Participant shall be
disregarded.

 

11.3                        Delivery of Certificates. 
As soon as practicable after each Purchase Date, the Company shall
arrange the delivery to each Participant of a certificate representing the
shares acquired by the Participant on such Purchase Date; provided that the
Company may deliver such shares to a broker designated by the Company that will
hold such shares for the benefit of the Participant.  Shares to be delivered to a Participant under
the Plan shall be

 

13

 

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 Plan Account 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 balance to be returned
to a Participant pursuant to the preceding sentence is 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 the cash balance in the
Participant’s Plan account to be applied toward the purchase of shares of Stock
in the subsequent Purchase Period or Offering Period.

 

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 provision for
the federal, state, local and foreign tax withholding obligations, if any, of
the Participating Company Group 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                        Provision of Reports and Stockholder Information to Participants.  Each Participant who has exercised all or
part 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 amount credited to his or her Plan account 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 may be delivered in such form
and by such means, including by electronic transmission, as the Company may determine.  In addition, each Participant shall be
provided information concerning the Company equivalent to that information
provided generally to the Company’s common stockholders.

 

12.                               WITHDRAWAL
FROM 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 or
electronic notice of withdrawal on a form provided by the Company for this
purpose.  Such withdrawal may be elected
at any time prior to the end of an Offering Period; provided, however, that if
a Participant withdraws from the Plan after a Purchase Date, the withdrawal
shall not affect shares of Stock acquired by the Participant on such Purchase
Date.  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

 

14

 

Company’s designated office for a reasonable period prior to the
effectiveness of the Participant’s withdrawal.

 

12.2                        Return of Plan Account Balance.  Upon a Participant’s voluntary withdrawal
from the Plan pursuant to Section 12.1, the Participant’s accumulated Plan
account balance which has 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 and the Offering shall terminate. 
Such amounts to be refunded in accordance with this Section 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 upon the failure of a Participant
to remain an Eligible Employee, the Participant’s participation in the Plan
shall terminate immediately.  In such
event, the Participant’s Plan account balance which has not been applied toward
the purchase of shares shall, as soon as practicable, be returned to the
Participant or, in the case of the Participant’s death, to the Participant’s
beneficiary designated in accordance with Section 20, if any, or 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 requirements of
Sections 5 and 7.1.

 

14.                               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 thereof, as the case
may be (the “Acquiring Corporation”),
may, without the consent of any Participant, either assume or continue the
Company’s rights and obligations under outstanding Purchase Rights or
substitute substantially equivalent purchase rights for the Acquiring
Corporation’s stock.  If the Acquiring
Corporation elects not to assume or continue the Company’s rights and
obligations under outstanding Purchase Rights, the Purchase Date of the then
current Offering Period shall be accelerated to a date before the date of the
Change in Control specified by the Committee, but the number of shares of Stock
subject to outstanding Purchase Rights shall not be adjusted.  All Purchase Rights which are neither assumed
or continued 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.

 

Neither payroll deductions or other amounts credited
to a Participant’s Plan account nor a Participant’s Purchase Right may be
assigned, transferred, pledged or otherwise disposed of in any manner other
than as provided by the Plan or by will or the laws of descent and
distribution.  (A beneficiary designation
pursuant to Section 20 shall not be treated as a disposition for this
purpose.)  Any such attempted assignment,
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to

 

15

 

withdraw from the Plan as
provided in Section 12.1.  A
Purchase Right 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, state and foreign
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, state or
foreign 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 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.

 

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 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 shares are 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.

 

18.                               LEGENDS.

 

The Company may at any time place legends or other
identifying symbols referencing any applicable federal, state or foreign
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:

 

16

 

“THE SHARES EVIDENCED BY
THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON
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.  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).”

 

19.                               NOTIFICATION
OF DISPOSITION 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.  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
later of two years after the date of grant of such Purchase Right or one year
after the date of exercise of 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.

 

20.                               DESIGNATION
OF BENEFICIARY.

 

20.1                        Designation Procedure. 
Subject to local laws and procedures, a Participant may file a written
designation of a beneficiary who is to receive (a) shares and cash, if
any, from the Participant’s Plan account if the Participant dies subsequent to
a Purchase Date but prior to delivery to the Participant of such shares and
cash or (b) cash, if any, from the Participant’s Plan account if the
Participant dies prior to the exercise of the Participant’s Purchase
Right.  If a married Participant
designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s
spouse.  A Participant may change his or
her beneficiary designation at any time by written notice to the Company.

