DATRON SYSTEMS INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
Adopted Effective July 1, 1997
Approved by Stockholders ____________, 1997
1. PURPOSE
(a) The purpose of the Employee Stock Purchase Plan (the "Plan")
is to provide a means by which employees of Datron Systems Incorporated,
a Delaware corporation (the "Company"), and its Affiliates, as defined
in subparagraph 1(b), which are designated as provided in subparagraph
2(b), may be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent or
subsidiary corporation of the Company, as those terms are defined in
Section 424 of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) The Company, by means of the Plan, seeks to retain the
services of its employees, to secure and retain the services of new
employees, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b)
of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company. The Board may delegate administration of the
Plan to a Committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase Common
Stock of the Company shall be granted (each such grant of rights, an
"Offering") and the provisions governing each Offering (which need not
be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan (each, a
"Participating Affiliate").
(iii) To construe and interpret the Plan and each
Offering, and to establish, amend and revoke rules and regulations for
the administration of the Plan. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or
any Offering, in a manner and to the extent it shall deem necessary or
expedient to make the Plan or any Offering fully effective.
(iv) To amend the Plan as provided in paragraph 11.
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best
interests of the Company and its Affiliates and to carry out the intent
that the Plan be treated as an "employee stock purchase plan" within the
meaning of Section 423 of the Code and each Offering be treated as a
grant of options pursuant to such Plan.
(c) The Board may delegate administration of the Plan to a
committee of one or more members of the Board (the "Committee"). If
administration is delegated to a Committee (which may be a newly formed
or pre-existing committee of the Board), the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from
time to time by the Board. The Board may at any time revest in the
Board the administration of the Plan and may reverse or override any
decision of the Committee.
3. SHARES SUBJECT TO THE PLAN.
The number of shares of Common Stock that may be sold pursuant
to rights granted under the Plan shall not exceed two hundred thousand
(200,000) (appropriately adjusted for the effect of any stock split,
stock dividend or the like) of the Company's common stock (the "Common
Stock"). If any right granted under the Plan shall for any reason
terminate without having been exercised, the Common Stock not purchased
under such right shall again become available for issuance under the
Plan.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time provide for an
Offering on a date or dates (the "Offering Date(s)") selected by the
Board or the Committee. Each Offering shall be of rights to purchase
Common Stock, shall be only to Eligible Employees, as defined below,
shall comply with the requirement of Section 423(b)(5) of the Code that
all employees granted rights to purchase stock under the Plan shall have
the same rights and privileges and shall be in such form and shall
contain such terms and conditions as the Board or the Committee shall
deem appropriate, provided, that the terms of any such Offerings shall
be consistent with the Plan (including without limitation the provisions
of paragraphs 5 through 8 hereof). Each Offering shall specify the
period during which the Offering shall be effective, which period shall
not exceed twenty-seven (27) months beginning with the Offering Date.
The terms and conditions of an Offering shall be incorporated by
reference into the Plan and treated as part of the Plan with respect to
such Offering.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or any
Participating Affiliate. Except as provided in subparagraph 5(b), an
employee of the Company or any Participating Affiliate shall not be
eligible to be granted rights under the Plan unless, on the Offering
Date, such employee has been in the employ of the Company or any
Affiliate for such continuous period preceding such grant as the Board
or the Committee may require for such Offering, but in no event shall
the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or
the Committee, no employee of the Company or any Participating Affiliate
shall be eligible to be granted rights under the Plan unless, on the
Offering Date, such employee's customary employment with the Company or
such Affiliate is for at least twenty (20) hours per week and at least
five (5) months per calendar year. Employees who meet the eligibility
requirements for a particular Offering shall be "Eligible Employees" for
purposes of such Offering.
(b) The Board or the Committee may provide in connection with any
Offering that each person who, during the course of such Offering, first
becomes an Eligible Employee, will, on a date or dates specified in the
Offering which occurs on or after the day on which such person becomes
an Eligible Employee, receive a right under that Offering, which right
shall thereafter be deemed to be a part of that Offering. Such right
shall have the same characteristics as any rights originally granted
under that Offering except that:
(i) the date on which such right is granted to such Eligible
Employee shall be the "Offering Date" of such right for all purposes,
including determination of the exercise price of such right;
(ii) the period of the Offering with respect to such right
shall begin on its Offering Date and end coincident with the end of the
then current Offering (or, if there is then more than one current
Offering, the end of the most recently commenced Offering); and
(iii) the Board or the Committee may provide that if each
such person first becomes an Eligible Employee within a specified period
of time before the end of the Offering, he or she will not receive any
right under that Offering.
(c) No employee shall be eligible for the grant of any rights
under the Plan if, immediately after any such rights are granted, such
employee owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or
of any Affiliate. For purposes of this subparagraph 5(c), the rules of
Section 424(d) of the Code shall apply in determining the stock
ownership of any employee, and stock which such employee may purchase
under all outstanding rights and options shall be treated as stock owned
by such employee.
