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EXHIBIT 99.3
EMULEX CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE AND TYPE OF OPTION
1.1 PURPOSE OF PLAN. The purpose of the Plan is to provide
employment incentives for, and to encourage stock ownership by, Employees of the
Company in order to increase their proprietary interest in the success of the
Company.
1.2 TYPE OF OPTION. The Options granted under the Plan are intended
to qualify for favorable tax treatment under Code Section 421(a) pursuant to the
terms of an employee stock purchase plan that satisfies the requirements of Code
Section 423(b).
2. DEFINITIONS
Whenever capitalized in the text, the following terms shall have the
meanings set forth below.
2.1 ACCOUNT. The unfunded bookkeeping account established pursuant
to Section 3.5 hereof to record a Participant's contributions to the Plan.
2.2 BASE COMPENSATION. The total cash salary or wages paid by the
Company to an Employee during the calendar year with which or within which the
Option Period ends and which is reportable as earnings subject to income tax on
Form W-2, including salary, annual bonus and incentive payments, annual profit
sharing bonus, overtime, lead premium, commissions and shift differential pay.
Base Compensation does not include deferred compensation or Company
contributions to any Employee benefit plan, but shall include salary deferral
contributions under a Section 401(k) plan or salary reduction contributions to a
cafeteria plan meeting the requirements of Section 125 of the Code that the
Company maintains or in the future may maintain. Base Compensation shall also
exclude:
2.2.1 cash reimbursement of moving, relocation and temporary
housing expenses, automobile allowances, telephone allowances, sign on bonuses,
referral bonuses and educational reimbursements to the extent such
reimbursements and allowances are subject to income tax and reportable on Form
W-2;
2.2.2 the taxable portion of any other statutory or nonstatutory
fringe benefits (including any termination, severance or separation allowance
paid coincident with or immediately following an Employee's termination of
employment under a termination, severance or separation allowance plan, program,
policy or arrangement, whether written or oral, sponsored, adopted or maintained
by the Employer or under any agreement, whether written or oral, with the
Employer), including, without limitation, group-term life insurance, to the
extent such benefits are subject to income tax and reportable on Form W-2;
2.2.3 income attributable to the exercise of any stock option or
vesting of any stock award to the extent such property transfers are subject to
income tax pursuant to Code Section 83 and reportable on Form W-2.
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2.3 BOARD. The Board of Directors of the Company.
2.4 CODE. The Internal Revenue Code of 1986, as amended.
2.5 COMMON STOCK. The shares of the $.10 par value per share common
stock of the Company.
2.6 COMPANY. Emulex Corporation, a Delaware corporation, as well as
any Parent or Subsidiary corporations whose employees participate in the Plan
with the consent of the Board.
2.7 CONTINUOUS EMPLOYMENT. An Employee's employment by the Company
without interruption. Employment shall not be considered interrupted because of:
2.7.1 Transfers of employment between the Company and its
Subsidiary or Parent corporations, or
2.7.2 Any leave of absence approved by the Company.
2.8 EMPLOYEE. Any person, including officers and directors, employed
by the Company. This term shall not include directors unless they are employed
by the Company in a position in addition to their duties as a director.
2.9 ELIGIBLE EMPLOYEE. Any Employee who has satisfied the
eligibility conditions of Section 3.1 below.
2.10 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
2.11 FAIR MARKET VALUE. For purposes of the Plan, the "fair market
value" per share of Common Stock of the Company at any date shall be (a) if the
Common Stock is listed on an established stock exchange or exchanges or the
NASDAQ National Market System, the closing price per share on such date on the
principal exchange on which it is traded or as reported by NASDAQ, or (b) if the
Common Stock is not then listed on an exchange or the NASDAQ National Market
System, the closing price per share on such date reported by NASDAQ, or if
closing sales are not reported by NASDAQ, the average of the closing bid and
asked prices per share for the Common Stock in the over-the-counter market as
quoted on NASDAQ on such date, or (c) if the Common Stock is not then listed on
an exchange, the NASDAQ National Market System or quoted on NASDAQ, an amount
determined in good faith by the Plan Administrator.
2.12 INSIDER. A Participant who is an officer, director or more than
ten percent (10%) shareholder subject to the provisions of Section 16 of the
Exchange Act.
2.13 NON-EMPLOYEE DIRECTOR. A member of the Board who is not an
Employee of the Company, any Parent or Subsidiary, who satisfies the
requirements of such term as defined in Rule 16b-3(b)(3)(i) promulgated by the
Securities and Exchange Commission.
