<PAGE> 1
As filed with the Securities and Exchange Commission on March 7, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KLA INSTRUMENTS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2564110
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
160 Rio Robles
San Jose, CA 95134
(Address, including zip code, of principal executive offices)
1982 STOCK OPTION PLAN
(Full Title of the Plan)
Lisa C. Berry
Vice President, General Counsel
KLA INSTRUMENTS CORPORATION
160 Rio Robles
San Jose, CA 95134
(Name and address of agent for service)
(408) 468-4200
(Telephone number, including area code, of agent for service)
Copy to:
JUDITH M. O'BRIEN, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered Share(1) Price(1) Registration
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par 1,600,000 $ 40.125 $ 64,200,000 $ 19,454.55
value, to be issued
upon exercise of
options granted under
the Amended 1982 Stock
Option Plan
Total 1,600,000 $ 40.125 $ 64,200,000 $ 19,454.55
=========================================================================================================
</TABLE>
(1) The Proposed Maximum Offering Price Per Share was estimated in accordance
with Rule 457(c) under the Securities Act solely for the purpose of
calculating the registration fee, based on the average of the high and low
price of the Registrant's stock as reported in the Nasdaq National Market on
March 6, 1997.
<PAGE> 2
THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL HAS EXEMPTED KLA INSTRUMENTS
CORPORATION AND KLA INSTRUMENTS CORPORATION (ISRAEL) FROM THE REQUIREMENTS
UNDER ISRAELI LAW TO OBTAIN A PERMIT WITH REGARD TO THIS FORM S-8. NOTHING IN
THE EXEMPTION GRANTED SHALL BE CONSTRUED AS AUTHENTICATING THE MATTER CONTAINED
IN THIS FORM S-8 OR AS AN APPROVAL OF THEIR RELIABILITY OR ACCURACY OR AN
EXPRESSION OF AN OPINION AS TO THE QUALITY OF THE SECURITIES OFFERED HEREBY.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The contents of the Registrant's Registration Statement on Form S-8
(File No. 333-03003) filed with the Securities and Exchange Commission on April
30, 1996 is incorporated by reference in this Registration Statement.
ITEM 8. EXHIBITS.
See Exhibit Index.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Jose, State of California, on March 7,
1997.
KLA INSTRUMENTS CORPORATION
By: /s/Kenneth Levy
-------------------------------------
Kenneth Levy
Chairman and
Chief Executive Officer
II-2
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Levy and Lisa C. Berry, and
each of them, their true and lawful attorneys and agents, with full power of
substitution, each with power to act alone, to sign and execute on behalf of
the undersigned any amendment or amendments to this Registration Statement on
Form S-8 and to perform any acts necessary in order to file such amendments,
and each of the undersigned does hereby ratify and confirm all that said
attorneys and agents, or their or his or her substitutes, shall do or cause to
be done by virtue hereof. Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C>
/s/ Kenneth Levy
- -------------------------------- Chief Executive Officer, Director and March 7, 1997
Kenneth Levy Chairman of the Board
(Principal Executive Officer)
/s/ Kenneth L. Schroeder
- -------------------------------- President, Chief Operating Officer and March 7, 1997
Kenneth L. Schroeder Director
/s/ Robert J. Boehlke
- -------------------------------- Vice President, Administration and Finance March 7, 1997
Robert J. Boehlke Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Edward W. Barnholt
- -------------------------------- Director March 7, 1997
Edward W. Barnholt
/s/ Leo J. Chamberlain
- -------------------------------- Director March 7, 1997
Leo J. Chamberlain
/s/ Yoshio Nishi
- -------------------------------- Director March 7, 1997
Yoshio Nishi
/s/ Samuel Rubinovitz
- -------------------------------- Director March 7, 1997
Samuel Rubinovitz
/s/ Dag Tellefsen
- -------------------------------- Director March 7, 1997
Dag Tellefsen
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Certificate of Incorporation, as amended, of the Registrant is
incorporated by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-3, dated February 2, 1994
(Commission File No. 0-9992)
4.2 Bylaws of the Registrant, as amended, of the Registrant is
incorporated by reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-3, dated February 2, 1994
(Commission File No. 0-9992)
4.3 Amended and Restated Rights Agreement dated as of August 30, 1995
between the Registrant and The First National Bank of Boston, as
Rights Agent, is incorporated by reference to the Registrant's
report on Form 8-A/A Amendment No. 1 to the Registration Statement
on Form 8-A (filed September 24, 1996, Commission File No. 0-9992)
5.1 Opinion re legality
