<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 1997
REGISTRATION NO. 333- O
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------
KLA-TENCOR 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, CALIFORNIA
95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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TENCOR INSTRUMENTS SECOND AMENDED AND RESTATED 1984 STOCK OPTION PLAN
TENCOR INSTRUMENTS AMENDED AND RESTATED 1993 EQUITY INCENTIVE PLAN
TENCOR INSTRUMENTS 1993 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
TENCOR INSTRUMENTS 1993 EMPLOYEE STOCK PURCHASE PLAN
TENCOR INSTRUMENTS 1993 FOREIGN SUBSIDIARY EMPLOYEE STOCK PURCHASE PLAN
1983 EMPLOYEE INCENTIVE STOCK OPTION PLAN OF PROMETRIX CORPORATION
1993 EMPLOYEE INCENTIVE STOCK OPTION PLAN OF PROMETRIX CORPORATION
(FULL TITLE OF THE PLAN)
LISA C. BERRY, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
160 RIO ROBLES, SAN JOSE, CALIFORNIA 95134, (408) 434-4200
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
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Copy to:
JUDITH M. O'BRIEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD, PALO ALTO, CA, 94304-1050
(415) 493-9300
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Offering Registration
to be Registered Registered (1) Per Share Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 3,133,335 $45.875(1) $143,741,743.13 $43,558.10
</TABLE>
(1) 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 May 1, 1997.
<PAGE> 2
KLA-TENCOR CORPORATION
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed by
KLA-Tencor Corporation (the "Company" or "Registrant") with the Securities and
Exchange Commission:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1996 (File No. 000-09992) pursuant to
Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) (1) The Registrant's quarterly report on Form 10-Q for the
quarter ended September 30, 1996 (File No. 000-09992) filed
pursuant to Section 13 of the Exchange Act.
(2) The Registrant's quarterly report on Form 10-Q for the
quarter ended December 31, 1996 (File No. 000-09992) filed
pursuant to Section 13 of the Exchange Act.
(3) The Registrant's Current Report on Form 8-K dated January 14,
1997 (File No. 000-09992) filed pursuant to Section 13 of the
Exchange Act.
(4) The Registrant's Current Report on Form 8-K dated April 15,
1997 (File No. 000-09992) filed pursuant to Section 13 of the
Exchange Act.
(c) The description of the Registrant's Common Stock as set forth
in the Registration Statement filed by the Registrant on Form
8- A on March 29, 1989 (File No. 000-09992) pursuant to
Section 12(g) of the Exchange Act and any amendments or
reports thereto filed with the Securities and Exchange
Commission for the purpose of updating such description
including Amendment No. 1 to Form 8-A filed September 25, 1995
and Amendment No. 2 to Form 8-A filed September 24, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act on or after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that "[a] corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful." With respect to
derivative actions, Section 145(b) of the DGCL provides in relevant part that
"[a] corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor .
. . [by reason of his service in one of the capacities specified in the
preceding sentence] against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper."
The Company's Amended and Restated Certificate of Incorporation
provides that to the fullest extent permitted by the DGCL, no director of the
Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. The Amended and
Restated Certificate of Incorporation also provides that no amendment or repeal
of such provision shall apply to or have any effect on the right to
indemnification permitted thereunder with respect to claims arising from acts or
omissions occurring in whole or in part before the effective date of such
amendment or repeal whether asserted before or after such amendment or repeal.
The Company's By-Laws provide that the Company shall indemnify to the
full extent permitted by the DGCL each of its directors, officers, employees
and other agents against expenses actually and reasonably incurred in
connection with any proceeding arising by reason of the fact that such person
is or was an agent of the Company.