2.14 OPTION. A stock option granted pursuant to the Plan.
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2.15 OPTION PERIOD. Six-month periods from January through June 30
and July 1 through December 31 of each calendar year, or such other periods as
the Plan Administrator may determine.
2.16 OUTSIDE DIRECTOR. A member of the Board who is not an Employee
of the Company, any Parent or Subsidiary, who satisfies the requirements of such
term as defined in Treas. Regs. Section 1.162-27(e)(3).
2.17 PLAN. The Emulex Corporation Employee Stock Purchase Plan.
2.18 PLAN ADMINISTRATOR. The Board or the Committee designated
pursuant to Section 6.2 hereof to administer, construe and interpret the terms
of the Plan.
2.19 PARTICIPANT. An Eligible Employee who has been granted an
Option under the Plan.
2.20 PARENT. Any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if at the time in question, each
of the corporations (other than the Company) owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
2.21 STOCKHOLDERS. The holders of outstanding shares of the Common
Stock.
2.22 SUBSIDIARY. Any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if at the time in
question, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain.
3. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY.
3.1.1 All Employees of the Company:
(a) Who have completed a period of Continuous Employment
of at least 90 days prior to the date Options are granted under the Plan, and
(b) Whose customary employment exceeds twenty (20) hours
per week, shall be eligible to participate in the Plan.
3.1.2 No Employee may be granted an Option if the Employee would
immediately thereafter own, directly or indirectly, five percent (5%) or more of
the combined voting power or value of all classes of stock of the Company or of
a Parent or Subsidiary corporation.
3.1.3 For purposes of Section 3.1.2 above, an Employee's
ownership interest will be determined in accordance with the provisions of
Section 424(d) of the Code.
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3.2 PAYROLL WITHHOLDING.
3.2.1 Eligible Employees may enroll as Participants by executing,
prior to the commencement of each Option Period, a form to be provided by the
Plan Administrator on which they may designate:
(a) The portion of their Base Compensation, not to exceed 10%,
to be deducted each payroll period and contributed to their Accounts for the
purchase of shares of Common Stock (the "withholding credit"), and/or
(b) The amount of funds, if any, which they will deposit at the
beginning of the Option Period for the purchase of shares of Common Stock (the
"initial deposit credit").
(c) The maximum amount that may be applied to the exercise of
the Option after being credited to a Participant's Account pursuant to Section
3.2.1(a) and Section 3.2.1(b) shall not in the aggregate exceed 10% of Base
Compensation. From time to time, in its sole discretion, the Plan Administrator
may increase or decrease the maximum percentage, but not in excess of 15% of
Base Compensation.
3.2.2 Except as provided herein or in Section 4.1.5 hereof, once a
payroll withholding amount is elected, the periodic payroll deduction
withholding credits for that Option Period cannot be decreased or increased
without terminating the Option. However, pursuant to rules and procedures
prescribed by the Plan Administrator, a Participant who is on an approved unpaid
leave of absence may make additional contributions to make up any contributions
that the Participant failed to make while on a Company-approved unpaid leave of
absence if the Participant returns to active employment and contributes those
amounts before the end of the Option Period during which the leave of absence
began. In addition, a Participant who is an employee whose Base Compensation is
primarily based on commissions, who has one or more payroll periods in which the
Participant's commission income is less than the amount of the periodic payroll
deduction withholding credit elected by the Participant, may make additional
contributions to make up any shortfall, if the Participant contributes those
amounts before the end of the Option Period. A failure to make up such a
contributions shortfall by the end of the Option Period shall be treated as an
election, pursuant to Section 4.1.5 hereof, to cease future contributions.
3.3 LIMITATIONS.
3.3.1 Notwithstanding anything herein to the contrary, the
maximum limit on the right to purchase shares of Common Stock during any Option
Period shall not exceed the lesser of: (a) twelve thousand five hundred dollars
($12,500) per Option Period, or (b) 500 shares of Common Stock per Option
Period, subject to adjustment pursuant to Section 5.2 hereof; provided, however,
that if the Option Period is a length of time other than six months, the
limitation set forth in this Section 3.3.1 shall be adjusted such that on an
annual basis (pro rated for the actual Option Period) the maximum limit on the
right to purchase shares of Common Stock during any calendar year shall not
exceed the lesser of: (a) twenty-five thousand dollars ($25,000) per calendar
year, or (b) 1,000 shares of Common Stock per calendar year, subject to
adjustment pursuant to Section 5.2 hereof.