10.74 Restated 1982 Stock Option Plan, as amended on November 18, 1996
23.1 Consent of Counsel (included in Exhibit 5.1)
23.2 Consent of Independent Accountants
24.1 Power of Attorney (see Page II-3)
</TABLE>
II-4
<PAGE> 1
EXHIBIT 5.1
March 7, 1997
KLA Instruments Corporation
160 Rio Robles
San Jose, CA 95134
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about March 7, 1997 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of (i) 1,600,000 shares of your Common
Stock reserved for issuance under the 1982 Stock Option Plan (the "Stock Plan")
and (ii) 800,000 shares of your Common Stock reserved for issuance under the
Second Restated 1981 Employee Stock Purchase Plan (the "Purchase Plan"). The
1,600,000 shares of Common Stock reserved under the Stock Plan and the 800,000
shares of Common Stock reserved under the Purchase Plan are referred to
collectively hereinafter as the "Shares," and the Stock Plan and the Purchase
Plan are referred to hereinafter collectively as the "Plans." As your legal
counsel, we have examined the proceedings taken and proposed to be taken in
connection with the issuance, sale and payment of consideration for the Shares
to be issued under the Plans.
It is our opinion that, when issued and sold in compliance with
applicable prospectus delivery requirements and in the manner referred to in
the Plans and pursuant to the agreements which accompany the Plans, the Shares
will be legally and validly issued, fully paid and non- assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement and any amendments thereto.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE> 1
EXHIBIT 10.74
KLA INSTRUMENTS CORPORATION
RESTATED 1982 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. On October 6, 1981, the KLA Instruments
Corporation 1981 Incentive Stock Option Plan (the "1981 Plan") was adopted. The
1981 Plan was amended and restated in its entirety and renamed the KLA
Instruments Corporation 1982 Stock Option Plan (the "1982 Plan"). The 1982 Plan
was amended and restated in its entirety in 1985 (the "1985 Restatement"). The
1985 Restatement was amended and restated in its entirety effective January 1,
1987 (the "1987 Restatement"). The 1981 Plan, 1982 Plan, the 1985 Restatement
and the 1987 Restatement are hereinafter referred to collectively as the "Prior
Plan." The Prior Plan is hereby amended and restated in its entirety as the KLA
Instruments Corporation Restated 1982 Stock Option Plan (the "PLAN") effective
as of July 29, 1996 (the "EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by providing
an incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.
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 and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, prior to July 29, 2006.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. 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 the Compensation Committee or
other committee of the Board duly appointed to administer the Plan and having
such
1
<PAGE> 2
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 KLA Instruments Corporation, a
Delaware corporation, or any successor corporation thereto.
(e) "CONSULTANT" means any person, including an
advisor, engaged by a Participating Company to render services other than as an
Employee or a Director.
(f) "DIRECTOR" means a member of the Board or of the
board of directors of any other Participating Company.
(g) "DISABILITY" means the permanent and total
disability of the Optionee within the meaning of Section 22(e)(3) of the Code.
(h) "EMPLOYEE" means any person treated as an
employee (including an officer or a Director who is also treated as an employee)
in the records of a Participating Company; provided, however, that neither
service as a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.
(i) "EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
(j) "FAIR MARKET VALUE" means, as of any date, the
value of a share of stock or other property as determined by the Board, in its
sole discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein.
(k) "INCENTIVE STOCK OPTION" means an Option intended
to be (as set forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422(b) of the Code.
(l) "INSIDER" means an officer or a Director of the
Company or any other person whose transactions in Stock are subject to Section
16 of the Exchange Act.
(m) "NONSTATUTORY STOCK OPTION" means an Option not
intended to be (as set forth in the Option Agreement) or which does not qualify
as an Incentive Stock Option.
2
<PAGE> 3
(n) "OPTION" means a right to purchase Stock (subject
to adjustment as provided in Section 4.2) pursuant to the terms and conditions
of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.
(o) "OPTION AGREEMENT" means a written agreement
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired upon
the exercise thereof.