The Company has entered into indemnification agreements with its
directors and executive officers and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable
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<PAGE> 4
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -------------------------------------------------------------------------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant
4.2 By-Laws of the Registrant, as amended
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
5.1 Opinion of counsel as to legality of securities being registered
10.1 Tencor Instruments Second Amended and Restated 1984 Stock Option Plan
10.2 Tencor Instruments Amended and Restated 1993 Equity Incentive Plan
10.3 Tencor Instruments 1993 Nonemployee Directors Stock Option Plan
10.4 Tencor Instruments 1993 Employee Stock Purchase Plan
10.5 Tencor Instruments 1993 Foreign Subsidiary Employee Stock Purchase Plan
10.6 1983 Employee Incentive Stock Option Plan of Prometrix Corporation
10.7 1993 Employee Incentive Stock Option Plan of Prometrix Corporation
23.1 Consent of counsel (contained in Exhibit 5.1)
23.2 Consent of Independent Accountants
24.1 Power of Attorney (see page II-7)
+ Incorporated by reference to the Registrant's report, filed
September 24, 1996, on Form 8-A/A Amendment No. 1 to the
Registration Statement on Form 8-A (File No. 000-09992).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 5
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 6
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
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 THIS 5TH DAY
OF MAY, 1997.
KLA-TENCOR CORPORATION
By: /S/ KENNETH LEVY
-----------------------------------
KENNETH LEVY
CHAIRMAN OF THE BOARD
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<PAGE> 7
POWER OF ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Levy and Lisa C. Berry and each
of them, jointly and severally, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution for him and in his name, place and
stead in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ KENNETH LEVY Chairman of the Board May 5, 1997
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(Kenneth Levy)
/s/ JON D. TOMPKINS Chief Executive Officer and Director May 5, 1997
-------------------------------------------------
(Jon D. Tompkins)
/s/ KENNETH L. SCHROEDER President and Director May 5, 1997
-------------------------------------------------
(Kenneth L. Schroeder)
/s/ ROBERT J. BOEHLKE Chief Financial Officer May 5, 1997
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(Robert J. Boehlke)
/s/ JAMES W. BAGLEY Director May 5, 1997
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(James W. Bagley)
/s/ EDWARD W. BARNHOLT Director May 5, 1997
-------------------------------------------------
(Edward W. Barnholt)
/s/ LEO J. CHAMBERLAIN Director May 5, 1997
-------------------------------------------------
(Leo J. Chamberlain)
/s/ RICHARD J. ELKUS, JR. Director May 5, 1997
-------------------------------------------------
(Richard J. Elkus, Jr.)
/s/ DEAN O. MORTON Director May 5, 1997
-------------------------------------------------
(Dean O. Morton)
/s/ YOSHIO NISHI, PH.D. Director May 5, 1997
-------------------------------------------------
(Yoshio Nishi, Ph.D.)
/s/ SAMUEL RUBINOVITZ Director May 5, 1997
-------------------------------------------------
(Samuel Rubinovitz)
/s/ DAG TELLEFSEN Director May 5, 1997
-------------------------------------------------
(Dag Tellefsen)
/s/ LIDA URBANEK Director May 5, 1997
-------------------------------------------------
(Lida Urbanek)
</TABLE>
II-7
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________
EXHIBITS
_____________________________________________________
Registration Statement on Form S-8
KLA-TENCOR CORPORATION
May 8, 1997
II-8
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- --------------------------------------------------------------------------------------------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant
4.2 By-Laws of the Registrant, as amended
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
5.1 Opinion of counsel as to legality of securities being registered
10.1 Tencor Instruments Second Amended and Restated 1984 Stock Option Plan
10.2 Tencor Instruments Amended and Restated 1993 Equity Incentive Plan
10.3 Tencor Instruments 1993 Nonemployee Directors Stock Option Plan
10.4 Tencor Instruments 1993 Employee Stock Purchase Plan
10.5 Tencor Instruments Foreign Subsidiary Employee Stock Purchase Plan
10.6 1983 Employee Incentive Stock Option Plan of Prometrix Corporation
10.7 1993 Employee Incentive Stock Option Plan of Prometrix Corporation
23.1 Consent of counsel (contained in Exhibit 5.1)
23.2 Consent of Independent Accountants
24.1 Power of Attorney (see page II-7)
+ Incorporated by reference to the Registrant's report, filed September 24, 1996, on
Form 8-A/A Amendment No. 1 to the Registration Statement on Form 8-A (File No. 000-09992)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
KLA INSTRUMENTS CORPORATION
KLA Instruments Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is KLA Instruments Corporation, and
the name under which the corporation was originally incorporated is KLA
Corporation. The date of filing its original Certificate of Incorporation with
the Secretary of State was July 9, 1975.
