Document:

exv10w3

 

Exhibit 10.3

PHOENIX TECHNOLOGIES LTD.

1999 STOCK PLAN

STOCK OPTION AGREEMENT

          Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

          [Name]

          [Address]

          You have been granted an option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Option Agreement, as follows:

	 	 	 	 	 
	 

	 	Grant Number
	 	[                    ] 
	 
	 	 	 	 
	 

	 	Date of Grant
	 	10/5/2007 
	 
	 	 	 	 
	 

	 	Vesting Commencement Date
	 	N/A 
	 
	 	 	 	 
	 

	 	Exercise Price per Share
	 	$8.52 
	 
	 	 	 	 
	 

	 	Total Number of Shares Granted
	 	[                    ] 
	 
	 	 	 	 
	 

	 	Type of Option:
	 	           Incentive Stock Option 
	 
	 	 	 	 
	 

	 	 	 	þ     Nonstatutory Stock Option 
	 
	 	 	 	 
	 

	 	Term/Expiration Date:
	 	10/5/2017 

     Vesting Schedule:

          This Option may be exercised, in whole or in part, as follows:

	 	•	 	25% of the shares subject to the Option shall vest if the closing price per share
of the Company’s common stock as reported on the NASDAQ Global Market system (the
“Closing Price”) is equal to or greater than $15.00 for sixty (60) consecutive
trading days;
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $20.00 for sixty (60) consecutive trading days;
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $25.00 for sixty (60) consecutive trading days; and
	 
	 	•	 	25% of the shares subject to the Option shall vest if the Closing Price is equal
to or greater than $30.00 for sixty (60) consecutive trading days.

Notwithstanding the foregoing, upon the consummation of a Change of Control (as defined in
the then-current Severance and Change of Control Agreement between the Company and
Optionee), if the Change of Control consideration (“Consideration”) for each share of
Company common stock is equal to or greater than any of the

 

 

vesting price thresholds set forth above, then all shares subject to the applicable vesting
price thresholds that are equal to or less than the per share Consideration shall
immediately vest. No equity vesting acceleration provisions in the Optionee’s Severance and
Change of Control Agreement shall apply to the Option.

     Holding Period:

If the Option vests in whole or in part and Optionee exercises the Option in whole or in
part, Optionee shall hold the shares of Company common stock obtained from an exercise for a
minimum of six (6) months before selling or otherwise disposing such shares; provided, that,
Optionee shall be permitted to immediately sell shares in connection with a cashless
exercise of the Option without regard to the six month holding period, as well as to cover
any tax obligations arising from such an exercise.

     Termination Period:

          This Option may be exercised for ninety days after Optionee ceases to be a Service Provider.
Upon the death or Disability of the Optionee, this Option may be exercised for one hundred eighty
days after Optionee ceases to be a Service Provider. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.

II. AGREEMENT

          1. Grant of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an
option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the
terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section
15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

               If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule
of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).

          2 Exercise of Option.

               (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Option Agreement.

               (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to the Secretary of the Company. The Exercise Notice shall be accompanied
by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.

               No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

          3 Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

               (a) cash;

               (b) check;

 

 

               (c) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or

               (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

          4 Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

          5 Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the
terms of this Option Agreement.

          6 Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

               (a) Exercising the Option.

                    (i) Nonstatutory Stock Option. The Optionee may incur regular federal income tax
liability upon exercise of a NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to withhold from his or
her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.

                    (ii) Incentive Stock Option. If this Option qualifies as an ISO, the Optionee will
have no regular federal income tax liability upon its exercise, although the excess, if any, of the
Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise
Price will be treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of exercise. In the
event that the Optionee ceases to be an Employee but remains a Service Provider, any Incentive
Stock Option of the Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.

               (b) Disposition of Shares.

                    (i) NSO. If the Optionee holds NSO Shares for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal income tax
purposes.

                    (ii) ISO. If the Optionee holds ISO Shares for at least one year after exercise and
two years after the grant date, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price. Any additional gain will
be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were
held.

