Document:

Exhibit 10.2

 

2004
EMPLOYEE STOCK PURCHASE PLAN

OF

DEPOMED, INC.

 

 

Table
of Contents

 

	
  1.

  	
  Establishment of Plan.

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Number of Shares.

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Purpose.

  	
  1

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Administration.

  	
  2

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Eligibility.

  	
  2

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Offering Dates.

  	
  3

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Participation in this
  Plan.

  	
  3

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Grant of Option on
  Enrollment.

  	
  3

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Purchase Price.

  	
  4

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Payment of
  Purchase Price; Changes in Payroll Deductions; Issuance of Shares.

  	
  5

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Limitations on
  Shares to be Purchased.

  	
  6

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Withdrawal.

  	
  7

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Termination of Employment.

  	
  7

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Return of Payroll Deductions.

  	
  8

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Capital Changes.

  	
  8

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Nonassignability.

  	
  9

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Reports.

  	
  9

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Notice of Disposition.

  	
  9

  
	
   

  	
   

  	
   

  
	
  19.

  	
  No Rights to Continued Employment.

  	
  9

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Equal Rights and
  Privileges.

  	
  10

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Notices.

  	
  10

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Term; Shareholder Approval.

  	
  10

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Designation of Beneficiary.

  	
  10

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Conditions upon Issuance of
  Shares; Limitation on Sale of Shares.

  	
  11

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Applicable Law.

  	
  11

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Amendment or Termination.

  	
  11

  

 

i

 

DEPOMED,
INC.

2004 EMPLOYEE STOCK PURCHASE PLAN

 

As Adopted May 27, 2004

 

1.                                       Establishment of
Plan.

 

Depomed, Inc. (the “Company”) proposes to
grant options for purchase of the Company’s Common Stock (the “Common Stock”) to
eligible employees of the Company and its Participating Subsidiaries (as
hereinafter defined) pursuant to this 2004 Employee Stock Purchase Plan (this “Plan”).  For the purposes of this Plan, “Parent
Corporation” and “Subsidiary” shall have the same meanings as “parent
corporation” and “subsidiary corporation” in Sections 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended (the “Code”).  “Participating Subsidiaries” are Parent
Corporations or Subsidiaries that the Board of Directors of the Company (the “Board”) designates
from time to time as corporations that shall participate in this Plan.  The Company intends this Plan to qualify as
an “employee stock purchase plan” under Section 423 of the Code (including
any amendments to or replacements of such Section), and this Plan shall be so
construed.  Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code
shall have the same definition herein.

 

2.                                       Number of Shares.

 

The total number of
shares of Common Stock reserved and available for issuance pursuant to this
Plan shall be 500,000 (the “Share Limit”), subject to adjustments effected in
accordance with Section 15 of this Plan. Shares issued under this Plan may
consist, in whole or in part, of authorized and unissued shares or treasury
shares reacquired in private transactions or open market purchases, but all
shares issued under this Plan shall be counted against the Share Limit.

 

3.                                       Purpose.

 

The purpose of this Plan
is to provide eligible employees of the Company and Participating Subsidiaries
with a convenient means of acquiring an equity interest in the Company through
payroll deductions, to enhance such employees’ sense of participation in the
affairs of the Company and Participating Subsidiaries, and to provide an
incentive for continued employment.  For
the purposes of this Plan, “employee” shall mean any individual who is an
employee of the Company or a Participating Subsidiary. Whether an individual
qualifies as an employee shall be determined by the Committee (as hereinafter
defined), in its sole discretion. The Committee shall be guided by the
provisions of Treasury Regulation Section 1.421-7 and Section 3401(c)
of the Code and the Treasury Regulations thereunder, with the intent that the
Plan cover all “employees” within the meaning of those provisions other than
those who are not eligible to participate in the Plan, provided, however, that
any determinations regarding whether an individual is an “employee” shall be
prospective only, unless otherwise determined by the Committee. Unless the
Committee makes a contrary determination, the employees of the Company shall, for
all purposes of this Plan, be those individuals who are carried as employees

 

 

of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to participate
in the Plan shall be directed to the Committee, whose decision shall be final.

 

4.                                       Administration.

 

This Plan shall be
administered by the Compensation Committee of the Board (the “Committee”).  Subject to the provisions of this Plan and
the limitations of Section 423 of the Code or any successor provision in
the Code, all questions of interpretation or application of this Plan shall be
determined by the Committee and its decisions shall be final and binding upon
all participants.  Members of the Committee
shall receive no compensation for their services in connection with the
administration of this Plan, other than standard fees as established from time
to time by the Board for services rendered by Board members serving on Board
committees.  All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.

