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Exhibit 4.3
THE SANTA CRUZ OPERATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
(As Amended November 1999)
The following constitute the provisions of the Employee Stock Purchase Plan of
The Santa Cruz Operation, Inc.
1. Purpose.
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The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that
section of the Code.
2. Definitions.
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a) "Board" shall mean the Board of Directors of the company.
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b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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c) "Common Stock" shall mean the Common Stock of the Company.
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d) "Company" shall mean The Santa Cruz Operation, Inc., a California
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corporation.
e) "Compensation" shall include all base pay, overtime pay, bonus and
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commissions and shall exclude all other amounts.
f) "Designated Subsidiaries" shall mean the Subsidiaries which have been
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designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
g) "Employee" shall mean any individual who is a regular employee of the
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Company for purposes of tax withholding under the Code whose customary
employment with the Company or any Designated Subsidiary regardless of
the number of hours worked. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds ninety (90) days and the
individual's right to employment is not guaranteed either by statute
or by contract, the employment relationship will be deemed to have
terminated on the 91st day of such leave.
h) "Enrollment Date" shall mean the first day of each Offering Period.
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i) "Exercise Date" shall mean the last day of each Offering Period.
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j) "Fair Market Value" shall mean, as of any date, the value of Common
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Stock determined as follows:
i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair
Market Value shall be the closing sale price for the Common Stock
(or the mean of the closing bid and asked prices, if no sales
were reported), as quoted on such exchange (or the exchange with
the greatest volume of trading in Common Stock) or system on the
date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
ii) If the Common Stock is quoted on the NASDAQ system (but not on
the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean of the closing bid and
asked prices for the Common Stock on the date of such
determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
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iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith
by the Board.
iv) For purposes of the Enrollment Date under the first Offering
Period under the Plan, the Fair Market Value of the Common Stock
shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange commission
pursuant to Rule 424 under the Securities Act of 1933, as
amended.
k) "Offering Period" shall mean a period of approximately six (6) months,
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commencing on the first Trading Day on or after February 1 and
terminating on the last Trading Day in the period ending the following
July 31, or commencing on the first Trading Day on or after August 1
and terminating on the last Trading Day in the period ending the
following January 31, during which an option granted pursuant to the
Plan may be exercised. The duration, commencement and termination of
Offering Periods may be changed pursuant to Section 4 of this Plan.
l) "Purchase Price" shall mean an amount equal to 85% of the Fair Market
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Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
m) "Reserves" shall mean the number of shares of Common Stock covered by
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each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but not yet placed under option.
n) "Subsidiary" shall mean a corporation, domestic or foreign, of which
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not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
o) "Trading Day" shall mean a day on which national stock exchanges and
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the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Eligibility.
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a) Any Employee (as defined in Section 2(g)), who shall be employed by
the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan
i) to the extent, immediately after the grant, such Employee (or any
other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting
power or value of all classes of the capital stock of the Company
or of any Subsidiary, or
ii) to the extent his or her rights to purchase stock under all
employee stock purchase plans of the Company and its subsidiaries
to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of
the shares at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
4. Offering Periods.
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The Plan shall be implemented by consecutive Offering Periods with a new
Offering Period commencing on the first Trading Day on or after February 1
and August 1 each year, or on such other date as the Board shall determine,
and continuing thereafter until terminated in accordance with Section 19
hereof. The Board shall have the power to change the duration, commencement
and termination of Offering Periods with respect to future offerings
without shareholder approval if such change is announced at least five (5)
days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. Participation.
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a) An eligible Employee may become a participant in the Plan by completing
a subscription agreement authorizing payroll deductions in the form of
Exhibit A to this Plan and filing it with the Company's payroll office
at least ten business days prior to the applicable Enrollment Date,
however, a later date, prior to the applicable Enrollment Date may be
established for all eligible Employees to enroll in a given Offering
Period.
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b) Payroll deductions for a participant shall commence on the first
payroll following the enrollment Date and shall end on the last payroll
in the Offering Period to which such authorization is applicable,
unless sooner terminated by the participant as provided in Section 10
hereof.