(p) "OPTIONEE" means a person who has been granted
one or more Options.
(q) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(r) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.
(s) "PARTICIPATING COMPANY GROUP" means, at any point
in time, all corporations collectively which are then Participating Companies.
(t) "RULE 16b-3" means Rule 16b-3 under the Exchange
Act, as amended from time to time, or any successor rule or regulation.
(u) "SECTION 162(m)" means Section 162(m) of the
Code, as amended by the Revenue Reconciliation Act of 1993 (P.L. 103-66).
(v) "SECURITIES ACT" means the Securities Act of
1933, as amended.
(w) "SERVICE" means an Optionee's employment or
service with the Participating Company Group, whether in the capacity of an
Employee, a Director or a Consultant. An Optionee's Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Optionee renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. An Optionee's
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the corporation for which the Optionee performs Service ceasing
to be a Participating Company. An Optionee's Service with the Participating
Company Group shall not be deemed to terminate if the Optionee takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Company of ninety (90) days or less. In the event of a leave of absence in
excess of ninety (90) days, the Optionee's Service shall be deemed to terminate
on the ninety-first (91st) day of such leave unless the Optionee's right to
return to Service with the Participating Company Group remains
3
<PAGE> 4
guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company (or required by law), a leave of absence
shall not be treated as Service for purposes of determining the Optionee's
vesting. Subject to the foregoing, the Company, in its sole discretion, shall
determine whether an Optionee's Service has terminated and the effective date of
such termination.
(x) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(y) "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f) of
the Code.
(z) "TEN PERCENT OWNER OPTIONEE" means an Optionee
who, at the time an Option is granted to the Optionee, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of Section 422(b)(6) of the
Code.
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. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board, including any duly appointed Committee of the Board.
All questions of interpretation of the Plan or of any Option shall be determined
by the Board, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.
3.3 COMMITTEE COMPLYING WITH SECTION 162(M). If a
Participating Company is a "publicly held corporation" within the meaning of
Section 162(m), the Board may establish a Committee of "outside directors"
within the meaning of Section 162(m) to approve the grant of any Option which
might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the
4
<PAGE> 5
limit on employee remuneration deductible for income tax purposes pursuant to
Section 162(m).
3.4 POWERS OF THE BOARD. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its sole discretion:
(a) to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares of Stock to be
subject to each Option;
(b) to designate Options as Incentive Stock Options
or Nonstatutory Stock Options;
(c) to determine the Fair Market Value of shares of
Stock or other property;
(d) to determine the terms, conditions and
restrictions applicable to each Option (which need not be identical) and any
shares acquired upon the exercise thereof, including, without limitation, (i)
the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction of
any tax withholding obligation arising in connection with the Option or such
shares, including by the withholding or delivery of shares of stock, (iv) the
timing, terms and conditions of the exercisability of the Option or the vesting
of any shares acquired upon the exercise thereof, (v) the time of the expiration
of the Option, (vi) the effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms,
conditions and restrictions applicable to the Option or such shares not
inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, or renew, or grant a
new Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof;
(g) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines
and policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and
5
<PAGE> 6
(i) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.
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 sixteen million five hundred thousand
(16,500,000), increased (a) on the first day of each fiscal year of the Company
beginning on and after July 1, 1997 by a number of shares equal to three percent
(3%) of the number of shares of Stock issued and outstanding on the last day of
the immediately preceding fiscal year and (b) at any time after the Effective
Date by a number of shares equal to the number of shares of Stock, if any,
repurchased on the open market by the Company for issuance under the Plan.
Notwithstanding the foregoing, except as adjusted pursuant to Section 4.2, in no
event shall more than sixteen million five hundred thousand (16,500,000) shares
of Stock be cumulatively available for issuance pursuant to the exercise of
Incentive Stock Options (the "ISO SHARE ISSUANCE LIMIT"). Subject to adjustment
as provided in Section 4.2, shares issuable under the Plan shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If any outstanding Option for any reason expires or is terminated or
canceled or shares of Stock acquired, subject to repurchase, upon the exercise
of an Option are repurchased by the Company, the shares of Stock allocable to
the unexercised portion of such Option, or such repurchased shares of Stock,
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, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, in the ISO Share Issuance
Limit set forth in Section 4.1, in the Section 162(m) Grant Limit set forth in
Section 5.4, and in the exercise price per share of any outstanding Options. If
a majority of the shares which are of the same class as the shares that are
subject to outstanding Options are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event, as defined in
Section 8.1) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares subject to, and the exercise price per share of, the outstanding Options
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 up or
down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the
6
<PAGE> 7
stock subject to the Option. The adjustments determined by the Board pursuant to
this Section 4.2 shall be final, binding and conclusive.