 

5.                                       Eligibility.

 

Any employee of the
Company or the Participating Subsidiaries is eligible to participate in an
Offering Period (as hereinafter defined) under this Plan except the following:

 

(a)                                  employees
who are not employed by the Company or a Participating Subsidiary prior to the
beginning of such Offering Period or prior to such other time period as
specified by the Committee;

 

(b)                                 employees
who are customarily employed for twenty (20) hours or less per week;

 

(c)                                  employees
who are customarily employed for five (5) months or less in a calendar year;

 

(d)                                 employees
who, together with any other person whose stock would be attributed to such
employee pursuant to Section 424(d) of the Code, own stock or hold options
to purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or any of its
Participating Subsidiaries or who, as a result of being granted an option under
this Plan with respect to such Offering Period, would own stock or hold options
to purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or any of its
Participating Subsidiaries;

 

(e)                                  individuals
who provide services to the Company or any of its Participating Subsidiaries as
independent contractors who are reclassified as common law employees for any
reason except for federal income and employment tax purposes; and

 

2

 

(f)                                    employees
who reside in countries for whom such employees’ participation in the Plan
would result in a violation under any corporate or securities laws of such
country of residence.

 

6.                                       Offering Dates.

 

The offering periods of
this Plan (each, an “Offering
Period”) shall be of twenty-four (24) months duration commencing
on December 1 and June 1 of each year (or at such time or times as
may be determined by the Committee). 
Each Offering Period shall consist of four (4) six month purchase
periods (individually, a “Purchase
Period”) during which payroll deductions of the participants are
accumulated under this Plan.  The first
business day of each Offering Period is referred to as the “Offering Date.”  The last business day of each Purchase
Period is referred to as the “Purchase Date.” 
The Committee shall have the power to change the Offering Dates, the
Purchase Dates and the duration of Offering Periods or Purchase Periods without
shareholder approval if such change is announced prior to the relevant Offering
Period or prior to such other time period as specified by the Committee.

 

7.                                       Participation
in this Plan.

 

Eligible employees may
become participants in an Offering Period under this Plan on the Offering Date,
after satisfying the eligibility requirements, by delivering a subscription
agreement to the Company prior to such Offering Date, or such other time period
as specified by the Committee.  An
eligible employee who does not deliver a subscription agreement to the Company
after becoming eligible to participate in an Offering Period shall not
participate in that Offering Period or any subsequent Offering Period unless
such employee enrolls in this Plan by filing a subscription agreement with the
Company prior to such Offering Period, or such other time period as specified
by the Committee.  Once an employee
becomes a participant in an Offering Period by filing a subscription agreement,
such employee shall automatically participate in the Offering Period commencing
immediately following the last day of the prior Offering Period unless the
employee withdraws or is deemed to withdraw from this Plan or terminates
further participation in the Offering Period as set forth in Section 12
below.  Such participant is not required
to file any additional subscription agreement in order to continue
participation in this Plan.

 

8.                                       Grant of
Option on Enrollment.

 

Enrollment by an eligible
employee in this Plan with respect to an Offering Period shall constitute the
grant (as of the Offering Date) by the Company to such employee of an option to
purchase on the Purchase Date up to that number of shares of Common Stock
determined by a fraction, the numerator of which is the amount accumulated in such
employee’s payroll deduction account during such Purchase Period and the
denominator of which is the lower of (i) eighty-five percent (85%) of the fair
market value of a share of Common Stock on the Offering Date (but in no event
less than the par value of a share of Common Stock), or (ii) eighty-five
percent (85%) of the fair market value of a share of Common Stock on the
Purchase Date (but in no event less than the par value of a share of Common
Stock), provided, however, that the number of shares of Common Stock subject to
any option granted pursuant to this Plan shall not

 

3

 

exceed the lesser of (x)
the maximum number of shares set by the Committee pursuant to
Section 11(c) below with respect to the applicable Purchase Date, or (y)
the maximum number of shares which may be purchased pursuant to
Section 11(b) below with respect to the applicable Purchase Date.  The fair market value of a share of Common
Stock shall be determined as provided in Section 9 below.