The amendment to the corporation's Certificate of Incorporation
set forth was approved by the corporation's Board of Directors and stockholders
and was duly adopted in accordance with the provisions of Sections 242 and 245
of the General Corporation Law of the State of Delaware.
2. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby amended and restated to read as herein set
forth in full:
"FIRST: The name of the corporation (hereinafter called the
"corporation") is KLA-Tencor Corporation.
SECOND: The address, including street, number, city and county, of
the registered office of the corporation in the State of Delaware is 1209
Orange Street, City of Wilmington, County of New Castle, and the name of the
registered agent of the corporation in the State of Delaware at such address is
The Corporation Trust Company.
THIRD: The nature of the business and of the purposes to be conducted
and promoted by the corporation is as follows:
To manufacture, purchase or otherwise acquire, import and export,
invest in, own, mortgage, pledge, sell, assign, and transfer or otherwise
dispose of, trade, deal in and deal with goods, wares, merchandise and personal
property of every kind, nature and description, both on its own account and for
others.
To render services of every kind, nature and description (including,
but not limited to, consulting, financial, engineering, research and similar or
related services) both on its own account and for others.
<PAGE> 2
To develop, obtain, purchase or otherwise acquire, and to hold, own,
use, sell, limit or otherwise dispose of processes, formulae, inventions and
devices of every kind, nature and description, whether patented or not; and to
apply for and obtain letters patent under the laws of the United States or of
any foreign country.
To borrow or lend money, and to make and issue notes, bonds,
debentures, obligations, and evidences of indebtedness of all kinds, whether
secured by mortgage, pledge, or otherwise, without limit as to amount, and to
secure the same by mortgage, pledge, or otherwise and generally to make and
perform agreements and contracts of every kind and description.
To subscribe for, take, acquire, hold, sell, exchange and deal in
shares, stock, bonds, obligations and securities of any corporation,
government, authority or company; to form, promote, subsidize and assist
companies, syndicates, or partnerships of all kinds, and to finance and
refinance the same; and to guarantee the obligations of other persons, firms,
or corporations.
In general, to do any act necessary or incidental to the conduct of
said businesses and in the transaction thereof, to carry on any other business,
whether manufacturing or otherwise, and to do any other thing permitted by all
present and future laws of the State of Delaware applicable to business
corporations.
FOURTH: The aggregate number of shares of stock which the corporation
shall have authority to issue shall be 251,000,000 shares, with the par value
of each of such shares being $0.001. These shares shall be divided into the
following classes:
(1) 250,000,000 shares shall be designated as Common Stock; and
(2) 1,000,000 shares shall be designated as Preferred Stock.
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences, and
rights of the shares of each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of Preferred Stock may
be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the then
outstanding shares of Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the certificate or certificates establishing the series of
Preferred Stock.
FIFTH: The name and the mailing address of the incorporator are as
follows:
<TABLE>
<CAPTION>
Name Mailing Address
-------------- ----------------------
<S> <C>
R.G. Dickerson 229 South State Street
Dover, Delaware
</TABLE>
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<PAGE> 3
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction with the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors and/or of the stockholders or class of stockholders of this
corporation; as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. (a) The business and affairs of the corporation shall be
managed by or under the direction of the Board of Directors. In addition to
the powers and authority expressly conferred upon them by the General
Corporation Law of the State of Delaware or by this Certificate of
Incorporation or the By-Laws of the corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation.
(b) The number of directors shall initially be 6 and,
thereafter, shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to the
Board for adoption).