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only
to Employees, Consultants, and Directors; provided, however, that no Director
who is not also an Employee shall be eligible to be granted an Option. Eligible
persons may be granted more than one (1) Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an
Employee on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Option granted to a prospective
Employee, Consultant or Director upon the condition that such person commence
Service with the Participating Company Group shall be deemed granted effective
on the date such person's Service commences, with an exercise price determined
as of such date in accordance with Section 6.1.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising and separate certificates representing each such portion
shall be issued upon the exercise of the Option. In the absence of such
designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the Option first.
5.4 SECTION 162(m) GRANT LIMIT. Subject to adjustment as
provided in Section 4.2, at any such time as a Participating Company is a
"publicly held corporation" within the meaning of Section 162(m), no Optionee
shall be granted one or more Options within any fiscal year of the Company which
in the aggregate are for the purchase of more than two hundred thousand
(200,000) shares; provided, however, that such limit shall be six hundred
thousand (600,000) shares in an Optionee's first fiscal year of Service with the
Participating Company Group (the "SECTION 162(m) GRANT LIMIT"). An Option which
is canceled in the same fiscal year
7
<PAGE> 8
of the Company in which it was granted shall continue to be counted against the
Section 162(m) Grant Limit for such period.
6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
Option Agreements specifying the number of shares of Stock covered thereby, in
such form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall
be established in the sole discretion of the Board; provided, however, that (a)
no Option shall have an exercise price per share less than the Fair Market Value
of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner Optionee shall have an
exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying under the
provisions of Section 424(a) of the Code.
6.2 EXERCISE PERIOD.
(a) EXERCISABILITY AND DURATION. Options shall be
exercisable, on or before the date of their expiration (the "OPTION EXPIRATION
DATE"), at such time or times, or upon such event or events, and subject to such
terms, conditions, performance criteria, and restrictions as shall be determined
by the Board and set forth in the Option Agreement evidencing such Option. The
Option Expiration Date for each Option shall be determined by the Board in the
grant of such Option, provided, however, that (a) no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years after the effective
date of grant of such Option and (b) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option. Except as otherwise
provided in this Section 6.2 or by the Board in the grant of an Option, the
Option Expiration Date of any Option granted hereunder shall be the date
occurring ten (10) years after the effective date of grant of the Option.
(b) TERMINATION OF OPTION. An Option shall terminate
and may no longer be exercised on the first to occur of (a) the Option
Expiration Date of such Option, (b) the last date for exercising the Option
following termination of the Optionee's Service as described in Section 6.8, or
(c) a Transfer of Control to the extent provided in Section 8.
8
<PAGE> 9
6.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of shares
of Stock being purchased pursuant to any Option shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company of shares of Stock
owned by the Optionee having a Fair Market Value (as determined by the Company
without regard to any restrictions on transferability applicable to such stock
by reason of federal or state securities laws or agreements with an underwriter
for the Company) not less than the exercise price, (iii) by the assignment of
the proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
"CASHLESS EXERCISE"), (iv) in the Company's sole discretion at the time an
Option is exercised, by cash for a portion of the aggregate exercise price not
less than the par value, if any, of the shares being acquired and the Optionee's
promissory note for the balance of the aggregate exercise price in a form
approved by the Company, (v) by such other consideration as may be approved by
the Board from time to time to the extent permitted by applicable law, or (vi)
by any combination thereof. The Board may at any time or from time to time, by
adoption of or by amendment to the standard forms of Option Agreement described
in Section 7, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
(b) TENDER OF STOCK. Notwithstanding the foregoing,
an Option may not be exercised by tender to the Company of shares of Stock to
the extent such tender of Stock would constitute a violation of the provisions
of any law, regulation or agreement restricting the redemption of the Company's
stock. Unless otherwise provided by the Board, an Option may not be exercised by
tender to the Company of shares of Stock unless such shares either have been
owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.
