POWER INTEGRATIONS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(As Amended Through June 6, 2000)
(As Amended By the Board on April 22, 2008)
(Approved By the Stockholders on June 13, 2008
)
1.
Establishment, Purpose and
Term of Plan.
1.1
Establishment. The Power Integrations, Inc. 1997 Employee Stock
Purchase Plan (the “ Plan ”) is hereby
established effective as of the effective date of the initial
registration by the Company of its Stock under Section 12 of
the Securities Exchange Act of 1934, as amended (the “
Effective Date ”).
1.2
Purpose. The purpose of the Plan is to advance the interests of
Company and its stockholders by providing an incentive to attract,
retain and reward Eligible Employees of the Participating Company
Group and by motivating such persons to contribute to the growth
and profitability of the Participating Company Group. The Plan
provides such Eligible Employees with an opportunity to acquire a
proprietary interest in the Company through the purchase of Stock.
The Plan consists of two programs, which are referred to as the
U.S. Program and the Global Program. The U.S. Program is intended
to qualify as an “employee stock purchase plan” under
Section 423(b) of the Code (including any amendments or
replacements of such section), and the Global Program is not
intended to so qualify.
1.3 Term of
Plan. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been
issued.
2.
Definitions and
Construction.
2.1
Definitions. Any term not expressly defined in the Plan (or
other provisions governing the Global Program) but defined for
purposes of Section 423 of the Code shall have the same
definition herein. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) “ Board ” means the Board of
Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan, “Board”
also means such Committee(s).
(b) “ Code ” means the Internal Revenue
Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(c) “ Committee ” means a committee of
the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have
all of the powers of the Board granted herein, including, without
limitation, the power to amend or
terminate the
Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
(d) “ Company ” means Power Integrations,
Inc., a Delaware corporation, or any successor corporation
thereto.
(e) “ Compensation ” means, with respect
to any Offering Period, base wages or salary, commissions,
overtime, bonuses, annual awards, other incentive payments, shift
premiums, and all other compensation paid in cash during such
Offering Period before deduction for any contributions to any plan
maintained by a Participating Company and described in Section
401(k) or Section 125 of the Code. Compensation shall not
include reimbursements of expenses, allowances, long-term
disability, workers’ compensation or any amount deemed
received without the actual transfer of cash or any amounts
directly or indirectly paid pursuant to the Plan or any other
equity compensation plan, or any other compensation not included
above.
(f) “ Eligible Employee ” means an
Employee who meets the requirements set forth in Section 5 for
eligibility to participate in the Plan.
(g) “ Employee ” means a person treated
as an employee of a Participating Company. A Participant shall be
deemed to have ceased to be an Employee either upon an actual
termination of employment or upon the corporation employing the
Participant ceasing to be a Participating Company. For purposes of
the Plan, an individual shall not be deemed to have ceased to be an
Employee while such individual is on any military leave, sick
leave, or other bona fide leave of absence approved by the Company
of three (3) months or less. In the event an
individual’s leave of absence exceeds three (3) months,
the individual shall be deemed to have ceased to be an Employee on
the first day following the three (3)-month anniversary of such
leave unless the individual’s right to reemployment with the
Participating Company Group is guaranteed either by statute or by
contract. The Company shall determine in good faith and in the
exercise of its discretion whether an individual has become or has
ceased to be an Employee and the effective date of such
individual’s employment or termination of employment, as the
case may be. For purposes of an individual’s participation in
or other rights, if any, under the Plan as of the time of the
Company’s determination, all such determinations by the
Company shall be final, binding and conclusive, notwithstanding
that the Company or any governmental agency subsequently makes a
contrary determination.
(h) “ Fair Market Value ” means, as of
any date, if there is then a public market for the Stock, the U.S.
Dollar closing price of a share of Stock (or the mean of the U.S.
Dollar closing bid and asked prices if the Stock is so quoted
instead) as quoted on the Nasdaq Global Select Market, Nasdaq
Global Market, the Nasdaq Capital Market or such other national or
regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable.