(c) The directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class to expire at the 1990 annual meeting of stockholders, the term of
office of the second class to expire at the 1991 annual meeting of stockholders
and the term of office of the third class to expire at the 1992 annual meeting
of stockholders. At each annual meeting of stockholders following such initial
classification and election, directors shall be elected to succeed those
directors whose terms expires for a term of office to expire at the third
succeeding annual meeting of stockholders after their election. All directors
shall hold office until the expiration of the term for which elected, and until
their respective successors are elected, except in the case of the death,
resignation, or removal of any director.
(d) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification or other cause (other than removal from
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<PAGE> 4
office by a vote of stockholders) may be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires.
No decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
(e) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least a majority of the voting
power of all of the then outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors, voting together as a
single class. Vacancies in the Board of Directors resulting from such removal
may be filled by (i) a majority of the directors then in office, though less
than a quorum, or (ii) the stockholders at a special meeting of the
stockholders properly called for that purpose, by the vote of the holders of a
majority of the shares entitled to vote at such special meeting. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires.
2. After the original or other By-Laws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the By-Laws of the corporation may
be exercised by the Board of Directors of the corporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the certificate of incorporation shall entitle the holder thereof
to the right to vote, at any meeting of stockholders except as the provisions
of paragraph (c)(2) of Section 242 of the General Corporation Law of the State
of Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
4. Any action required or permitted to be taken by the
stockholders of the corporation must be effected at a duly called annual or
special meeting of stockholders of the corporation and may not be effected by
any consent in writing by such stockholders.
NINTH: The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities and other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added
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<PAGE> 5
or inspected in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH:
1. (a) In addition to any affirmative vote required by law or
this certificate of incorporation, and except as otherwise expressly provided
in paragraph 2 of this Article ELEVENTH:
(i) any merger or consolidation of the corporation
or any Subsidiary (as hereinafter defined) with (a) any Interested Shareholder
(as hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Shareholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction of a series of transactions)
to or with any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the corporation or any Subsidiary having an
aggregate fair market value of $1,000,000 or more; or
(iii) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions) of any securities
of the corporation or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate fair market value
of $1,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its subsidiaries or any other
transaction (whether or not with or into or otherwise involving an Interested
Shareholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the corporation or any Subsidiary which is directly
or indirectly owned by an Interested Shareholder or any Affiliate of any
Interested Shareholder; shall require the affirmative vote of the holders of at
least 80% of the then outstanding shares of capital stock of the corporation
authorized to be issued from time to time under Article FOURTH of this
certificate of incorporation (the "Voting Stock"), voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage may be specified, by law
or in any agreement with any national securities exchange or otherwise.
Notwithstanding any other provision of this certificate of incorporation to the
contrary, for purposes of this Article ELEVENTH, each share of the Voting Stock
shall have one vote.
(b) The term "Business Combination" as used in this Article
ELEVENTH shall mean any transaction which is referred to in any one or more of
clauses (i) through (v) of subparagraph (a) of this paragraph 1.
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2. The provisions of paragraph 1 of this Article ELEVENTH shall
not be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as if required by law and
any other provision of this certificate of incorporation, if all of the
conditions specified in the following subparagraph (a) are met:
(a) The Business Combination shall have been approved by a
majority of the Continuing Directors (as hereinafter defined): provided,
however, that such approval shall only be effective if obtained at a meeting at
which a Continuing Director Quorum (as hereinafter defined) is present.
3. For the purposes of this Article ELEVENTH:
(a) The term "person" shall mean any individual, firm,
corporation or other entity.
(b) The term "Interested Shareholder" shall mean any person
(other than the corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit plan of the
corporation or any Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity) who or which:
(i) is the beneficial owner (as hereinafter defined) of
more than five percent of the Voting Stock; or
(ii) is an Affiliate (as hereinafter defined) of the
corporation and at any time within the two-year period immediately prior to the
date in question was the beneficial owner of five percent or more of the Voting
Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Interested
Shareholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933, as amended.
(c) A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or indirectly;
or
(ii) which such person or any of its Affiliates or
Associates has, directly or indirectly, (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of Voting Stock.