               (c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of
(i) two years after the grant date, or (ii) one year after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee

 

 

agrees that he or she may be subject to income tax withholding by the Company on the
compensation income recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

          7 Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be modified adversely
to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws, but not the choice of law rules, of
California.

          8 NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

          By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of the Plan and
this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and
fully understands all provisions of the Plan and Option Agreement. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.

	 	 	 	 	 	 	 
	OPTIONEE:

	 	 	 	PHOENIX TECHNOLOGIES LTD.	 	 
	 
	 	 	 	 	 	 
	 

Signature

	 	 
	 	 

By:
	 	 
	 
	 	 	 	 	 	 
	 

Print Name

	 	 
	 	 

Title
	 	 
	 
	 	 	 	 	 	 
	 

Residence Addressexv10w4

 

Exhibit 10.4

PHOENIX TECHNOLOGIES LTD.

2001 EMPLOYEE STOCK PURCHASE PLAN

As Amended and Restated September 19, 2007

Generally Effective December 1, 2007

(Approved by Stockholders on January 2, 2008)

1. ESTABLISHMENT OF PLAN. Phoenix Technologies Ltd., a Delaware corporation (the “COMPANY”),
proposes to grant options for purchase of the Company’s Common Stock to eligible employees of the
Company and its Subsidiaries (as hereinafter defined) pursuant to this 2001 Employee Stock Purchase
Plan (“PLAN”). For purposes of this Plan, “PARENT CORPORATION” and “SUBSIDIARY” (collectively,
“SUBSIDIARIES”) 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”). 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. A total of 1,750,000 shares of
the Company’s Common Stock are reserved for issuance under this Plan. Such total number of shares
shall be subject to adjustments effected in accordance with Section 14 of this Plan.

2. PURPOSE. The purpose of this Plan is to provide employees of the Company and Subsidiaries
designated by the Board of Directors of the Company (the “BOARD”) as eligible to participate in
this Plan 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
Subsidiaries, and to provide an incentive for continued employment.

3. ADMINISTRATION. This Plan shall be administered by a committee appointed by the Board (the
“COMMITTEE”) consisting of at least two (2) members of the Board, each of whom is a Disinterested
Person as defined in Rule 16b-3(d) of the Securities Exchange Act of 1934 (the “EXCHANGE ACT”). As
used in this Plan, references to the “Committee” shall mean either such committee or the Board if
no committee has been established. Board members who are not Disinterested Persons may not vote on
any matters affecting the administration of this Plan, but any such member may be counted for
determining the existence of a quorum at any meeting of the Board. 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 Board and
its decisions shall be final and binding upon all participants. Members of the Board 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.

4. ELIGIBILITY. Any employee of the Company or the 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 Subsidiaries before the
beginning of such Offering Period;
	 
	 	(b)	 	employees who are customarily employed for less than twenty (20) hours per
week;
	 
	 	(c)	 	employees who are customarily employed for less than five (5) months in a
calendar year; and
	 
	 	(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 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 Subsidiaries.

Notwithstanding the foregoing, the Board, in its sole discretion, also may provide that employees
who are members of the executive staff of the Company and its Subsidiaries shall not be eligible to
participate in an Offering Period (as hereinafter

1

 

defined) under the Plan. For purposes of this Section 4 only, “executive staff” shall have the
same meaning as the term “officer” under Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder. Moreover, the Board’s exclusion of executive staff employees
during a prior Offering Period shall not prevent the Board from making such employees once again
eligible for future Offering Periods under the Plan.

5. OFFERING DATES.

     (a) The offering periods of this Plan (each, an “OFFERING PERIOD”) shall be of periods not to
exceed the maximum period permitted by Section 423 of the Code. Until determined otherwise by the
Committee,

	 	(i)	 	Offering Periods shall be concurrent and commence each June 1 and
December 1 of each calendar year; and
	 
	 	(ii)	 	each Offering Period shall consist of two (2) 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 Board shall have
the power to change the duration of Offering Periods and/or Purchase Periods with respect to future
offerings without stockholder approval if such change is announced at least fifteen (15) days prior
to the scheduled beginning of the first Offering Period and/or Purchase Period to be affected.

