This excerpt taken from the LLTC DEF 14A filed Sep 23, 2009.
Summary of the 2005 Employee Stock Purchase Plan
The following is a summary of the principal features of the Purchase Plan and its operation. The summary is qualified in its entirety by reference to the Purchase Plan.
The Purchase Plan was adopted by the Board of Directors in July 2005 and by the stockholders at the 2005 Annual Meeting. The purpose of the Purchase Plan is to provide employees with an opportunity to purchase the Companys common stock through payroll deductions.
The Purchase Plan may be administered by the Board or a committee appointed by the Board (referred to in either case below as the Administrator). All questions of interpretation or application of the Purchase Plan are determined by the Administrator, and its decisions are final, conclusive and binding upon all participants.
Each employee of the Company and the Companys designated subsidiaries who is a common law employee and whose customary employment with the Company or subsidiary is at least twenty hours per week and more than five months in a calendar year is eligible to participate in the Purchase Plan. No employee, however, may participate in the Purchase Plan (i) to the extent that, at the commencement of an offering period, the employee would own 5% or more of the total combined voting power of all classes of the Companys capital stock, or (ii) to the extent that his or her rights to purchase stock under all of the
Companys employee stock purchase plans accrues at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the beginning of the applicable offering period) in any calendar year. Under the Purchase Plan, as the Board intends to implement it, directors and officers of the Company may not participate, although the Administrator has the power to change this for future offering periods.
The Purchase Plan operates in successive offering periods with the length of each period determined by the Administrator up to twenty-seven months. As currently operated, offering periods last approximately six months, running from approximately May 1 to October 31 and November 1 to April 30; provided, however, that the first offering period under the Purchase Plan will commence with the first trading day on or after the date stockholders approve the Purchase Plan, but in no event earlier than the effective date of the filing of a registration statement with the SEC covering the shares of common stock issuable under the Purchase Plan. The Administrator has the power at any time to change the length of the offering periods, to subdivide each offering period into multiple purchase periods, and to have multiple offering periods running at one time.
To participate in the Purchase Plan, an eligible employee must authorize payroll deductions under the Purchase Plan. The Purchase Plan provides that payroll deductions may not be less than 5% and may not exceed 10% of a participants compensation during the offering period, subject to further limitation determined by the Administrator. Currently, the Administrator has specified that employees can choose one of only two levels of payroll deductions either 5% or 10% of compensation during the offering period. Once an employee becomes a participant in the Purchase Plan, the employee automatically will participate in each successive offering period until the employee withdraws from the Purchase Plan or the employees employment with the Company (or the designated subsidiary) terminates. Technically, at the beginning of each offering period, each participant is granted an option to purchase shares of common stock. The option is automatically exercised at the end of each purchase period to the extent of the payroll deductions accumulated during such purchase period, unless the participants employment with the Company (or the designated subsidiary) terminates earlier.
The Purchase Price permits shares of the Companys common stock to be purchased at a purchase price of 85% of the lesser of the fair market value of the common stock on (i) the first day of the offering period, or (ii) the last day of a purchase period, if an offering period consists of more than one purchase period, or the last day of the offering period itself, if it consists of only one purchase period. Currently, the Board of Directors has implemented the Purchase Plan such that shares are purchased at a purchase price of 85% of the fair market value of the common stock only on the last day of the offering period. The Administrator may change this implementation, or reduce the amount of the discount for fair market value, at any time for future offering periods. The fair market value of the Companys common stock on any relevant date will be the closing price per share as reported on the Nasdaq Global Market, or the mean of the closing bid and ask prices if no sales were reported, as quoted on such exchange or reported in The Wall Street Journal.
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions throughout each offering period. The number of shares of the Companys common stock a participant may purchase in each purchase period during an offering period is determined by dividing the total amount of payroll deductions withheld
from the participants compensation during that purchase period by the purchase price; provided, however, that a participant may not purchase more than 300 shares during any offering period, although the Administrator has the ability to change that limit. During an offering period, a participant may discontinue his or her participation in the Purchase Plan, and may decrease the rate of payroll deductions within limits set by the Administrator.
All payroll deductions made for a participant are credited to the participants account under the Purchase Plan, are withheld in whole percentages only and are included with the Companys general funds, which are used for general corporate purposes. A participant may not make any additional payments into his or her account.
Generally, a participant may withdraw from an offering period at any time by written or electronic notice without affecting his or her eligibility to participate in future offering periods. However, once a participant withdraws from a particular offering period, that participant may not participate again in the same offering period. To participate in a subsequent offering period, the participant must deliver to the Company a new enrollment agreement.
Termination of Employment
Upon termination of a participants employment for any reason, including disability or death, he or she will be deemed to have elected to withdraw from the Purchase Plan, the payroll deductions credited to the participants account at that time will be returned to him or her or, in the case of death, to the person or persons entitled thereto, and such participants participation in the Purchase Plan will automatically be terminated.
Adjustments upon Changes in Capitalization, Dissolution, Liquidation, Merger or Change of Control
Changes in Capitalization. Subject to any required action by the Companys stockholders, the number of shares reserved under the Purchase Plan, as well as the price per share at which shares may be purchased in a pending purchase period may be appropriately adjusted by the Administrator for any change in the Companys common stock (whether by stock split, reverse stock split, any dividend or other distribution, combination, recapitalization, reorganization, merger, consolidation, split-up, spin-off, repurchase or exchange).
Dissolution or Liquidation. In the event of the Companys proposed dissolution or liquidation, the Administrator will shorten all purchase and offering periods then in progress by setting a new ending date and all pending purchase and offering periods will end on that date. The new ending date must be prior to the dissolution or liquidation. If the Administrator shortens any purchase or offering period then in progress, the Administrator will notify each participant to the new ending date that the ending date has been changed to the new date and that purchases under the Purchase Plan will occur automatically on that new date, unless the participant has withdrawn from the offering period.
Merger or Change of Control. In the event of any merger or change of control, as defined in the Purchase Plan, the successor corporation, or a parent or subsidiary of the successor corporation, may assume or substitute for each pending offering period under the Purchase Plan. In the event the successor corporation refuses to assume or substitute for such offering periods, the Administrator will shorten all purchase and offering periods then in progress by setting a new ending date and all purchase and offering periods will end on the new ending date. The new exercise date must be prior to the effective date of the merger or change of control. If the Administrator shortens any purchase or offering period then in progress, the Administrator will notify each participant prior to the new ending date that the ending date has been changed to the new date and
that purchase under the Purchase Plan will occur automatically on that new date, unless the participant has withdrawn from the offering period.
Amendment and Termination of the Plan
The Administrator may at any time terminate or amend the Purchase Plan, including the term of any offering period then outstanding. Generally, no such termination can adversely affect offering periods then in progress, other than as discussed above.