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(d) For the purposes of determining whether a person is an
Interested Shareholder pursuant to subparagraph (b) of this paragraph 3, the
number of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned through application of subparagraph (c) of this paragraph 3 may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(e) The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1984.
(f) The term "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in subparagraph (b) of this paragraph 3, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the corporation.
(g) The term "Continuing Director" means any member of the
Board of Directors of the corporation (the "Board") who is unaffiliated with
the Interested Shareholder and was a member of the Board prior to the time that
the Interested Shareholder became an Interested Shareholder, and any successor
of a Continuing Director who is unaffiliated with the Interested Shareholder or
is recommended or elected to succeed a Continuing Director by a majority of
Continuing Directors, provided that such recommendation or election shall only
be effective if made at a meeting at which a Continuing Director Quorum is
present.
(h) The term "Continuing Director Quorum" means four
Continuing Directors capable of exercising the powers conferred upon them under
the provisions of the certificate of incorporation or By-Laws of the
corporation or by law.
4. Notwithstanding any other provisions of this certificate of
incorporation or the By-Laws of the corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this certificate of
incorporation or the By-Laws of the corporation), the affirmative vote of the
holders of 80% or single class, shall be required to amend or repeal, or adopt
any provisions inconsistent with, this Article ELEVENTH.
TWELFTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith of which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article
TWELFTH by the stockholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at the time of
such repeal or modification."
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IN WITNESS WHEREOF, said KLA Instruments Corporation has caused this
certificate to be signed by Kenneth Levy, its Chief Executive Officer, and
attested by Larry W. Sonsini, its Secretary, this 30th day of April, 1997.
KLA INSTRUMENTS CORPORATION
By: /s/ KENNETH LEVY
---------------------------------
Kenneth Levy
Chief Executive Officer
ATTEST:
By: /s/ LARRY W. SONSINI
---------------------------
Larry W. Sonsini
Secretary
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<PAGE> 1
EXHIBIT 4.2
KLA-TENCOR CORPORATION
A DELAWARE CORPORATION
BY-LAWS
ORIGINALLY ADOPTED: JUNE 12, 1989
AS AMENDED: APRIL 30, 1997
<PAGE> 2
KLA-TENCOR CORPORATION,
A DELAWARE CORPORATION
BY-LAWS
ORIGINALLY ADOPTED: JUNE 12, 1989
AS AMENDED: APRIL 30, 1997
ARTICLE 1.
STOCKHOLDERS
Section 1 Annual Meeting. An annual meeting of the stockholders,
for the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the last annual meeting of stockholders.
Section 2 Special Meetings. Special meetings of the stockholders,
for any purpose or purposes prescribed in the notice of the meeting, may be
called only by the Board of Directors and shall be held at such place, on such
date, and at such time as they shall fix. Business transacted at special
meetings shall be confined to the purpose or purposes stated in the notice.
Section 3 Notice of Meetings. Written notice of the place, date,
and time of all meetings of the stockholders shall be given, not less than ten
(10) nor more than sixty to each stockholder entitled to vote at such meeting,
except as otherwise provided herein or required by law (meaning, here and
hereinafter, as required from time to time by the Delaware General Corporation
Law or the Certificate of Incorporation of the Corporation). When a meeting is
adjourned to another place, date or time, written notice need not be given of
the adjourned meeting if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than thirty (30) days after the date for which
the meeting was
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originally noticed, or if a new record date is fixed for the adjourned meeting,
written notice of the place, date, and time of the adjourned meeting shall be
given in conformity herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original meeting.
Section 4 Quorum. At any meeting of the stockholders, the holders
of a majority of all of the shares of the stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then, provided that those present hold more than
33-1/3% of the shares entitled to vote, those present at such adjourned meeting
shall constitute a quorum, and all matters shall be determined by a majority of
the votes cast at such meeting.