     (b) Notwithstanding anything to the contrary, in the event that the fair market value of a
share of the Company’s Common Stock on the first Purchase Date during an Offering Period is less
than the fair market value of a share of the Company’s Common Stock on the Offering Date of such
Offering Period, then following the purchase of the shares of the Company’s Common Stock on such
Purchase Date,

	 	(i)	 	the Offering Period shall terminate; and
	 
	 	(ii)	 	all participants in the just-terminated Offering Period shall
automatically be enrolled in a new Offering Period that shall commence on the
day following the Purchase Date on the same terms on which such participants
were enrolled in the terminated Offering Period.

Such new Offering Period shall end on the business day immediately prior to the second anniversary
of its Offering Date.

6. PARTICIPATION IN THIS PLAN. Eligible employees may become participants in an Offering Period
under this Plan on the first Offering Date after satisfying the eligibility requirements by
delivering a subscription agreement to the Company’s Stock Administration Department or any other
department designated by the Stock Administration Department or an officer of the Company (“STOCK
ADMINISTRATION”) not later than the last day of the month before such Offering Date unless a later
time for filing the subscription agreement authorizing payroll deductions is set by the Board for
all eligible employees with respect to a given Offering Period. An eligible employee who does not
deliver a subscription agreement to Stock Administration by such filing date after becoming
eligible to participate in such Offering Period shall not participate in that Offering Period or
any subsequent Offering Periods unless such employee enrolls in such Offering Periods under this
Plan by filing a subscription agreement with Stock Administration not later than the last day of
the month preceding a subsequent Offering Date. Subject to Section 5(b), once an employee becomes
a participant in an Offering Period, such employee will automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering Period in which such
employee participated unless the employee withdraws or is deemed to withdraw from an Offering
Period under this Plan as set forth in Section 11 below or terminates further participation in the
Plan. A participant is not required to file an additional subscription agreement in order to
continue participation in Offering Periods under this Plan, unless such participant terminates
further participation in this Plan.

7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in this Plan with respect to
an Offering Period will 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
of the Company determined by dividing

2

 

	 	(a)	 	the amount accumulated in such employee’s payroll deduction account during such
Purchase Period by
	 
	 	(b)	 	the purchase price for such Purchase Period, as set forth in Section 8 below;

PROVIDED, HOWEVER, that the number of shares of the Company’s Common Stock purchased under any
option granted pursuant to this Plan shall not exceed the limitations set forth in Section 10 of
the Plan.

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

	 	(a)	 	the fair market value of a share of the Company’s Common Stock on the
applicable Offering Date; or
	 
	 	(b)	 	the fair market value of a share of the Company’s Common Stock on the
applicable Purchase Date;

PROVIDED, HOWEVER, that in no event may the purchase price per share of the Company’s Common Stock
be below the par value per share of the Company’s Common Stock. For purposes of this Plan, the
term “fair market value” on a given date shall mean the closing price of the Company’s Common Stock
as reported on a stock exchange or on the NASDAQ National Market System on the applicable date (or
the average closing price over the number of consecutive trading days preceding such date as the
Board shall deem appropriate). If the Company’s Common Stock is not reported on such exchange or
such system or if there is no public market for the Company’s Common Stock, the fair market value
of the Company’s Common Stock shall be as determined by the Board in its sole discretion, exercised
in good faith.

9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS — ISSUANCE OF SHARES.

