background image
Purchase of Stock.
The number of whole shares an employee may purchase in any Purchase Period is determined
by dividing the total amount of payroll deductions withheld from the employee during the Purchase Period pursuant
to the Purchase Plan by the price per share determined as described above, subject to the limitations described
above. The purchase takes place automatically on the last market day of the Purchase Period.
An employee may withdraw from any Offering Period at any time at least 15 days prior to the end
of an Offering Period. No further payroll deductions for the purchase of shares will be made for the succeeding
Offering Period unless the employee enrolls in the new Offering Period in the same manner as for initial
participation in the Purchase Plan.
Termination of Employment.
Termination of an employee's employment for any reason, including retirement or
death, immediately cancels the employee's participation in the Purchase Plan. In such event, the payroll
deductions credited to the employee's account will be returned to such employee or, in case of death, to the
employee's legal representative.
Adjustment Upon Changes in Capitalization.
The number of shares subject to any purchase, and the number of
shares issuable under the Purchase Plan, is subject to adjustment in the event of a recapitalization of the
Company's common stock. In the event of a proposed dissolution or liquidation of the Company, the Offering
Period will terminate and the Board may, in its sole discretion, give participants the right to purchase shares that
would not otherwise be purchasable until the last day of the applicable Purchase Period.
Tax Treatment of U.S.-based Participants.
Participating employees in the U.S. will not recognize income for
federal income tax purposes either upon enrollment in the Purchase Plan or upon the purchase of shares. All
federal income tax consequences are deferred until a participating U.S. employee sells the shares, disposes of the
shares by gift, or dies.
If shares are held for more than one year after the date of purchase and more than two years from the beginning
of the applicable Offering Period, or if the employee dies while owning the shares, the employee realizes
ordinary income on a sale (or a disposition by way of gift or upon death) to the extent of the lesser of: (i) 15
percent of the fair market value of the shares at the beginning of the Offering Period; or (ii) the actual gain (the
amount by which the market value of the shares on the date of sale, gift or death, exceeds the purchase price). All
additional gain upon the sale of shares is treated as long-term capital gain. If the shares are sold and the sale price
is less than the purchase price, there is no ordinary income, and the employee has a long-term capital loss for the
difference between the sale price and the purchase price.
If the shares are sold or are otherwise disposed of, including by way of gift (but not death, bequest or
inheritance), prior to the expiration of either the one-year or the two-year holding periods described above (in any
case a "disqualifying disposition"), the employee will realize ordinary income at the time of sale or other
disposition taxable to the extent that the fair market value of the shares at the date of purchase was greater than
the purchase price. This excess will constitute ordinary income in the year of the sale or other disposition even if
no gain is realized on the sale or if a gratuitous transfer is made. The difference, if any, between the proceeds of
sale and the fair market value of the shares at the date of purchase is a capital gain or loss. Capital gains may be
offset by capital losses, and up to $3,000 of capital losses in excess of capital gains may be offset annually
against ordinary income. Ordinary income recognized by an employee upon a disqualifying disposition
constitutes taxable compensation that will be reported on a W-2 form. The Company takes the position that any
ordinary income recognized upon a sale or other disposition is not subject to withholding.
Tax Treatment of Non-U.S.-based Participants.
For participants residing outside the U.S., the Company will
assess its requirements regarding tax, social insurance and other applicable taxes in connection with participation
in the Purchase Plan. These requirements may change from time to time as laws or interpretations change.
Tax Treatment of the Company.
The Company is entitled to a deduction in connection with the disposition of
shares acquired under the Purchase Plan only to the extent that the employee recognized ordinary income on a
disqualifying disposition of the shares. The Company treats any transfer of record ownership of shares, including
transfer to a broker or nominee or into "street name," as a disposition, unless it is notified to the contrary. In
order to enable the Company to learn of disqualifying dispositions and ascertain the amount of the deductions to
which it is entitled, employees are required to notify the Company in writing of the date and terms of any
disposition of shares purchased under the Purchase Plan.