 

20.2                        Absence of Beneficiary Designation.  If a Participant dies without an effective
designation pursuant to Section 20.1 of a beneficiary who is living at the
time of the Participant’s death, the Company shall deliver any shares or cash
credited to the Participant’s Plan account to the Participant’s legal representative
or as otherwise required by applicable law.

 

21.                               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.

 

17

 

22.                               AMENDMENT
OR TERMINATION OF THE PLAN.

 

The Committee may at any time amend, suspend or
terminate the Plan, except that (a) no such amendment, suspension or
termination shall affect Purchase Rights previously granted under the Plan
unless expressly provided by the Committee and (b) no such amendment,
suspension or termination may adversely affect a Purchase Right previously
granted under the Plan without the consent of the Participant, 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
comply with any applicable law, regulation or rule.  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 then authorized for issuance under the Plan or would change the
definition of the corporations that may be designated by the Committee as
Participating Companies.  Notwithstanding
the foregoing, in the event that the Committee determines that continuation of
the Plan or an Offering would result in unfavorable financial accounting
consequences to the Company, the Committee may, in its discretion and without
the consent of any Participant, including with respect to an Offering Period
then in progress: (a) terminate the Plan or any Offering Period, (b) accelerate
the Purchase Date of any Offering Period, (c) reduce the discount or the
method of determining the Purchase Price in any Offering Period (e.g., by
determining the Purchase Price solely on the basis of the Fair Market Value on
the Purchase Date), (d) reduce the maximum number of shares of Stock that
may be purchased in any Offering Period or (e) take any combination of the
foregoing actions.

 

18

 

APPENDIX A

 

Participating
Companies

 

GSI Technology, Inc.

GSI Technology Holdings, Inc.,
a Cayman Islands company

GSI Technology (BVI), Inc.,
a British Virgin Islands company

 

19

 

APPENDIX B

 

FORMS OF

 

SUBSCRIPTION AGREEMENT

AND

NOTICE OF WITHDRAWAL

 

20

 

GSI TECHNOLOGY, INC.

 

2007 EMPLOYEE STOCK PURCHASE PLAN

 

SUBSCRIPTION AGREEMENT

 

NAME (Please print):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

(Last)                                                                                                                                                                                                                (First)                                                                                                                 (Middle)

 

o            Original application for the
Offering Period beginning (date):                                                                    

 

o            Decrease
payroll deduction rate effective with the pay period beginning (date):                                   

 

o            Stop payroll deductions effective
with the pay period beginning (date):                                                 

 

o            Change
of beneficiary.

 

I.                                        SUBSCRIPTION

 

I
elect to participate in the 2007 Employee Stock Purchase Plan (the “Plan”) of GSI Technology, Inc. (the “Company”) and to subscribe to purchase shares of the Company’s
Common Stock in accordance with this Subscription Agreement and the Plan.  Capitalized terms used in this Subscription
Agreement have the meanings assigned by the Plan.

 

I
authorize payroll deductions of                     
percent (in whole percentages not less than 1%, unless an election to stop
deductions is being made, or more than 15%) of my Compensation on each pay day
throughout the Offering Period in accordance with the Plan.  I understand that these payroll deductions
will be accumulated for the purchase of shares of Common Stock at the applicable
purchase price determined in accordance with the Plan.  Except as otherwise provided by the Plan, I
will automatically purchase shares on each Purchase Date unless I withdraw from
the Plan by giving written notice on a form provided by the Company or unless
my eligibility or employment terminates.

 

I
understand that I will automatically participate in each subsequent Offering
that commences immediately after the last day of an Offering in which I am
participating until I withdraw from the Plan by giving written notice on a form
provided by the Company or my eligibility or employment terminates.

 

Shares
I purchase under the Plan should be issued in the name(s) set forth below.  (Shares may be issued in the participant’s
name alone or together with the participant’s spouse as community property or
in joint tenancy.)

 

NAME(S)
(please print):                                                                                                                                                                                                                                                                                                                                                                                                              

 

ADDRESS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

 

MY
SOCIAL SECURITY NUMBER:                                                                                                                                                                                                                                                                                                                                                                                       

 

I
agree to make adequate provision for the federal, state, local and foreign tax
withholding obligations, if any, which arise upon my purchase of shares under
the Plan and/or my disposition of shares. 
The Company may withhold from my compensation the amount necessary to
meet such withholding obligations.

 

I
agree that, unless otherwise permitted by the Company, until I dispose of
shares I purchase under the Plan, I will hold such shares in the name(s)
entered above (and not in the name of any nominee) until the later of (i) two
years after the first day of the Offering Period in which I purchased the
shares and (ii) one year after the Purchase Date on which I purchased the
shares.  This restriction only applies to
the name(s) in which shares are held and does not affect my ability to
dispose of Plan shares.