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3.3.2 This limitation shall apply to the Participant's right to
purchase Common Stock under the Plan and under all other employee stock purchase
plans described in Section 423 of the Code that are maintained by the Company
and its Subsidiary and Parent corporations.
3.3.3 This dollar limitation applies to the Fair Market Value of
Common Stock (determined at the time the Option is granted) for the Option
Period in which the Option is outstanding.
3.3.4 This limitation shall be applied in a manner consistent
with the provisions of Section 423(b)(8) of the Code.
3.4 GRANTING OF OPTIONS.
3.4.1 Upon the Employee's completion and return of the
enrollment form, the Plan Administrator will, at the commencement of the Option
Period, grant an Option to allow the Participant to purchase the number of whole
shares of Common Stock specified by the administrator in the Option. Each
participant will be entitled to an Option to purchase the same number of shares.
However, the exercise of the of the Option by any Participant will be limited to
such number of whole shares of Common Stock that can be purchased by the amount
calculated pursuant to Section 4.2 hereof.
3.4.2 The price at which each share covered by an Option may be
purchased will in all instances be determined by the Plan Administrator, but
shall be no less than the lesser of
(a) Eighty-five percent (85%) of the Fair Market Value of
a share of Common Stock on the first day of the applicable Option Period; or
(b) Eighty-five percent (85%) of the Fair Market Value of
a share of Common Stock on the last day of the applicable Option Period (the
"Exercise Date").
3.4.3 Options shall be evidenced by an agreement between the
Participant and the Company in a form approved by the Plan Administrator.
3.5 ESTABLISHMENT OF ACCOUNTS.
3.5.1 All amounts contributed by the Participant to the Plan
(whether by means of payroll withholding or a lump sum advance contribution)
will be credited to a separate Account maintained for the Participant.
(a) The Accounts will not bear interest and a Participant
will not be entitled to any interest on the Account when the Option is
terminated.
(b) The Plan Administrator shall prescribe the rules and
procedures, as it deems necessary or appropriate, regarding the handling of
Participant contributions and, in its sole discretion, may deposit such
contributions in a passbook account or other investment in the name of the
Company maintained at any institution.
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3.5.2 A Participant may not withdraw any portion of the funds
accumulated in his or her Account without terminating his or her Option pursuant
to Section 4.1, below.
4. OPTIONS
4.1 TERMINATION OF OPTIONS.
4.1.1 An Option shall terminate upon the Participant's voluntary
withdrawal from the Plan. A Participant may withdraw from the Plan at any time
prior to the last day of the Option Period by submitting written notice to the
Plan Administrator.
4.1.2 An Option also shall terminate automatically if the
Participant holding the Option ceases to be employed by the Company for any
reason (including disability or retirement) prior to the last day of the Option
Period.
4.1.3 For purposes of Section 4.1.2 above, a Participant's
employment will not be considered to have been terminated by reason of death or
a leave of absence taken in accordance with the Company's leave of absence
policy, provided the leave of absence does not exceed five (5) months or, if
longer, so long as the Participant's right to reemployment with the Company is
guaranteed either by statute or contract (the "Term Expiration Period"). If the
leave of absence exceeds the Term Expiration Period, the Participant will be
deemed to have ceased to be employed on the first day following the end of the
Term Expiration Period. In the event of death, the Option shall be exercisable
to the extent of the amounts credited to the deceased Participant's Account. The
Option may be exercised by the representative of the Participant's estate or by
a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Option is exercisable based on the
credits to the Participant's Account.
4.1.4 Upon any termination of an Option, all amounts credited to
the Participant's Account shall be refunded to the Participant.
4.1.5 A Participant may make a single election during an Option
Period to cease future payroll withholding without terminating the Option with
respect to the number of whole shares equal to:
(a) the withheld amounts credited to the Participant's
Account;
(b) divided by the Fair Market Value of one share of
Common Stock on the first day of the Option Period.
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4.2 EXERCISE OF OPTIONS.
4.2.1 Unless terminated prior to the last day of the Option
Period, Options granted at the commencement of an Option Period will be
exercised automatically on the last day of the Option Period for such number of
whole shares of Common Stock that can be purchased by the amount calculated by:
(a) The dollar amount of the periodic deductions credited
to the Participant's Account attributable to amounts withheld from the
Participant's Base Compensation for the payroll periods during the Option Period
(the "withholding credit"),
(b) Adding the withholding credit to the amount of funds
(if any) deposited by the Participant with the Plan at the beginning of the
Option Period (the "initial deposit credit"), and
(c) Dividing the sum of the withholding credit and the
initial deposit credit by the Fair Market Value of one share of Common Stock on
the first day of the Option Period.