     (a) The consideration for the purchase price of the shares subject to an option under this
Plan is accumulated by regular payroll deductions made during each Offering Period. The deductions
are made either (i) as a specified dollar amount per pay period, but not less than $5.00 per pay
period and not greater than an amount equal to twenty percent (20%) of the participant’s
Compensation as of the first day of such Offering Period or (ii) a percentage of the participant’s
Compensation in one percent (1%) increments not less than one percent (1%) and not greater than
twenty percent (20%) or (iii) such lower limit set by the Committee, provided that in each case the
deductions for a participant in a Purchase Period shall not exceed $12,500.

     (b) As used herein, “COMPENSATION” shall mean all base salary, wages, commissions, and
overtime, and draws against commissions; PROVIDED, HOWEVER, that for purposes of determining a
participant’s compensation, any election by such participant to reduce his or her regular cash
remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did
not make such election. Payroll deductions shall commence on the first payday following the
Offering Date and shall continue to the end of the Offering Period unless sooner altered or
terminated as provided in this Plan.

     (c) A participant may change the rate of payroll deductions during an Offering Period by
filing with Stock Administration a new authorization for payroll deductions, in which case the new
rate shall become effective for the next payroll period commencing more than fifteen (15) days
after Stock Administration’s receipt of the authorization (or such earlier payroll period after
such receipt as the Company’s payroll department is able to accommodate) 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, excluding the fifteen (15)
day period immediately preceding a Purchase Date (or such shorter period of time as determined by
the Company and communicated to the participants); PROVIDED, HOWEVER, that a participant shall be
limited to only one (1) increase and one (1) decrease (other than to zero percent (0%)) during any
Purchase Period. In addition, a participant may decrease the rate of payroll deductions to zero
percent (0%) once (and only once) during any Purchase Period. A change in the rate of payroll
deductions to zero percent (0%) during any Purchase Period shall not be deemed a withdrawal from
the Offering Period or the Plan. A participant may increase or decrease the rate of payroll
deductions for any subsequent Offering Period by filing with Stock Administration a new
authorization for payroll deductions not later than the last day of the month before the beginning
of such Offering Period.

     (d) All payroll deductions are made on an after-tax basis and credited to each participant’s
account under this Plan. All payroll deductions are deposited with the general funds of the
Company. No interest accrues on the payroll

3

 

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, so long as this Plan remains in effect and provided that the
participant has not withdrawn, 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 8 of this Plan.
No fractional shares shall be issued upon the exercise of an option on a Purchase Date. The
amount, if any, of accumulated payroll deductions remaining in each participant’s account after the
purchase of shares of Common Stock on the final Purchase Date of an Offering Period shall be
refunded to such participant in cash, without interest. In the event that this Plan has been
oversubscribed, then all funds not used to purchase shares on the final Purchase Date of an
Offering Period 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) During a participant’s lifetime, such participant’s option to purchase shares hereunder is
exercisable only by him or her. The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised. Shares to be delivered to a
participant under this Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse or in the name of any stock brokerage or other firm with whom the
Company has established an account for the participant for the automatic deposit of shares
purchased under this Plan.

10. 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.

     (b) Subject to Sections 9(a) and 10(a) above, the maximum number of shares of Common Stock
that a participant may purchase on any single Purchase Date shall not exceed two thousand (2,000)
shares (the “MAXIMUM SHARE AMOUNT”); PROVIDED, that not less than thirty (30) days prior to the
commencement of any Offering Period, the Board may, in its sole discretion, revise the Maximum
Share Amount. If a new Maximum Share Amount is set, then all participants must be notified of such
Maximum Share Amount not less than fifteen (15) days prior to the commencement of the next Offering
Period. Once the Maximum Share Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Board as set forth above. The
Maximum Share Amount shall be subject to adjustments effected in accordance with Section 14 of this
Plan.

     (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 will make a pro rata allocation of the remaining shares in as uniform a manner as shall be
reasonably practicable and 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 thereby.

11. WITHDRAWAL.

     (a) Each participant may withdraw from an Offering Period under this Plan by signing and
delivering to Stock Administration a written notice to that effect on a form provided for such
purpose. Such withdrawal may be elected at any time at least fifteen (15) days prior to the end of
an Offering Period.