(d) PAYMENT BY PROMISSORY NOTE. No promissory note
shall be permitted if the exercise of an Option using a promissory note would be
a violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by
9
<PAGE> 10
the Board, if the Company at any time is subject to the regulations promulgated
by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company's securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations. Except as the Company and an Optionee otherwise agree, no Option
granted to such Optionee may be exercised following termination of the
Optionee's Service by delivery of a promissory note.
6.4 TAX WITHHOLDING. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company, equal
to all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof. Alternatively
or in addition, in its sole discretion, the Company shall have the right to
require the Optionee, through payroll withholding, cash payment or otherwise,
including by means of a Cashless Exercise, to make adequate provision for any
such tax withholding obligations of the Participating Company Group arising in
connection with the Option or the shares acquired upon the exercise thereof. The
Company shall have no obligation to deliver shares of Stock or to release shares
of Stock from any escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.
6.5 FRACTIONAL SHARES. The Company shall not be required to
issue fractional shares upon the exercise of any Option.
6.6 CERTIFICATE REGISTRATION. Except in the event the exercise
price of an Option is paid by means of a Cashless Exercise, the certificate for
the shares as to which the Option is exercised shall be registered in the name
of the Optionee, if requested by the Optionee, in the name of the Optionee and
his or her spouse, or, if applicable, in the names of the heirs of the Optionee
or such other person or persons who acquired the right to exercise the Option in
accordance with the terms of the Plan and the Option Agreement.
6.7 REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its sole discretion at
the time the Option is granted. The Company shall have the right to assign at
any time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the
10
<PAGE> 11
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.
6.8 EFFECT OF TERMINATION OF SERVICE.
(a) DISABILITY OF OPTIONEE. If an Optionee's Service
with the Participating Company Group is terminated because of the Disability of
the Optionee, any Option granted to such Optionee, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee (or the Optionee's guardian, legal representative, or
other person who acquired the right to exercise the option, as the case may be)
at any time prior to the expiration of the Post-Service Exercise Period set
forth in the Option Agreement evidencing such Option or such other longer period
as the Board, in its sole discretion, shall permit, but in any event no later
than the Option Expiration Date. Unless otherwise determined by the Board at the
time an Option is granted, for purposes of this Section 6.8(a), the Post-Service
Exercise Period shall be a period of twelve (12) months after the date on which
the Optionee's Service terminated because of the Disability of the Optionee.
(b) DEATH OF OPTIONEE. If an Optionee's Service with
the Participating Company Group is terminated because of the death of the
Optionee, any Option granted to such Optionee, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee's legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee's death at any time
prior to the expiration of the Post-Service Exercise Period set forth in the
Option Agreement evidencing such Option or such longer period as the Board, in
its sole discretion, shall permit, but in any event no later than the Option
Expiration Date. Unless otherwise determined by the Board at the time an Option
is granted, for purposes of this Section 6.8(b), the Post-Service Exercise
Period shall be a period of twelve (12) months after the date on which the
Optionee's Service terminated because of the death of the Optionee. An
Optionee's Service shall be deemed to have terminated because of death if the
Optionee dies within three (3) months after the Optionee's termination of
Service.
(c) OTHER TERMINATION OF SERVICE. If an Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability or death, any Option granted to the Optionee, to the extent
unexercised and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee (or other person who acquired the
right to exercise the Option) at any time prior to the expiration of the
Post-Service Exercise Period set forth in the Option Agreement evidencing such
Option or such longer period as the Board, in its sole discretion, shall permit,
but in any event no later than the Option Expiration Date. Unless otherwise
determined by the Board at the time an Option is granted, for purposes of this
Section 6.8(c), the Post-Service Exercise Period shall be a period of one (1)
month after the date on which the Optionee's Service terminated for any reason
other than the Disability or death of the Optionee.
11
<PAGE> 12
(d) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of an Option within the
applicable Post-Service Exercise Period set forth in this Section 6.8 is
prevented by the provisions of Section 11 below, the Option shall remain
exercisable until three (3) months after the date the Optionee is notified by
the Company that the Option is exercisable, but in any event no later than the
Option Expiration Date.