If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last
day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Board, in
its sole discretion. If there is then no public market for the
Stock, the Fair Market Value on any relevant date shall be as
determined by the Board.
(i) “ Global Program ” means the
component of the Plan intended to provide Employees, who are not
subject to United States income tax, the opportunity to purchase
Stock through accumulated payroll deductions or other approved
contributions. This component of the Plan is not intended to
qualify for special tax treatment under Section 423 of the
Code.
(j) “ Offering ” means an offering of
Stock as provided in Section 6.
(k) “ Offering Date ” means, for any
Offering, the first day of the Offering Period with respect to such
Offering.
(l) “ Offering Period ” means a period
established in accordance with Section 6.1.
(m) “ Parent Corporation ” means any
present or future “parent corporation” of the Company,
as defined in Section 424(e) of the Code.
(n) “ Participant ” means an Eligible
Employee who has become a participant in an Offering Period in
accordance with Section 7 and remains a participant in
accordance with the Plan.
(o) “ Participating Company ” means
(i) for purposes of the U.S. Program, the Company or any U.S.
Parent Corporation or U.S. Subsidiary Corporation designated by the
Board as a corporation the Employees of which may, if Eligible
Employees, participate in the Plan, (ii) for purposes of the
Global Program, any entity (whether or not treated as a corporation
for U.S. tax purposes) controlling the Company or controlled by the
Company directly or indirectly through one or more intermediaries.
The Board shall have the sole and absolute discretion to determine
from time to time which Parent Corporations or Subsidiary
Corporations shall be Participating Companies. To the extent that
any Participating Company in the Global Program has an entity
located in more than one local jurisdiction, the Board shall also
have the authority to establish eligibility to participate in the
Global Program on an entity-by-entity basis within such
Participating Company. The Participating Companies in the U.S.
Program and Global Program are set forth on Appendix A
.
(p) “ Participating Company Group ”
means, at any point in time, the Company and all other corporations
collectively which are then Participating Companies.
(q) “ Plan ” means this 1997 Employee
Stock Purchase Plan and shall apply to both the U.S. Program and
the Global Program.
(r) “ Purchase Date ” means, for any
Purchase Period, the last day of such period.
(s) “ Purchase Period ” means a period
established in accordance with Section 6.2.
(t) “ Purchase Price ” means the price at
which a share of Stock may be purchased under the Plan, as
determined in accordance with Section 9.
(u) “ Purchase Right ” means an option
granted to a Participant pursuant to the Plan to purchase such
shares of Stock as provided in Section 8, which the
Participant may or may not exercise during the Offering Period in
which such option is outstanding. Such option arises from the right
of a Participant to withdraw any accumulated payroll deductions of
the Participant not previously applied to the purchase of Stock
under the Plan and to terminate participation in the Plan at any
time during an Offering Period.
(v) “ Stock ” means the common stock of
the Company, as adjusted from time to time in accordance with
Section 4.2.
(w) “ Subscription Agreement ” means a
written agreement in such form as specified by the Company, stating
an Employee’s election to participate in the Plan and
authorizing payroll deductions under the Plan from the
Employee’s Compensation.
(x) “ Subscription Date ” means the last
business day prior to the Offering Date of an Offering Period or
such earlier date as the Company shall establish.
(y) “ Subsidiary Corporation ” means any
present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.
(z) “ U.S. Program ” means the component
of the Plan intended to provide Employees, who are subject to
United States income tax, the opportunity to purchase Stock through
accumulated payroll deductions or other approved contributions.
This component of the Plan shall be deemed to be a plan that is
intended to qualify for special tax treatment under
Section 423 of the Code and does not include the Global
Program.
2.2
Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation
of any provision of the Plan. Except when otherwise indicated by
the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires
otherwise.
3.1
Administration by the Board.
(a) The Plan shall be administered by the Board. All
questions of interpretation of the Plan, of any form of agreement
or other document employed by the Company in the administration of
the Plan, or of any Purchase Right shall be determined by the Board
and shall be final and binding upon all persons having an interest
in the Plan or the Purchase Right. All expenses incurred in
connection with the administration of the Plan shall be paid by the
Company. Subject to the provisions of the Plan, the Board shall
determine all of the relevant terms and conditions of Purchase
Rights granted pursuant to the Plan under the U.S. Program;
provided, however, that all Participants granted Purchase Rights
pursuant to the U.S. Program shall have the same rights and
privileges within the meaning of Section 423(b)(5) of the
Code.