 

1

 

I agree
that I will notify the Chief Financial Officer of the Company in writing within
30 days after any sale, gift, transfer or other disposition of any kind prior
to the end of the periods referred to in the preceding paragraph (a “Disqualifying
Disposition”) of any shares I purchased under the Plan.  If I do not respond within 30 days of the
date of a Disqualifying Disposition Survey delivered to me by certified mail,
the Company is authorized to treat my nonresponse as my notice to the Company
of a Disqualifying Disposition and to compute and report to the Internal
Revenue Service the ordinary income I must recognize upon such Disqualifying
Disposition.

 

II.                                   BENEFICIARY
DESIGNATION

 

In the
event of my death, I designate the following as my beneficiary to receive all
payments and shares then due me under the Plan:

 

BENEFICIARY’S
NAME (please print):                                                                                                                                                                                                                                                                                                                        

(First)                                                                 (Middle)                                                  (Last)

 

RELATIONSHIP:                                                                                                                                                                                                                                              SOC.
SEC. NO.:                                                                                                          

 

ADDRESS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

 

If you
are married and your beneficiary is someone other than your spouse, then your
spouse must sign and date this form as indicated below.  If you are not married when you designate a
beneficiary and you later become married, or if you later become married to a
different person, the beneficiary designation previously made will be
automatically revoked.  Payments and
shares then due you upon your death will be delivered to your legal
representative unless you have completed a new beneficiary designation and it
is consented to by your then spouse.

 

III.                              CONSENT
OF SPOUSE

 

I am
the spouse of                                                                                                                                                                                                                                                                                           .  I consent to the above designation of a
beneficiary other than me to receive payments and shares due my spouse under
the Plan.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of
  Participant’s Spouse

  

 

IV.                               PARTICIPANT
DECLARATION

 

Any
election I have made on this form revokes all prior elections with regard to
this form.

 

I am
familiar with the provisions of the Plan and agree to participate in the Plan
subject to all of its provisions.  I
understand that the Board of Directors of the Company reserves the right to
terminate the Plan or to amend the Plan and my right to purchase stock under
the Plan to the extent provided by the Plan. 
I understand that the effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Plan.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Participant

  

 

2

 

GSI TECHNOLOGY, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

 

NAME (Please print):

(Last)                                                                                                                                                                (First)                                                                                                                                                                 (Middle)

 

I
elect to withdraw from the GSI Technology, Inc. 2007 Employee Stock
Purchase Plan (the “Plan”) and the
Offering which began on (date)                                         
and in which I am participating (the “Current Offering”).

 

I
understand that I am terminating immediately my interest in the Plan and the
Current Offering, and that no further payroll deductions will be made (provided
I have given sufficient notice before the next pay day).  My payroll deductions not previously used to
purchase shares will not be used to purchase shares in the Current
Offering, but instead will be paid to me as soon as practicable.  I understand that I will not participate in
the Plan unless I elect to become a participant in another Offering by filing a
new Subscription Agreement with the Company. 
I understand that I will receive no interest on the amounts paid to me
from my Plan account, and that I may not apply such amounts to any other
Offering under the Plan or any other employee stock purchase plan of the
Company.

 

 

	
  Date:

  	
   

  	
   

  	
  Signature:Exhibit 10.7

 

Tai Yuan Hi-Tech Industrial Park

Factory Lease Agreement

 

This agreement is established between

Lessee, GSI Technology (BVI), Inc, Taiwan Branch (hereinafter
referred to as Lessee)

and

Lessor, Tai Yuen Textile Co., Ltd. (hereinafter
referred to as Lessor)

 

for the purpose of rental of properties in Tai Yuan Hi-Tech Industrial Park. Both
parties to this agreement concur to comply with the conditions herein below
provided:

 

	
  Article 1

  	
  Rented House

  Lessor shall rent the following house to Lessee:

  
	
   

  	
  1.

  	
  House Location: 1 house at 6F-1, No. 30, Tai-Yuan
  St., Chu-Pei Li, Chu-Pei City, Hsinchu County

  
	
   

  	
   

  	
  Area: 423.09 pings

  
	
   

  	
  2. 

  	
  Both parties agree to transfer the house as it is. 

  
	
  Article 2

  	
  Rents

  
	
   

  	
  1.

  	
  Monthly rent shall be NT$317,000, inclusive of tax.

  
	
   

  	
  2.