6. Payroll Deductions.
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a) At the time a participant files his or her subscription agreement, he
or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount of at least one percent (1%)
and not exceeding ten percent (10%) of the Compensation which he or she
receives on each pay day during the Offering Period, and the aggregate
of such payroll deductions during the Offering Period shall not exceed
ten percent (10%) of the participant's Compensation during said
Offering Period.
b) All payroll deductions made for a participant shall be credited to his
or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such
account.
c) A participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing
or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate. The Board may, in its discretion,
limit the number of participation rate changes during any Offering
Period. The change in rate shall be effective with the first full
payroll period following five (5) business days after the Company's
receipt of the new subscription agreement unless the Company elects to
process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering
Periods unless terminated as provided in Section 10 hereof.
d) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar
year (the "Current Offering Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan
in a prior Offering Period which ended during that calendar year plus
all payroll deductions accumulated with respect to the Current Offering
Period equal $21,250. Payroll deductions shall recommence at the rate
provided in such participant' s subscription agreement at the beginning
of the first Offering Period which is scheduled to end in the following
calendar year, unless terminated by the participant as provided in
Section 10 hereof.
e) At the time the option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any,
which arise upon the exercise of the option or the disposition of the
Common Stock. At any time, the Company may, but will not be obligated
to, withhold from the participant's compensation the amount necessary
for the Company to meet applicable withholding obligations, including
any withholding required to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option.
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On the Enrollment Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date of such Offering Period (at the applicable
Purchase Price) up to a number of shares of the Company's Common Stock
determined by dividing such Employee's payroll deductions accumulated prior
to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event
shall an Employee be permitted to purchase during each Offering Period more
than a number of Shares determined by dividing $12,500 by the Fair Market
Value of a share of the Company's Common Stock on the Enrollment Date (the
"Number"), except that for purposes of the first Offering period under the
Plan, the Number shall be calculated by dividing $25,000 by the Fair Market
Value of a share of the Company's Common Stock on the Enrollment Date, and
provided further that all such purchases shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. Exercise of the
option shall occur as provided in Section 8 hereof, unless the participant
has withdrawn pursuant to Section 10 hereof, and shall expire on the last
day of the Offering Period.
8. Exercise of Option.
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Unless a participant withdraws from the Plan as provided in Section 10
hereof, his or her option for the purchase of shares will be exercised
automatically on the Exercise Date, and the maximum number of full shares
subject to option shall be purchased for
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such participant at the applicable Purchase Price with the accumulated
payroll deductions in his or her account. No fractional shares will be
purchased; any payroll deductions accumulated in a participant's account
which are not sufficient to purchase a full share shall be retained in the
participant' s account for the subsequent Offering Period, subject to
earlier withdrawal by the participant as provided in Section 10 hereof. Any
other moneys left over in a participant's account after the Exercise Date
shall be returned to the participant. During a participant's lifetime, a
participant's option to purchase shares hereunder is exercisable only by
him or her.
9. Delivery.
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As promptly as practicable after each Exercise Date on which a purchase of
shares occurs, the Company shall arrange the delivery to each participant,
as appropriate, of a certificate representing the shares purchased upon
exercise of his or her option.
10. Withdrawal; Termination of Employment.
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a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit B to this Plan. All of the
participant's payroll deductions credited to his or her account will
be paid to such participant promptly after receipt of notice of
withdrawal and such participant's option for the Offering Period will
be automatically terminated, and no further payroll deductions for the
purchase of shares will be made during the Offering Period. If a
participant withdraws from an Offering Period, payroll deductions will
not resume at the beginning of the succeeding Offering Period unless
the participant delivers to the Company a new subscription agreement.
b) Upon a participant's ceasing to be an Employee (as defined in Section
2(g) hereof), for any reason he or she will be deemed to have elected
to withdraw from the Plan and the payroll deductions credited to such
participant' s account during the Offering Period but not yet used to
exercise the option will be returned to such participant or, in the
case of his or her death, to the person or persons entitled thereto
under Section 14 hereof, and such participant's option will be
automatically terminated.
c) A participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering
Period from which the participant withdraws.
11. Interest.
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No interest shall accrue on the payroll deductions of a participant in the
Plan.
12. Stock.
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a) The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 4,750,000 shares,
subject to adjustment upon changes in capitalization of the Company as
provided in Section 18 hereof. If on a given Exercise Date the number
of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall
make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it
shall determine to be equitable.
b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration.