     (b) Upon withdrawal from an Offering Period under 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 an Offering Period under this Plan, he or she may not resume his or her participation in the
same Offering Period from which he or she previously withdrew, but he or she may participate in any
subsequent Offering Period by filing a new authorization for payroll deductions in the same manner
as set forth above for initial participation in an Offering Period under this Plan.

4

 

12. 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, immediately
terminates his or her participation in an Offering Period under this Plan. In such event, the
payroll deductions credited to the participant’s account will 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 12, an employee will not be deemed to have terminated employment or failed to remain
in the continuous employ of the Company in the case of sick leave, military leave, or any other
leave of absence approved by the Board; PROVIDED, 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.

13. 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 promptly 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.

14. CAPITAL CHANGES.

     (a) Subject to any required action by the stockholders of the Company, the number of shares of
Common Stock covered by each option under this Plan which has not yet been exercised and the number
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 of the Company resulting from a stock split or the payment of a stock
dividend (but only on 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”; and PROVIDED FURTHER, that the
price per share of Common Stock shall not be reduced below its par value per share. Such
adjustment shall be made by the Board, 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. The Board may, in the exercise of its sole discretion in such
instances, declare that the options under this Plan shall terminate as of a date fixed by the Board
and give each participant the right to exercise his or her option as to all of the optioned shares,
including shares which would not otherwise be exercisable. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger or consolidation of the Company
with or into another corporation, each option under this Plan shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole discretion and in
lieu of such assumption or substitution, that the participant shall have the right to exercise the
option as to all of the optioned shares. If the Board makes an option exercisable in lieu of
assumption or substitution in the event of a merger, consolidation or sale of assets, the Board
shall notify the participant that the option shall be fully exercisable for a period of at least
twenty (20) days from the date of such notice, and the option will terminate upon the expiration of
such period.

     (c) The Board 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; PROVIDED, that the price per share of Common Stock shall not be reduced below its par
value per share.

15. 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 will, the laws of
descent and distribution or as provided in Section 22 hereof) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be void and without effect.

5

 

16. REPORTS. Individual accounts will be maintained for each participant in this Plan. Each
participant shall receive promptly 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.

17. NOTICE OF DISPOSITION. Each participant shall notify the Company 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 require that, unless such
participant is disposing of any of such shares during the Notice Period, such participant shall
keep the certificates representing such shares in his or her name (and not in the name of a
nominee) during 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.

18. 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 Subsidiary, or
restrict the right of the Company or any Subsidiary to terminate such employee’s employment.

19. 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 of the Code (or any successor provision) and the related regulations.
Any provision of this Plan which is inconsistent with Section 423 of the Code (or any successor
provision) shall, without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 423 of the Code. This Section 19 shall take precedence
over all other provisions in this Plan.

20. 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.

21. TERM; STOCKHOLDER APPROVAL. This Plan has been approved and adopted by the Board. Any changes
to the Plan which materially increase the benefits hereunder will not be effective until approved
by the stockholders of the Company, in any manner permitted by applicable corporate law (including
Rule 16b-3 of the rules promulgated by the Securities and Exchange Commission pursuant to Section
16 of the Exchange Act). This Plan shall continue until the earlier 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 date this Plan was amended or restated by the Board.

22. 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 an Purchase Period but prior to delivery to him of such shares and
cash. 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. 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 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.

23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE 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

6

 

thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, 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.

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

25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time amend, terminate or the
extend the term of this Plan, except that any such termination cannot affect options previously
granted under this Plan, nor may any amendment 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 stockholders of the Company obtained in accordance with Section 21 hereof within
twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such
amendment would: (a) increase the number of shares that may be issued under this Plan; (b) change
the designation of the employees (or class of employees) eligible for participation in this Plan;
or (c) constitute an amendment for which stockholder approval is required in order to comply with
Rule 16b-3 (or any successor rule) of the Exchange Act.

7

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