4.2.2 As soon as practicable after the last day of the Option
Period, a Participant shall receive a certificate for the whole number of shares
of Common Stock purchased by the funds from the Participant's Account.
4.2.3 If the amount credited to the Participant's Account on the
date of purchase exceeds the total purchase price of the shares subject to the
Option, the surplus shall be refunded to a Participant as soon as reasonably
practicable after the end of the applicable Option Period.
4.2.4 If at any time during an Option Period a Participant
ceases receiving compensation from the Company without terminating employment
(e.g., while on a Company-approved leave of absence or during a period for which
no commissions are paid), and, as a result, the amount in the Participant's
Account at the end of the Option Period is insufficient to purchase all the
shares covered by the Option granted to the Participant, as many whole shares as
can be purchased out of the contributed funds will be acquired. The balance of
the funds, if any, shall be refunded to the Participant.
4.2.5 Except as provided in Section 3.2.2, payment for shares to
be purchased at the termination of the Option Period may only be made from
funds:
(a) Deposited at the beginning of an Option Period, and/or
(b) Accumulated through payroll deductions made throughout
the Option Period.
4.3 NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will and the laws of descent and distribution. During the lifetime of a
Participant, an Option may be exercised only by the Participant.
5. COMMON STOCK
5.1 SHARES SUBJECT TO PLAN.
5.1.1 The maximum number of shares of Common Stock which may be
issued under the Plan is 200,000 shares, subject to adjustment in certain
circumstances as provided in Section 5.2 below.
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5.1.2 If any outstanding Option is terminated for any reason,
the shares allocated to the Option may again become subject to purchase under
the Plan.
5.1.3 The Common Stock issuable under the Plan may either be
previously unissued Common Stock or may have been reacquired by the Company in
the open market or otherwise.
5.1.4 If at any time the number of shares for which Options are
to be granted under the Plan pursuant to Participants' designation exceeds the
number of remaining shares then available under the Plan, the Plan Administrator
shall make pro rata adjustments to Participants' designations in a uniform
manner. Written notice of any the adjustments shall be given to each affected
Participant.
5.2 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. A proportionate
adjustment shall be made by the Plan Administrator in the number, price, and
kind of shares subject to outstanding Options if the outstanding shares of
Common Stock are increased, decreased, or exchanged for different securities,
through reorganization, merger, consolidation, recapitalization,
reclassification, stock split, stock dividends, or similar capital adjustment.
6. PLAN ADMINISTRATION
6.1 ADMINISTRATION BY BOARD. Subject to Section 6.2, the Plan
Administrator shall be the Board of Directors of the Company (the "Board")
during such periods of time as all members of the Board are Outside Directors.
Subject to the provisions of the Plan, the Plan Administrator shall have
authority to construe and interpret the Plan, to promulgate, amend, and rescind
rules and regulations relating to its administration, to determine the timing
and manner of the grant of the Options, to determine the exercise price, the
number of shares covered by and all of the terms of the Stock Options, to
determine the duration and purpose of leaves of absence which may be granted to
Stock Option holders without constituting termination of their employment for
purposes of the Plan, and to make all of the determinations necessary or
advisable for administration of the Plan. The Plan Administrator may, in its
absolute discretion, without amendment to the Plan, accelerate the date on which
any Option granted under the Plan becomes exercisable, waive or amend the
operation of Plan provisions respecting exercise after termination of employment
or otherwise adjust any of the terms of such Option. The interpretation and
construction by the Plan Administrator of any provision of the Plan, or of any
agreement issued and executed under the Plan, shall be final and binding upon
all parties. No member of the Board shall be liable for any action or
determination undertaken or made in good faith with respect to the Plan or any
agreement executed pursuant to the Plan.
6.2 ADMINISTRATION BY COMMITTEE. The Board may, in its sole
discretion, delegate any or all of its duties as Plan Administrator and, subject
to the provisions of Section 6.1 of the Plan, at any time the Board includes any
person who is not an Outside Director, the Board shall delegate all of its
duties as Plan Administrator during such period of time to a compensation
committee (the "Committee") of not fewer than two (2) members of the Board, all
of the members of which Committee shall be persons who, in the opinion of
counsel to the Company, are Outside Directors and Non-Employee Directors, to be
appointed by and serve at the pleasure of the Board. From time to time, the
Board may increase or decrease (to not less than two members) the size of the
Committee, and add additional members to, or remove members from, the Committee.