 

9.                                       Purchase Price.

 

The purchase price per
share at which a share of Common Stock shall be sold in any Offering Period
shall be eighty-five percent (85%) of the lesser of:

 

(a)                                  the
fair market value on the Offering Date; or

 

(b)                                 the
fair market value on the Purchase Date.

 

For the purposes of this
Plan, the term “fair
market value” means, as of any date, the value of a share of the
Common Stock determined as follows:

 

(a)                                  If
the Common Stock is traded on any established stock exchange or quoted on a
national market system, fair market value shall be the closing sales price for
the Common Stock as quoted on that stock exchange or system for the date the
value is to be determined (the “Value Date”) as reported by such stock exchange or
national market system, or, if not reported by such stock exchange or national
market system, as reported in The  Wall Street Journal or a similar
publication.  If no sales are reported
as having occurred on the Value Date, fair market value shall be that closing
sales price for the last preceding trading day on which sales of Common Stock
are reported as having occurred.  If no
sales are reported as having occurred during the five trading days before the
Value Date, Fair Market Value shall be the closing bid for Common Stock on the
Value Date.  If the Common Stock is
listed on multiple exchanges or systems, fair market value shall be based on
sales or bid prices on the primary exchange or system on which the Common Stock
is traded or quoted;

 

(b)                                 If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported on any established stock exchange or quoted on
a national market system, fair market value shall be the mean between the high
bid and low asked prices on the Value Date. 
If no prices are quoted for the Value Date, fair market value shall be
the mean between the high bid and low asked prices on the last preceding
trading day on which any bid and asked prices were quoted; or

 

(c)                                  If
the Common Stock is not traded on any established stock exchange or quoted on a
national market system and are not quoted by a recognized securities dealer,
the Board or Committee will determine fair market value in good faith.  The Board or Committee will consider the
following factors, and any others it considers significant, in determining fair
market value: (i) the price at which other securities of the Company have
been issued to purchasers other than employees, directors, or consultants,
(ii) the Company’s shareholder’s equity, prospective earning power,
dividend-paying capacity, and non-operating assets, if any, and (iii) any
other relevant factors, including the economic outlook for the Company and the

 

4

 

Company’s industry, the
Company’s position in that industry, the Company’s goodwill and other
intellectual property, and the values of securities of other businesses in the
same industry.

 

10.                                 Payment
of Purchase Price; Changes in Payroll
Deductions; Issuance of Shares.

 

(a)                                  The
purchase price of the shares is accumulated by regular payroll deductions made
during each Offering Period.  The
deductions are made as a percentage of the participant’s compensation in one
percent (1%) increments, not less than one percent (1%), nor greater than
fifteen percent (15%), or such lower limit set by the Committee.  Compensation shall mean all regular
straight-time gross earnings, and shall not include payments for overtime,
shift premium, incentive compensation or payments, bonuses, commissions or
other compensation.  Payroll deductions
shall commence on the first payday of the Offering Period and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
in this Plan.

 

(b)                                 A
participant may increase or decrease the rate of payroll deductions during an
Offering Period by filing with the Company a new authorization for payroll
deductions, in which case the new rate shall become effective for the next
payroll period commencing after the Company’s timely receipt of the authorization
and shall continue for the remainder of the Offering Period unless changed as
described below.  Such change in the
rate of payroll deductions may be made at any time during an Offering Period,
but not more than one (1) change may be made effective during any Purchase
Period.  A participant may increase or
decrease the rate of payroll deductions for any subsequent Offering Period by
filing with the Company a new authorization for payroll deductions prior to the
beginning of such Offering Period, or such other time period as specified by
the Committee.

 

(c)                                  A
participant may reduce his or her payroll deduction percentage to zero during
an Offering Period by filing with the Company a request for cessation of
payroll deductions.  Such reduction
shall be effective beginning with the next payroll period after the Company’s
timely receipt of the request and no further payroll deductions shall be made
for the duration of the Offering Period. 
Payroll deductions credited to the participant’s account prior to the
effective date of the request shall be used to purchase shares of Common Stock
of the Company in accordance with Section (e) below.  A participant may not resume making payroll
deductions during the Offering Period in which he or she reduced his or her payroll
deductions to zero.

 

(d)                                 All
payroll deductions made for a participant are credited to his or her account
under this Plan and are deposited with the general funds of the Company.  No interest accrues on the payroll
deductions.  All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.

