PROXY ITEM 2 PROPOSAL TO APPROVE OUR EMPLOYEE STOCK PURCHASE PLAN
Each participant who has purchased shares under the ESPP will immediately, upon
notification of the amount due, if any, pay to the company in cash amounts necessary to satisfy any applicable federal, state and local income taxes, employment taxes, social insurance, payroll tax, national insurance contributions, other
contributions, payment on account obligations or other amounts determined by the company to be required to be withheld, collected or accounted for to any tax authority. If
the company determines that additional withholding, collection or accounting is required beyond any amount deposited at the time of purchase, the participant must pay such amount to the company
on demand. If the participant fails to pay the amount so demanded, the company may withhold that amount from other amounts payable by the company to the participant, including, subject to applicable law, salary amounts.
Termination and Amendment
The ESPP will terminate when all of the shares reserved for purposes of the ESPP
have been purchased, provided that our board of directors may, in its sole discretion, terminate the ESPP at any time.
The board of directors or the Plan Administrator may, from time to time, amend the ESPP in any and all respects, except that only
the board may change (i) the number of shares reserved for the ESPP, (ii) the purchase price of shares offered pursuant to the ESPP, (iii), the terms of Section 6 of the ESPP relating to the offering and purchase dates, or (iv)
the maximum percentage of a participants compensation that may be deducted during an offering. Notwithstanding the foregoing, in no event may the board effect any of the following
amendments or revisions to the ESPP without the approval of the companys shareholders: (a) increase the number of shares of common stock issuable under the ESPP (except for permissible adjustments authorized in the plan), (b) modify the
eligibility requirements for participation in the ESPP, or (c) decrease the purchase price of shares offered pursuant to the ESPP.
Change of Control
Upon the occurrence of a change of control (as such term is defined in the ESPP),
each outstanding option will automatically be exercised, immediately prior to the effective date of any change of control, by applying the authorized payroll deductions or other permitted contributions of each participant for the offering in which
the change of control occurs to the purchase of whole shares of common stock at the purchase price per share in effect for that offering. The applicable limitation on the
number of shares of common stock that may be purchased by each participant will continue to apply. The company will use reasonable efforts to provide at least ten days prior written notice
of the occurrence of any change of control, and the participants will, following the receipt of such notice, have the right to terminate their outstanding options prior to the effective date of the change of control.
The following is a brief description of the U.S. federal income tax consequences
generally arising with respect to participation in the ESPP. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting, and not as tax guidance to participants in the ESPP. This summary does
not address the effects of other federal taxes or taxes imposed under state, local or foreign tax laws.
The ESPP is
intended to qualify as an employee stock purchase plan under Section 423 of the Code. An eligible employee will not have any taxable income when shares purchased under the ESPP are purchased at a discount. No income will be taxable to
the employee until the shares purchased under the ESPP are sold. If an employee disposes of shares purchased under the ESPP more than two years after the offering date, the employee will be required to report as ordinary compensation income for the
taxable year of disposition or death
an amount equal to the lesser of (a) the excess of the fair market value of the shares at the time of disposition over the applicable purchase price, or (b) 15 percent of the fair market value of
the shares on the offering date. Any gain on the disposition in excess of the amount treated as ordinary compensation income generally will be capital gain. In the case of such a disposition, the company will not be entitled to any deduction from
If an employee disposes of shares purchased under the ESPP within two years after the offering date, the
employee will be required to report the excess of the fair market value of the shares on the purchase date over the applicable purchase price as ordinary compensation income for the year of disposition. The amount of such ordinary income will be
added to the employees basis in the shares, and any additional gain or resulting loss recognized on the disposition of shares after such basis adjustment will be a capital gain or loss. A capital