  	
  Rent shall be paid every month, but Lessee shall draw
  12 checks at a time which totally cover one-year rent to Lessor. The date of
  issue for a check shall be the first day of the lease period in every month
  stipulated in the lease agreement. Lessor shall issue an invoice to Lessee
  after a check for paying the monthly rent has been cashed. The rents for the
  2nd year shall be paid in the same way; the checks drawn shall be
  given to Lessor before the last check, for the last term of the 1st
  year, is cashed. If any of these checks drawn by Lessee can not be cashed on
  time, a penalty fine amounting to 1% of the monthly rent shall be calculated
  and paid every day.

  
	
  Article 3

  	
  Guarantee (Deposit)

  Lessee shall be obliged to submit a guarantee (deposit)
  in the amount of NT$951,000 (equal to a 3-month rent, inclusive of tax) upon
  the execution of this agreement. If Lessee owes any rents or damages, Lessor
  may deduct such rents or damages from the guarantee (deposit) first. After expiration
  of the lease when Lessee fully vacates the said premises, Lessor shall return
  the guarantee (deposit) in full, without any interest payment due, after
  deducting any fees unpaid by Lessee. 

  
	
  Article 4

  	
  Lease Period

  The lease period shall be for a period of 1 year and
  11 months only, effective from Oct. 1, 2005 to Aug. 31, 2007. If Lessor wants
  to rent the house continuously after expiration of the lease agreement,
  Lessee has the priority right to rent it first, but Lessee shall notify
  Lessor of such intention 3 months before the lease expiration, and the lease conditions
  in the next lease agreement shall be negotiated again.

  

 

	
  Article 5

  	
  Use of Rented Property

  
	
   

  	
  1.

  	
  Lessee shall neither sublet, loan, transfer the
  rental of, nor institute any means that may submit a portion or the entirety
  of the house to the usage of a third-person, without the prior consent of
  Lessor.

  
	
   

  	
  2.

  	
  Lessee shall abide by laws and Tai Yuan Hi-Tech Industrial Park
  Regulations, and shall not use the house for any illegal purposes or for
  storage of dangerous materials that are hazardous to public safety.

  
	
   

  	
  3.

  	
  If an interior decoration becomes necessary, Lessee
  shall be obliged to obtain the prior consent of Lessor before effecting such
  interior decoration; however, Lessee shall be obliged to ensure that such
  interior decorating shall not, in anyway, destroy the original construction
  of the house or violate any laws. Should any law be violated because of such
  decoration, Lessee shall restore to its original condition; otherwise Lessor
  may terminate the agreement. When Lessor terminates this agreement, Lessee
  shall take back all decorated articles and equipment and be obliged to
  restore the house into its original condition at the time the house is due
  for return to Lessor. Any damage to a 3rd party shall be
  compensated by Lessee. If Lessor suffers loss consequently, Lessee shall
  compensate and be responsible for all expenses of Lessor.

  
	
   

  	
  4.

  	
  Lessee shall have public accident insurance
  (Insurance Amount: More than NT$10,000,000 for body injuries per incident;
  More than NT$2,000,000 for house loss per incident) and fire legal
  responsibility insurance. Should Lessee fail to obtain any of the above insurance
  and thus cause any loss to a 3rd party or Lessor, Lessee shall be responsible
  for compensation of such loss.

  
	
  Article 6

  	
  Damage and Repair

  
	
   

  	
  1.

  	
  For any damage or destruction to the house that is ascribed
  to Lessee’s responsibility, Lessee shall be held liable for repair or damages.

  
	
   

  	
  2.

  	
  For any damage or destruction to the house that is not
  ascribed to Lessee’s responsibility, Lessor shall be held liable for repair. If
  Lessor fails to repair within the period demanded by Lessee, Lessee may
  repair or have a repairperson repair, and repair expenses shall be paid by
  Lessor.

  
	
  Article 7

  	
  Expense and Tax

  
	
   

  	
  1.

  	
  House tax and land tax shall be at the expense of Lessor,
  whereas, all utility bills, telecommunication expense, cleaning expense, waste
  cleaning expense, equipment repair & maintenance expense, management
  expense and other necessary expenses to be paid for using the house shall be
  at the expense of Lessee.

  
	
   

  	
  2.

  	
  Lessee shall pay the above-mentioned expenses on
  time regardless of whether Lessee uses the house during the lease period or
  not.

  
	
  Article 8

  	
  Breach of Contract & Punishment 

  
	
   

  	
  1.

  	
  If Lessee violates the agreement while using the
  house and fails to correct or fails to completely correct within 7 days after
  Lessor’s notification, Lessor may terminate the lease agreement.

  
	
   

  	
  2.