(e) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable Post-Service
Exercise Period set forth in Section this Section 6.8 of shares acquired upon
the exercise of an Option would subject the Optionee to suit under Section 16(b)
of the Exchange Act, the Option shall remain exercisable until the earliest to
occur of (i) the tenth (10th) day following the date on which a sale of such
shares by the Optionee would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Optionee's termination of Service,
or (iii) the Option Expiration Date.
6.9 RIGHTS AS A STOCKHOLDER, EMPLOYEE OR CONSULTANT. No person
shall have any rights as a stockholder with respect to any shares covered by an
Option until the date of the issuance of a certificate for the shares for which
the Option has been exercised (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 4.2. Nothing in the Plan or in any Option Agreement shall
confer upon any Optionee any right to continue in the Service of a Participating
Company or interfere in any way with any right of the Participating Company
Group to terminate the Optionee's Service as an Employee or Consultant, as the
case may be, at any time.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the
Board at the time the Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Incentive Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by
the Board at the time the Option is granted, an Option designated as a
"Nonstatutory Stock Option" shall comply with and be subject to the terms and
conditions set forth in the form of Nonstatutory Stock Option Agreement adopted
by the Board concurrently with its adoption of the Plan and as amended from time
to time.
7.3 AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of any of the standard forms of
Option Agreement described in this Section 7 either in connection with the grant
or amendment of an individual Option or in connection with the authorization of
a new standard form or
12
<PAGE> 13
forms; provided, however, that the terms and conditions of any such new, revised
or amended standard form or forms of Option Agreement shall be in accordance
with the terms of the Plan. Such authority shall include, but not by way of
limitation, the authority to grant Options which are immediately exercisable
subject to the Company's right to repurchase any unvested shares of Stock
acquired by an Optionee upon the exercise of an Option in the event such
Optionee's Service with the Participating Company Group is terminated for any
reason, with or without cause.
8. TRANSFER OF CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to
have occurred if any of the following occurs with respect to the Company:
(i) a merger or consolidation in which the
Company is a party;
(ii) the sale, exchange, or transfer of all
or substantially all of the assets of the Company; or
(iii) a liquidation or dissolution of the
Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership
Change Event wherein the stockholders of the Company immediately before such
event do not retain immediately after such event direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting stock of the Company or the corporation or corporations
to which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of
a Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), shall either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. In the event the
Acquiring Corporation elects not to assume or substitute for outstanding Options
in connection with a Transfer of Control, any unexercisable or unvested portion
of the outstanding Options shall be immediately exercisable and vested in full
as of the date ten (10) days prior to the date of the Transfer of Control. The
exercise or vesting of any Option that was permissible solely by reason of this
Section 8.2 shall be conditioned upon the consummation of
13
<PAGE> 14
the Transfer of Control. Any Options which are neither assumed or substituted
for by the Acquiring Corporation in connection with the Transfer of Control nor
exercised as of the date of the Transfer of Control shall terminate and cease to
be outstanding effective as of the date of the Transfer of Control.
9. PROVISION OF INFORMATION. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.
10. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, a Nonstatutory Stock Option shall be assignable
or transferable to the extent permitted by the Board and set forth in the Option
Agreement evidencing such Option.
11. COMPLIANCE WITH SECURITIES LAW. The grant of Options and the
issuance of shares of Stock upon exercise of Options shall be subject to
compliance with all applicable requirements of federal, state or foreign law
with respect to such securities. Options may not be exercised if the issuance of
shares of Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Option may be exercised unless (a) a
registration statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon exercise of the
Option or (b) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to the exercise of any Option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
12. INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act
14
<PAGE> 15
under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
13. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend
the Plan at any time; provided that without the approval of the Company's
stockholders, there shall be (a) no increase in the maximum aggregate number of
shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2) and (b) no change in the class of persons eligible to
receive Options. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.
14. CONTINUATION OF PRIOR PLAN AS TO OUTSTANDING OPTIONS. Any other
provision of the Plan to the contrary notwithstanding, the terms of the Prior
Plan shall remain in effect and apply to all Options granted pursuant to the
Prior Plan.
15
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated August 7, 1996, which appears on page
24 of the 1996 Annual Report to Stockholders of KLA Instruments Corporation,
which is incorporated by reference in KLA Instruments Corporation's Annual
Report on Form 10-K for the year ended June 30, 1996.
/s/Price Waterhouse LLP
San Jose, California
March 7, 1997