(d) The number of shares of Common Stock an Eligible Employee may
purchase on any Purchase Date in an Offering shall not exceed such
number of shares as has a fair market value (determined as of the
Offering Date for such Offering) equal to (x) $25,000 multiplied by the
number of calendar years in which the right under such Offering has been
outstanding at any time, minus (y) the fair market value of any other
shares of Common Stock (determined as of the relevant Offering Date with
respect to such shares) which, for purposes of the limitation of Section
423(b)(8) of the Code, are attributed to any of such calendar years in
which the right is outstanding. The amount in clause (y) of the
previous sentence shall be determined in accordance with regulations
applicable under Section 423(b)(8) of the Code based on (i) the number
of shares previously purchased with respect to such calendar years
pursuant to such Offering or any other Offering under the Plan, or
pursuant to any other Company plans intended to qualify as "employee
stock purchase plans" under Section 423 of the Code, and (ii) the number
of shares subject to other rights outstanding on the Offering Date for
such Offering pursuant to the Plan or any other such Company plan.
(e) Officers of the Company and any Participating Affiliate shall
be eligible to participate in Offerings under the Plan, provided,
however, that the Board may provide in connection with any particular
Offering that employees who are highly compensated employees within the
meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate in such Offering.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, unless a lesser amount is set by the
Board or Committee for such Offering pursuant to paragraph 6(c) below,
and subject to the maximum set forth in paragraph 5(d) above, each
Eligible Employee for such Offering shall be granted the right to
purchase, for each 1% of such employee's Earnings designated by such
employee pursuant to Section 7 (but not exceeding ten percent (10%), the
number of shares of Company Common Stock determined by dividing $25,000
by the fair market value of a share of Common Stock on the Offering
Date, dividing the result by the maximum number of percentage points of
Earnings that an employee may designate for such Offering, and
multiplying the result by the number of calendar years included in whole
or in part in the period from the Offering Date to the end of the
Offering. The Board or Committee may define "Earnings" for purposes of
any Offering, consistently with the requirements of Section 423 of the
Code.
(b) The Board or the Committee shall establish one or more dates
during an Offering (the "Purchase Date(s)") on which rights granted
under the Plan shall be exercised and purchases of Common Stock carried
out in accordance with such Offering. If no Purchase Date for an
Offering is designated, such Offering shall have one Purchase Date
occurring on the last day that the Company's stock is traded during the
period of the Offering.
(c) In connection with each Offering made under the Plan, the
Board or the Committee may specify a maximum number of shares that may
be purchased by any employee as well as a maximum aggregate number of
shares that may be purchased by all eligible employees pursuant to such
Offering that is less than that provided in clause (a) above. The Board
or Committee may also limit the percentage of Earnings that can be
designated for withholding in connection with any Offering to a
percentage less than ten percent (10%). In addition, in connection with
each Offering that contains more than one Purchase Date, the Board or
the Committee may specify a maximum aggregate number of shares which may
be purchased by all eligible employees on any given Purchase Date under
the Offering. If the aggregate purchase of shares upon exercise of
rights granted under the Offering would exceed any such maximum
aggregate number, the Board or the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as
shall be practicable and as it shall deem to be equitable.
(d) Unless a greater price is specified for an Offering, and
subject to the requirements of the Code in the event the Board or
Committee elects to permit Eligible Employees to receive rights during
an Offering pursuant to paragraph 5(b), the purchase price of stock
acquired pursuant to rights granted under the Plan shall be the lesser
of:
(i) eighty-five (85%) of the fair market value of the stock
on the Offering Date; or
(ii) eighty-five (85%) of the fair market value of the stock
on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan
pursuant to an Offering by delivering a participation agreement to the
Company within the time specified in the Offering, in such form as the
Company provides. Each such agreement shall authorize payroll
deductions of up to the maximum percentage specified by the Board or the
Committee of such employee's Earnings during the Offering (as defined by
the Board or Committee in each Offering). The payroll deductions made
for each participant shall be credited to an account for such
participant under the Plan and shall be deposited with the general funds
of the Company and shall not bear interest. Participants may reduce
(including to zero) or increase such payroll deductions, and an eligible
employee may begin such payroll deductions, after the beginning of any
Offering only as provided for in the Offering. Participants may make
additional payments into his or her account only if specifically
provided for in the Offering and only if the participant has not had the
maximum amount withheld during the Offering.
(b) At any time during an Offering, a participant may terminate
his or her payroll deductions under the Plan and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such
form as the Company provides. Such withdrawal may be elected at any time
prior to the end of the Offering except as provided by the Board or the
Committee in the Offering. Upon such withdrawal from the Offering by a
participant, the Company shall distribute to such participant all of his
or her accumulated payroll deductions (reduced to the extent, if any,
such deductions have been used to acquire stock for the participant)
under the Offering, without interest, and such participant's interest in
that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but
such participant will be required to deliver a new participation
agreement in order to participate in subsequent Offerings under the
Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's
employment with the Company and any designated Affiliate, for any
reason, and the Company shall distribute to such terminated employee all
of his or her accumulated payroll deductions (reduced to the extent, if
any, such deductions have been used to acquire stock for the terminated
employee) under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and
distribution, or by a beneficiary designation as provided in paragraph
14 and, otherwise during his or her lifetime, shall be exercisable only
by the person to whom such rights are granted.
8. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant
Offering, each participant's accumulated payroll deductions and other
additional payments specifically provided for in the Offering (without
any increase for interest) will be applied to the purchase of whole
shares of stock of the Company, up to the maximum number of shares
permitted pursuant to the terms of the Plan and the applicable Offering,
at the purchase price specified in the Offering. No fractional shares
shall be issued upon the exercise of rights granted under the Plan. The
amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than
the amount required to purchase one share of stock on the final Purchase
Date of an Offering shall be held in each such participant's account for
the purchase of shares under the next Offering under the Plan, unless
such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or is no longer eligible to be granted rights under
the Plan, as provided in paragraph 5, in which case such amount shall be
distributed to the participant after such final Purchase Date, without
interest. The amount, if any, of accumulated payroll deductions
remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock
on the final Purchase Date of an Offering shall be distributed in full
to the participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any
extent unless shares under the Plan are covered by an effective
registration statement pursuant to the Securities Act of 1993, as
amended (the "Securities Act") and the Plan is in material compliance
with all applicable state, foreign and other securities and other laws
applicable to the Plan. If on a Purchase Date in any Offering hereunder
the Plan is not so registered or in such compliance, no rights granted
under the Plan or any Offering shall be exercised on such Purchase Date,
and the Purchase Date shall be delayed until the Plan is subject to such
an effective registration statement and in such compliance, except that
the Purchase Date shall not be delayed more than twelve (12) months and
the Purchase Date shall in no event be more than twenty-seven (27)
months from the Offering Date. If on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered and in such compliance, no rights granted under the Plan or
any Offering shall be exercised and all payroll deductions accumulated
during the Offering (reduced to the extent, if any, such deductions have
been used to acquire stock) shall be distributed to the participants,
without interest.
(c) Shares of stock of the Company that are purchased may be
registered in the name of the participant or jointly in the name of the
participant and his or her spouse as joint tenants with right of
survivorship or community property or in the name of a living trust that
the participant has established on his own behalf.
9. RIGHTS AS A STOCKHOLDER; NO EFFECT ON EMPLOYMENT AT WILL.
A participant shall not be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any shares subject to
rights granted under the Plan unless and until the participant's
shareholdings acquired upon exercise of rights under the Plan are
recorded in the Stock records of the Company. Nothing herein shall
create any rights on the part of any employee to continuing employment.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any rights granted under the Plan (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, or other
transaction not involving the receipt of consideration by the Company),
then, subject to clause (b) below, the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares
subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights. Such adjustments shall be
made by the Board or the Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible
securities of the Company or the issuance by or exercise of, options,
warrants or right to acquire Common Stock or convertible securities
shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock
outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash
or otherwise; or (4) the acquisition by any person, entity or group
within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or
related trust sponsored or maintained by the Company or any Affiliate of
the Company) of the beneficial ownership (within the meaning of Rule 13d-
3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of
the combined voting power entitled to vote in the election of directors,
then, as determined by the Board in its sole discretion (i) any
surviving or acquiring corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated
payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights
under the ongoing Offering terminated.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in paragraph 12 relating to
adjustments upon changes in stock, no amendment shall be effective
unless approved by the stockholders of the Company within twelve (12)
months before or after the adoption of the amendment, where the
amendment will:
(i) Increase the number of shares reserved for rights under
the Plan;
(ii) Modify the provisions as to eligibility for participation
in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to obtain employee stock purchase plan
treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3); or
(iii) Modify the plan in any other way if such
modification requires stockholder approval in order for the Plan to
obtain employee stock purchase plan treatment under Section 423 of the
Code or to comply with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible
employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder
relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.
(b) Subject to paragraph 12, rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with
the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except
as necessary to ensure that the Plan and/or rights granted under the
Plan comply with the requirements of Section 423 of the Code.
12. 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 the Plan in the event of such participant's death
subsequent to the end of an Offering but prior to delivery to the
participant 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 the Plan in the event of such
participant's death during an Offering.
(b) Such designation of a 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 the Plan who is living at the time of such participant's death,
the Company shall deliver such shares and/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 sole discretion, may deliver such shares and/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.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan
at any time. No rights may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of
the person to whom such rights were granted, or except as necessary to
comply with any laws or governmental regulation, or except as necessary
to ensure that the Plan and/or rights granted under the Plan comply with
the requirements of Section 423 of the Code.
14. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective on the date specified by the Board,
but no rights granted under the Plan shall be exercised unless and until
the Plan has been approved by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted by the
Board.