 

(e)                                  On
each Purchase Date, for so long as this Plan remains in effect and provided
that the participant has not submitted a signed and completed withdrawal form
before that date, which notifies the Company that the participant wishes to
withdraw from that Offering

 

5

 

Period under this Plan
and have all payroll deductions accumulated in the account maintained on behalf
of the participant, as of that date returned to the participant, the Company
shall apply the funds then in the participant’s account to the purchase of
whole shares of Common Stock reserved under the option granted to such
participant with respect to the Offering Period to the extent that such option
is exercisable on the Purchase Date. 
The purchase price per share shall be as specified in Section 9 of
this Plan.  Any cash remaining in a
participant’s account after such purchase of shares shall be refunded to such
participant in cash, without interest, provided, however, that any amount
remaining in such participant’s account on a Purchase Date which is less than
the amount necessary to purchase a full share of Common Stock shall be carried
forward, without interest, into the next Purchase Period or Offering Period, as
the case may be.  In the event that this
Plan has been oversubscribed, all funds not used to purchase shares on the Purchase
Date shall be returned to the participant, without interest.  No Common Stock shall be purchased on a
Purchase Date on behalf of any employee whose participation in this Plan has
terminated prior to such Purchase Date.

 

(f)                                    As
soon as practicable after the Purchase Date, the Company shall issue shares for
the participant’s benefit representing the shares purchased upon exercise of
his or her option.

 

(g)                                 During
a participant’s lifetime, his or her option to purchase shares hereunder is
exercisable only by him or her.  The
participant shall have no interest or voting rights in shares covered by his or
her option until such option has been exercised.

 

11.                                 Limitations
on Shares to be Purchased.

 

(a)                                  No
participant shall be entitled to purchase stock under this Plan at a rate
which, when aggregated with his or her rights to purchase stock under all other
employee stock purchase plans of the Company or any Subsidiary, exceeds $25,000
in fair market value, determined as of the Offering Date (or such other limit
as may be imposed by the Code) for each calendar year in which the employee
participates in this Plan.  The Company
shall automatically suspend the payroll deductions of any participant as
necessary to enforce such limit provided that when the Company automatically
resumes such payroll deductions, the Company must apply the rate in effect
immediately prior to such suspension.

 

(b)                                 No
participant shall be entitled to purchase more than 3,000 shares of Common
Stock (the “Maximum
Share Amount”) on any single Purchase Date.  Prior to the commencement of any Offering
Period or prior to such time period as specified by the Committee, the
Committee may, in its sole discretion, set a new Maximum Share Amount.  If a new Maximum Share Amount is set, then
all participants must be notified of such Maximum Share Amount prior to the
commencement of the next Offering Period. 
The Maximum Share Amount shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Committee
as set forth above.

 

(c)                                  If
the number of shares to be purchased on a Purchase Date by all employees
participating in this Plan exceeds the number of shares then available for
issuance under this Plan, then the Company shall make a pro rata allocation of
the remaining shares in as

 

6

 

uniform a manner as shall
be reasonably practicable or as the Committee shall determine to be
equitable.  In such event, the Company
shall give written notice of such reduction of the number of shares to be
purchased under a participant’s option to each participant affected.

 

(d)                                 Any
payroll deductions accumulated in a participant’s account which are not used to
purchase stock due to the limitations in this Section 11 shall be returned
to the participant as soon as practicable after the end of the applicable
Purchase Period, without interest.

 

12.                                 Withdrawal.

 

(a)                                  Each
participant may withdraw from an Offering Period under this Plan by signing and
delivering to the Company a written notice to that effect on a form provided
for such purpose.  Such withdrawal may
be elected at any time prior to the end of an Offering Period, or such other
time period as specified by the Committee.

 

(b)                                 Upon
withdrawal from this Plan, the accumulated payroll deductions shall be returned
to the withdrawn participant, without interest, and his or her interest in this
Plan shall terminate.  In the event a
participant voluntarily elects to withdraw from this Plan, he or she may not
resume his or her participation in this Plan during the same Offering Period,
but he or she may participate in any Offering Period under this Plan which
commences on a date subsequent to such withdrawal by filing a new authorization
for payroll deductions in the same manner as set forth in Section 7 above
for initial participation in this Plan.

 

(c)                                  If
the fair market value on the first day of the current Offering Period in which
a participant is enrolled is higher than the fair market value on the first day
of any subsequent Offering Period, the Company shall automatically enroll such
participant in the subsequent Offering Period. 
Any funds accumulated in a participant’s account prior to the first day
of such subsequent Offering Period shall be applied to the purchase of shares
on the Purchase Date immediately prior to the first day of such subsequent
Offering Period, if any.