The
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Committee shall act pursuant to a majority vote, or the written consent of a
majority of its members, and minutes shall be kept of all of its meetings and
copies thereof shall be provided to the Board. Subject to the provisions of the
Plan and the directions of the Board, the Committee may establish and follow
such rules and regulations for the conduct of its business, as it may deem
advisable. No member of the Committee shall be liable for any action or
determination undertaken or made in good faith with respect to the Plan or any
agreement executed pursuant to the Plan.
6.3 EXCEPTIONS. Anything to the contrary notwithstanding, the
requirements in Sections 6.1 and 6.2 that all members of the Committee be
Non-Employee Directors and Outside Directors shall not apply for any period of
time during which the Company's Common Stock is not registered pursuant to
Section 12 of the Exchange Act. Those provisions of the Plan that make express
reference to Rule 16b-3 under the Exchange Act shall apply only to reporting
persons.
6.4 INDEMNIFICATION OF THE PLAN ADMINISTRATOR. To the extent
permitted by law, the Certificate of Incorporation of the Company, the Bylaws of
the Company and any indemnity agreements between the Company and its directors
or employees, the Company shall indemnify each member of the Board and of the
Committee comprising the Plan Administrator, and any other employee of the
Company with duties under the Plan, against expenses (including reasonable
attorneys fees and any amount paid in settlement) reasonably incurred in
connection with any claims against him or her by reason of conduct in the
performance of duties under the Plan.
7. MISCELLANEOUS MATTERS
7.1 UNIFORM RIGHTS AND PRIVILEGES. Except for the limitations of
Section 3.3, the rights and privileges of all Participants under the Plan must
be the same.
7.2 RIGHTS AS A STOCKHOLDER.
7.2.1 No person shall have any stockholder rights with respect
to shares covered by an Option until a stock certificate for the shares is
issued and delivered to the person.
7.2.2 No adjustments will be made for cash dividends or other
rights for which the record date is prior to the date of the exercise of the
Option.
7.3 APPLICATION OF PROCEEDS. The proceeds received by the Company
from the sale of Common Stock pursuant to Options shall be used for general
corporate purposes.
7.4 AMENDMENT AND TERMINATION.
7.4.1 The Board may at any time alter, amend, suspend, or
terminate the Plan with respect to any shares not already subject to Options.
7.4.2 No amendment may be adopted without the approval of the
Stockholders that would:
(a) Materially increase the benefits accruing to
Participants in the Plan,
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(b) Increase the number of shares that may be issued under
the Plan,
(c) Materially modify the requirements as to eligibility
for participation,
(d) Extend the term of the Plan,
(e) Alter the option price formula, or
(f) Cause the Plan to fail to meet the requirements to
qualify as an "employee stock purchase plan" under Section 423 of the Code.
7.5 INTERPRETATION.
7.5.1 If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and the Plan will be construed and enforced as if the
provision had not been included in it.
7.5.2 Unless the context clearly indicates otherwise, the
masculine gender shall include the feminine, the singular shall include the
plural, and the plural shall include the singular.
7.5.3 Section headings are for convenient reference only and
shall not be deemed to be part of the substance of this instrument or in any way
to enlarge or limit the contents of any Section.
7.6 STOCKHOLDER APPROVAL.
7.6.1 No shares of Common Stock shall be issued under the Plan
unless it shall have been approved by the stockholders of the Company within 12
months of the date of adoption. If the Plan is not approved by the Company's
stockholders within that time period, the Plan and all Options issued under the
Plan will terminate and all contributions will be refunded to the Participants
together with any interest earned thereon.
7.6.2 This approval by the Company's stockholders must relate to
both:
(a) The aggregate number of shares to be granted under the
Plan, and
(b) The corporations whose employees may be Participants
in the Plan.
7.7 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any Option shall confer upon any Employee any right to continued
employment, nor shall it interfere in any way with the right of the Company
terminate the employment of any Employee at any time, with or without cause.
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7.8 GOVERNING LAW. The Plan and all actions taken under it shall be
governed by and construed in accordance with the laws of the state of
California.
8. EFFECTIVE DATE AND TERM OF PLAN
8.1 EFFECTIVE DATE. The effective date of this Plan shall be January
1, 2001, subject to the approval of Stockholders of the Company within 12 months
of the date of adoption. No options granted under the Plan will be effective
until the Stockholders of the Company have approved the Plan.
8.2 TERM OF PLAN. Unless sooner terminated by the Board in its sole
discretion, the Plan will expire on December 31, 2010.
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