(b) The Board may also adopt rules, procedures, or sub-plans
applicable to a Participating Company or jurisdiction as part of
the Global Program to accommodate the specific
requirements of
the law and procedures of foreign jurisdictions, including but not
limited to, establishing rules and procedures regarding handling of
payroll deductions or other approved contributions, payment of
interest, conversion of local currency, payroll tax, withholding
procedures, and handling of stock certificates that vary with local
requirements. Unless otherwise superseded by the terms of a
sub-plan under the Global Program, the provisions of the Plan shall
govern the operation of such sub-plan.
3.2 Authority
of Officers. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein,
provided that the officer has apparent authority with respect to
such matter, right, obligation, determination or
election.
3.3 Policies
and Procedures Established by the Company. The Company may,
from time to time, consistent with the Plan and the requirements of
Section 423 of the Code, establish, change or terminate such
rules, guidelines, policies, procedures, limitations, or
adjustments as deemed advisable by the Company, in its sole
discretion, for the proper administration of the Plan, including,
without limitation, (a) a minimum payroll deduction amount
required for participation in an Offering, (b) a limitation on
the frequency or number of changes permitted in the rate of payroll
deduction during an Offering, (c) an exchange ratio applicable
to amounts withheld in a currency other than United States dollars,
(d) a payroll deduction greater than or less than the amount
designated by a Participant in order to adjust for the
Company’s delay or mistake in processing a Subscription
Agreement or in otherwise effecting a Participant’s election
under the Plan or as advisable to comply with the requirements of
Section 423 of the Code, and (e) determination of the date and
manner by which the Fair Market Value of a share of Stock is
determined for purposes of administration of the Plan.
4.
Shares Subject to
Plan.
4.1 Maximum
Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be three million
(3,000,000) and shall consist of authorized but unissued or
reacquired shares of Stock, or any combination thereof. If an
outstanding Purchase Right for any reason expires or is terminated
or canceled, the shares of Stock allocable to the unexercised
portion of such Purchase Right shall again be available for
issuance under the Plan.
4.2
Adjustments for Changes in Capital Structure. In the event of
any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change
in the capital structure of the Company, or in the event of any
merger (including a merger effected for the purpose of changing the
Company’s domicile), sale of assets or other reorganization
in which the Company is a party, appropriate and proportionate
adjustments shall be made in the number and class of shares subject
to the Plan and each Purchase Right and in the Purchase Price. If a
majority of the shares which are of the same class as the shares
that are subject to outstanding Purchase Rights are exchanged for,
converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event) shares of another corporation (the “
New Shares ”), the Board may unilaterally amend the
outstanding Purchase Rights to provide that such Purchase Rights
are exercisable for New Shares. In the event of any such amendment,
the number of shares subject to, and the Purchase Price of, the
outstanding Purchase Rights shall
be adjusted in
a fair and equitable manner, as determined by the Board, in its
sole discretion. Notwithstanding the foregoing, any fractional
share resulting from an adjustment pursuant to this
Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the Purchase Price be decreased to an amount
less than the par value, if any, of the stock subject to the
Purchase Right. The adjustments determined by the Board pursuant to
this Section 4.2 shall be final, binding and
conclusive.
5.1 Employees
Eligible to Participate in U.S. Program. Each Employee of a
Participating Company in the U.S. Program is eligible to
participate in the Plan and shall be deemed an Eligible Employee,
except the following:
(a) Any Employee who is customarily employed by the
Participating Company Group for less than twenty (20) hours
per week; or
(b) Any Employee who is customarily employed by the
Participating Company Group for not more than five (5) months
in any calendar year.