 

13.                                 Termination of
Employment.

 

Termination of a
participant’s employment for any reason, including retirement, death or the
failure of a participant to remain an eligible employee of the Company or of a
Participating Subsidiary, shall immediately terminate his or her participation
in this Plan.  In such event, the
payroll deductions credited to the participant’s account shall be returned to
him or her or, in the case of his or her death, to his or her legal
representative, without interest.  For
purposes of this Section 13, an employee shall not be deemed to have
terminated employment or failed to remain in the continuous employ of the
Company or of a Participating Subsidiary in the case of sick leave, military
leave, or any other leave of absence approved by the Committee, provided,
however that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.

 

7

 

14.                                 Return of Payroll Deductions.

 

In the event a
participant’s interest in this Plan is terminated by withdrawal, termination of
employment or otherwise, or in the event this Plan is terminated by the Board,
the Company shall deliver to the participant all payroll deductions credited to
such participant’s account.  No interest
shall accrue on the payroll deductions of a participant in this Plan.

 

15.                                 Capital Changes.

 

(a)                                  Subject
to any required action by the shareholders of the Company, the number and type
of shares of Common Stock covered by each option under this Plan which has not
yet been exercised and the number and type of shares of Common Stock which have
been authorized for issuance under this Plan but have not yet been placed under
option (collectively, the “Reserves”),
as well as the price per share of Common Stock covered by each option under
this Plan which has not yet been exercised, shall be proportionately adjusted
for any increase or decrease in the number of issued and outstanding shares of
Common Stock resulting from a stock split, stock dividend, combination or
reclassification of the Common Stock or any other increase or decrease in the
number of issued and outstanding shares of Common Stock effected without
receipt of any consideration by the Company, provided, however, that conversion
of any convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.” 
Such adjustment shall be made by the Committee, whose determination
shall be final, binding and conclusive. 
Except as expressly provided herein, no issue by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.

 

(b)                                 In
the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board.  In the event of (i) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the shareholders of the Company or their relative
stock holdings and the options under this Plan are assumed, converted or
replaced by the successor corporation, which assumption shall be binding on all
participants), (ii) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company immediately prior to such
merger (other than any shareholder that merges, or which owns or controls
another corporation that merges, with the Company in such merger) cease to own
their shares or other equity interest in the Company, (iii) the sale of all or
substantially all of the assets of the Company, or (iv) the acquisition, sale,
or transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction, each option under this Plan shall be assumed or
an equivalent option shall be substituted by the successor corporation or a
parent or subsidiary of the successor corporation, unless the successor
corporation does not agree to assume the option or to substitute an equivalent
option, in which case the Board may determine, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Purchase Date (the “New Purchase

 

8

 

Date”).  If the Board shortens the Offering Period then in progress, the
Board shall notify each participant in writing, at least ten (10) days prior to
the New Purchase Date, that the Purchase Date for his or her option has been
changed to the New Purchase Date and that his or her option will be exercised
automatically on the New Purchase Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section 12.

 

(c)                                  The
Committee may, if it so determines in the exercise of its sole discretion, also
make provision for adjusting the Reserves, as well as the price per share of
Common Stock covered by each outstanding option, in the event that the Company
effects one or more reorganizations, recapitalizations, rights offerings or
other increases or reductions of shares of its outstanding Common Stock, or in
the event of the Company being consolidated with or merged into any other
corporation.

 

16.                                 Nonassignability.

 

Neither payroll
deductions credited to a participant’s account nor any rights with regard to
the exercise of an option or to receive shares under this Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by the
laws of descent and distribution or as provided in Section 23 below) by
the participant.  Any such attempt at
assignment, transfer, pledge or other disposition shall be void and without
effect.

 

17.                                 Reports.

 

Individual accounts shall
be maintained for each participant in this Plan.  Each participant shall receive, as soon as practicable after the
end of each Purchase Period, a report of his or her account setting forth the
total payroll deductions accumulated, the number of shares purchased, the per
share price thereof and the remaining cash balance, if any, carried forward to
the next Purchase Period or Offering Period, as the case may be.