  	
  If either of the parties violates the agreement and
  thus damages the other party’s rights, the violating party shall compensate
  the other party for the 

  

 

 

	
   

  	
   

  	
  loss and other relevant expenses.

  
	
   

  	
  3.

  	
  At the expiration of the lease, except if Lessor
  consents to continue the lease of the house, Lessee shall be obliged to
  return the house to Lessor, in the spirit of goodwill, fully vacated and
  under the same conditions that it was leased. Lessee shall not issue any
  cause for denial nor present any protest to such a turnover. In the event
  that Lessee shall fail to return the house on time, then Lessor shall demand
  the payment of a breach of contract penalty that is equal to one time the
  amount of the agreed rent, for the period starting from the day following the
  expiration date until the last day that Lessee remains in occupation of the
  house.

  
	
   

  	
  4.

  	
  Should Lessee fail to make the rent payment for 2
  months, Lessor may terminate the lease agreement.

  
	
   

  	
  5.

  	
  If Lessee violates the agreement while using the
  house and fails to correct or fails to completely correct within 7 days after
  Lessor’s notification, Lessor may terminate the lease agreement. For any loss
  or damage, Lessor may ask for compensation.

  
	
  Article 9

  	
  Lease Termination

  
	
   

  	
  1.

  	
  If one party decides to terminate this agreement
  before expiration of the lease, the terminating party shall obtain the
  written consent of the other party. If Lessee wants to move out of the house
  while lease agreement is still in effect, Lessee shall give a 3 months
  written notification to Lessor and pay the amount of a 3-month rent to Lessor
  as compensation. If Lessor wants to tack back the rented house earlier before
  expiration of the lease, Lessor shall also give Lessee a 3 months written
  notification and pay the amount equal to a 3-month rent to Lessee as compensation.

  
	
   

  	
  2.

  	
  Lessee shall be obliged to fully vacate and restore
  the house into its original condition at the time the house is due for return
  to Lessor. At the expiration of this agreement, any furniture, machine or
  item that Lessee has failed to take out of the house during the vacation of
  the house, shall be regarded as junk or abandoned item, the settlement of
  which shall be left to the discretion of Lessor. Any expenses incurred shall
  be paid by Lessee or deducted from the guarantee (deposit) first. Lessee
  shall make any causes to claim any rights or ask any expense from Lessor.

  
	
  Article 10

  	
  Notarization of Lease
  Agreement

  
	
   

  	
  1.

  	
  Lessor and Lessee shall deal with notarization of
  the lease agreement together, and the notarization fee shall be paid by both
  parties equally.

  
	
   

  	
  2.

  	
  Should Lessee fail to pay rents or any penalty due
  to breach of contract, or refuse to vacate and move out of the house at the
  expiration of the lease agreement, such payment or moving out will be
  enforced according to the law. Should Lessor fail to return the guarantee
  (deposit) under the lease agreement, such return will be enforced according
  to the law.

  
	
  Article 11

  	
  Jurisdiction

  Both parties agree that for any lawsuit involving
  the lease agreement, the first trial court shall be the Hsinchu District
  Court. 

  
	
  Article 12

  	
  Other Conditions

  
	
   

  	
  1.

  	
  After being given the house, Lessee shall pay the
  expenses stipulated in

  
				

 

	
   

  	
   

  	
  Article 7 of this lease
  agreement.

  
	
   

  	
  2.

  	
  The lease agreement is made in quadruplicate. Each
  party shall keep one copy; each of the court and the office of notary public
  shall keep one copy.

  
	
   

  
	
  Signed by:

  	
  Lessee

  	
  GSI Technology (BVI), Inc, Taiwan Branch

  (with seal)

  
	
   

  	
  Legal Representative:

  	
  Wu, Bor-Tay (with seal)

  
	
   

  	
  Uniform No.:

  	
  27923885

  
	
   

  	
  Address:

  	
  6F-1, No. 30, Tai-Yuan St., Chu-Pei Li, Chu-Pei
  City, Hsinchu County

  
	
   

  	
  Tel:

  	
  (03) 5525345

  
	
   

  	
   

  	
   

  
	
   

  	
  Lessor 

  	
  Tai Yuen Textile Co., Ltd.

  (with seal)

  
	
   

  	
  Legal Representative:

  	
  Vivian Wu Yen (with seal)

  
	
   

  	
  Uniform No.:

  	
  03516001

  
	
   

  	
  Address:

  	
  8F, No. 2, Dun Hua S. Rd., Sec. 2,  Taipei City

  
	
   

  	
  Tel:

  	
  (02) 77132222

  
	
   

  	
   

  	
   

  
	
  Sep. 27, 2005

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