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a) Administrative Body. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or
its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the
Plan. Every finding, decision and determination made by the Board or
its committee shall, to the full extent permitted by law, be final and
binding upon all parties.
b) Members of the Board who are eligible Employees are permitted to
participate in the Plan, provided that:
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i) Members of the Board who are eligible to participate in the Plan
may not vote on any matter affecting the administration of the
Plan or the grant of any option pursuant to the Plan.
ii) If a Committee is established to administer the Plan, no member
of the Board who is eligible to participate in the Plan may be a
member of the Committee.
c) Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection
(a) of this Section 13, in the event that Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision ("Rule 16b-3") provides specific
requirements for the administrators of plans of this type, the Plan
shall be only administered by such a body and in such a manner as
shall comply with the applicable requirements of Rule 16b-3. Unless
permitted by Rule 16b-3, no discretion concerning decisions regarding
the Plan shall be afforded to any committee or person that is not
"disinterested" as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
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a) The beneficiary(ies) designated by the participant to take under the
life insurance program of the Company, or a beneficiary chosen by a
participant is written designation to the Company of a beneficiary
shall 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 an Exercise Date on which the option is exercised but
prior to delivery to such participant of such shares and cash. In
addition, the same beneficiary(ies) shall receive any cash from the
participant's account under the Plan in the event of such
participant's death prior to exercise of the option.
b) Such designation of 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 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.
15. Transferability.
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Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under
the Plan may be assigned, transferred, pledged or otherwise disposed of in
any way (other than by will, the laws of descent and distribution or as
provided in Section 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds
from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds.
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All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.
17. Reports.
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Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees at least
annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
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18. Adjustments Upon Changes in Capitalization.
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a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves as well as the price per
share of Common Stock covered by each option under the Plan which has
not yet been exercised shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an
option.
b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.
c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan
shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten
the Offering Period then in progress by setting a new Exercise Date
(the "New Exercise Date") or to cancel each outstanding right to
purchase and refund all sums collected from participants during the
Offering Period then in progress. If the Board shortens the Offering
Period then in progress in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify each
participant in writing, at least ten (10) business days prior to the
New Exercise Date, that the Exercise Date for his option has been
changed to the New Exercise Date and that his option will be exercised
automatically on the New Exercise Date, unless prior to such date he
has withdrawn from the Offering Period as provided in Section 10
hereof. For purposes of this paragraph, an option granted under the
Plan shall be deemed to be assumed if, following the sale of assets or
merger, the option confers the right to purchase, for each share of
option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by
holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the sale of
assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code),
the Board may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon exercise
of the option to be solely common stock of the successor corporation or
its parent equal in fair market value to the per share consideration
received by holders of Common Stock and the sale of assets or merger.
d) The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as
the price per share of Common Stock covered by each outstanding option,
in the event the Company effects one or more reorganizations,
recapitalization, rights offerings or other increases or reductions of
shares of its outstanding Common Stock, and in the event of the Company
being consolidated with or merged into any other corporation.
19. Amendment or Termination.
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a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted,
provided that an Offering Period may be terminated by the Board of
Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
shareholders. Except as provided in Section 18 hereof, no amendment may
make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any
successor rule or provision or any other applicable law or regulation),
the Company shall obtain shareholder approval in such a manner and to
such a degree as required.
b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected,"
the Board (or its committee) shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by a
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participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase
of Common Stock for each participant properly correspond with amounts
withheld from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee) determines in
its sole discretion advisable which are consistent with the Plan.
20. Notices.
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All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares.
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Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto
shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon
which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by
any of the aforementioned applicable provisions of law.
22. Term of Plan.
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The Plan shall become effective upon the earlier to occur of its adoption
by the Board of Directors or its approval by the shareholders of the
Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 19 hereof.
23. Additional Restrictions of Rule 16b-3.
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The terms and conditions of options granted hereunder to, and the purchase
of shares by, persons subject to Section 16 of the Exchange Act shall
comply with the applicable provisions of Rule 16b-3. This Plan shall be
deemed to contain, and such options shall contain, and the shares issued
upon exercise thereof shall be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 to qualify for the maximum
exemption from Section 16 of the exchange Act with respect to Plan
transactions.
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