5.2 Employees
Eligible to Participate in Global Program. To the extent that
any Participating Company in the Global Program has Employees
located in more than one local jurisdiction, the Board shall have
the authority to determine whether such Employees are Eligible
Employees on a jurisdiction-by-jurisdiction basis, and may
otherwise excluded such Employees from participation in the Global
Program.
5.3 Exclusion
of Certain Stockholders. Notwithstanding any provision of the
Plan to the contrary, no Employee shall be granted a Purchase Right
under the Plan if, immediately after such grant, such Employee
would own or hold options to purchase stock of the Company or of
any Parent Corporation or Subsidiary Corporation possessing five
percent (5%) or more of the total combined voting power or value of
all classes of stock of such corporation, as determined in
accordance with Section 423(b)(3) of the Code. For purposes of
this Section 5.3, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of such
Employee.
(a) Prior to February 1, 2009, the Plan shall be
implemented by sequential Offerings of approximately twenty-four
(24) months duration (an “ Offering Period
”); provided, however, that the first such Offering Period
shall commence on the Effective Date and end on January 31,
2000 (the " Initial Offering Period ”). Subsequent
Offerings shall commence on the first day of February and August of
each year and end on the last day of the second January and July,
respectively, occurring thereafter.
(b) Beginning February 1, 2009, the Plan shall be
implemented by sequential Offerings of approximately six
(6) months duration, which shall run from the first day of
February to the last day of July each year and from the first day
of August each year to the last day in January in the following
year.
(c) Notwithstanding the foregoing, the Board may establish a
different duration for one or more future Offering Periods or
different commencing or ending dates for such Offering Periods;
provided, however, that no Offering Period may have a duration
exceeding twenty-seven (27) months. If the first or last day
of an Offering Period is not a day on which the national securities
exchanges or Nasdaq Stock Market are open for trading, the Company
shall specify the trading day that will be deemed the first or last
day, as the case may be, of the Offering Period.
(a) Prior to February 1, 2009, each Offering Period
shall consist of four (4) consecutive Purchase Periods of
approximately six (6) months duration, or such other number or
duration as the Board shall determine. The Purchase Period
commencing on the Offering Date of the Initial Offering Period
shall end on July 31, 1998. A Purchase Period commencing on or
about February 1 shall end on or about the next July 31. A
Purchase Period commencing on or about August 1 shall end on or
about the next January 31.
(b) Beginning February 1, 2009, each Offering Period
shall consist of one Purchase Period of approximately six
(6) months duration.
(c) Notwithstanding the foregoing, the Board may establish a
different duration for one or more future Purchase Periods or
different commencing or ending dates for such Purchase Periods. If
the first or last day of a Purchase Period is not a day on which
the national securities exchanges or Nasdaq Stock Market are open
for trading, the Company shall specify the trading day that will be
deemed the first or last day, as the case may be, of the Purchase
Period.
7.
Participation in the
Plan.
7.1 Initial
Participation. An Eligible Employee may become a Participant in
an Offering Period by delivering a properly completed Subscription
Agreement to the office designated by the Company not later than
the close of business for such office on the Subscription Date
established by the Company for such Offering Period. An Eligible
Employee who does not deliver a properly completed Subscription
Agreement to the Company’s designated office on or before the
Subscription Date for an Offering Period shall not participate in
the Plan for that Offering Period or for any subsequent Offering
Period unless such Eligible Employee subsequently delivers a
properly completed Subscription Agreement to the appropriate office
of the Company on or before the Subscription Date for such
subsequent Offering Period. An Employee who becomes an Eligible
Employee after the Offering Date of an Offering Period shall not be
eligible to participate in such Offering Period but may participate
in any subsequent Offering Period provided such Employee is still
an Eligible Employee as of the Offering Date of such subsequent
Offering Period.
7.2 Continued
Participation. A Participant shall automatically participate in
the next Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant
participates provided that such Participant remains an Eligible
Employee on the Offering Date of the new Offering Period and has
not either (a) withdrawn from the Plan pursuant to
Section 12.1 or (b) terminated employment as provided in
Section 13.
A Participant
who may automatically participate in a subsequent Offering Period,
as provided in this Section, is not required to deliver any
additional Subscription Agreement for the su
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