 

18.                                 Notice of
Disposition.

 

Each participant shall
notify the Company in writing if the participant disposes of any of the shares
purchased in any Offering Period pursuant to this Plan if such disposition
occurs within two (2) years from the Offering Date or within one (1) year from
the Purchase Date on which such shares were purchased (the “Notice Period”).  The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company’s transfer agent to
notify the Company of any transfer of the shares.  The obligation of the participant to provide such notice shall
continue notwithstanding the placement of any such legend on the certificates.

 

19.                                 No Rights to
Continued Employment.

 

Neither this Plan nor the
grant of any option hereunder shall confer any right on any employee to remain
in the employ of the Company or any Participating Subsidiary, or restrict the
right of the Company or any Participating Subsidiary to terminate such
employee’s employment.

 

9

 

20.                                 Equal Rights
and Privileges.

 

All eligible employees
shall have equal rights and privileges with respect to this Plan so that this
Plan qualifies as an “employee stock purchase plan” within the meaning of
Section 423 or any successor provision of the Code and the related
regulations.  Any provision of this Plan
which is inconsistent with Section 423 or any successor provision of the
Code shall, without further act or amendment by the Company, the Committee or
the Board, be reformed to comply with the requirements of
Section 423.  This Section 20
shall take precedence over all other provisions in this Plan.

 

21.                                 Notices.

 

All notices or other
communications by a participant to the Company under or in connection with this
Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the
Company for the receipt thereof.

 

22.                                 Term;
Shareholder Approval.

 

This Plan shall be
approved by the shareholders of the Company, in any manner permitted by
applicable corporate law, within twelve (12) months after the date this Plan is
adopted by the Board.  No purchase of
shares pursuant to this Plan shall occur prior to such shareholder
approval.  This Plan shall continue
until the earliest to occur of (a) termination of this Plan by the Board (which
termination may be effected by the Board at any time), (b) issuance of all of
the shares of Common Stock reserved for issuance under this Plan, or (c) ten
(10) years from the adoption of this Plan by the Board.

 

23.                                 Designation of Beneficiary.

 

(a)                                  A
participant may file a written designation of a beneficiary who is to receive
any shares and cash, if any, from the participant’s account under this Plan in
the event of such participant’s death subsequent to the end of a Purchase
Period but prior to delivery to him of such shares and cash.  The participant shall deliver along with
such designation a written acknowledgment of the participant’s spouse, if any,
consenting to the designation.  In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant’s account under this Plan in the event
of such participant’s death prior to a Purchase Date.

 

(b)                                 Such
designation of beneficiary may be changed by the participant at any time by
written notice.  The participant shall
deliver along with such designation a written acknowledgment of the
participant’s spouse, if any, consenting to the designation.  In the event of the death of a participant
and in the absence of a beneficiary validly designated under this Plan who is
living at the time of such participant’s death, the Company shall deliver such
shares or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or

 

10

 

relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

 

24.                                 Conditions upon
Issuance of Shares.

 

Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

 

25.                                 Applicable Law.

 

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

 

26.                                 Amendment or
Termination.

 

The Board may at any time
amend, terminate or extend the term of this Plan; provided, however, that:  (i) any such termination cannot affect
options previously granted under this Plan; (ii) no amendment may make any
change in an option previously granted which would adversely affect the right
of any participant, nor may any amendment be made without approval of the
shareholders of the Company obtained in accordance with Section 22 above
within twelve (12) months of the adoption of such amendment if such amendment
would:

 

(a)                                  increase
the number of shares that may be issued under this Plan; or

 

(b)                                 change
the designation of the employees (or class of employees) eligible for
participation in this Plan.

 

Notwithstanding the
foregoing, the Board may make such amendments to the Plan as the Board
determines to be advisable, if the continuation of the Plan or any Offering
Period would result in financial accounting treatment for the Plan that is
different from the financial accounting treatment in effect on the date this
Plan is adopted by the Board.

 

11Exhibit 10.19  

  

	 	 	May 8, 2003

John D. Craig

6 Rick Road

Shillington PA 19607 

Dear
John: 

        With
reference to your employment agreement (the "Employment Agreement") with EnerSys, Inc. (the  "Company"), dated November 9, 2000, pursuant
to which you are currently employed as Chairman, President & Chief Executive Officer of the
Company, we confirm that effective as of April 1, 2003, your salary provided for in Section 3 of the Employment Agreement has been increased to $725,000. 

        Except
as expressly set forth in the letter, the Employment Agreement shall remain in full force and effect. 

	 	 	ENERSYS HOLDINGS INC.
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  RICHARD W. ZUIDEMA      
 Richard W. Zuidema

Executive Vice President

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