* Section 5 Conduct of the Stockholders' Meeting. At every meeting
of the stockholders, the Chairman of the Board of the Corporation, or in his
absence the Chief Executive Officer of the Corporation, or in his absence the
President of the Corporation, or in his absence the Vice President designated
by the Chairman of the Board or the Chief Executive Officer, or in the absence
of such designation any Vice President, or in the absence of the Chairman of
the Board, Chief Executive Officer, President or any Vice President a chairman
chosen by the majority of the voting shares represented in person or by proxy,
shall act as chairman of the meeting. The Secretary of the Corporation or a
person designated by the chairman shall act as Secretary of the meeting.
Unless otherwise approved
__________________________________
* As amended April 30, 1997.
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<PAGE> 4
by the chairman, attendance at the Stockholders' Meeting shall be restricted to
stockholders of record, persons authorized in accordance with Section 8 of
these By-Laws to act by proxy, and officers of the Corporation.
Section 6 Conduct of Business. The Chairman shall call the meeting
to order, establish the agenda, and conduct the business of the meeting in
accordance herewith or, at the Chairman's discretion, in accordance with the
wishes of the stockholders in attendance.
The Chairman shall also conduct the meeting in an orderly manner, rule on
the precedence of, and procedure on, motions and other procedural matters, and
exercise discretion with respect to such procedural matters with fairness and
good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion
in general or on remarks by any one stockholder. Should any person in
attendance become unruly or obstruct the meeting proceedings, the Chairman
shall have the power to have such person removed from participation.
Notwithstanding anything in these By-Laws to the contrary, no business shall be
conducted at any meeting except in accordance with the procedures set forth in
this Section 6, Section 7 below and Section 11 of Article II below. The
Chairman of any meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 6, Section 7 below and Section
11 of Article II below, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted.
Section 7 Notice of Stockholder Business. At an annual or special
meeting of the stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before a
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
properly brought before the meeting by or at the direction of the Board of
Directors, (c) if at an annual meeting, properly brought before the meeting by
a stockholder, or (d) if at a special
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meeting, if, and only if, the notice of a special meeting provides for business
to be brought before the meeting by stockholders, properly brought before the
meeting by a stockholder.
For business to be properly brought before a meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice must be delivered to
or mailed and received at the principal executive offices of the Corporation no
later than the date upon which stockholder proposals to be included in the
Corporation's Proxy Statement must be received by the Corporation under the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder.
A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual or special meeting (a) a
brief description of the business desired to be brought before the annual or
special meeting and the reasons for conducting such business at the annual or
special meeting, (b) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business, (c) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, (d)
any material interest of the stockholder in such business and (e) such other
information relating to the stockholder or the proposal as is required to be
disclosed under the rules of the Securities and Exchange Commission governing
the solicitation of proxies with respect to such proposal, whether or not such
proxies are in fact solicited by the stockholder.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at an annual or special meeting except in accordance with
the procedures set forth in this Section 7. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that business was
not properly brought before the meeting and in accordance with the provisions
of this Section 7, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
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Section 8 Proxies and Voting. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing filed in accordance with the procedure established for
meeting. No stockholder may authorize more than one proxy for his shares.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his or her name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law or By-Laws, all other matters shall be
determined by a majority of the votes cast.
Section 9 Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing address of each such stockholder and the number of
shares registered in his or her name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
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Section 10 Elimination of Written Consent. Any action required or
permitted to be taken by the stockholders of the corporation must be effected
at a duly called annual or special meeting of stockholders of the corporation
and may not be effected by any consent in writing by such stockholders.
ARTICLE 2.
BOARD OF DIRECTORS
* Section 1 Number and Term of Office. The number of directors shall
initially be twelve (12) and, thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there
exists any vacancies in previously authorized directorships at the time any
such resolution is presented to the Board for adoption). The directors shall
be divided into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 1990
annual meeting of stockholders, the term of office of the second class to
expire at the 1991 annual meeting of stockholders and the term of office of the
third class to expire at the 1992 annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, directors shall be elected to succeed those directors whose term
expire for a term of office to expire at the third succeeding annual meeting of
stockholders after their election. All directors shall hold office until the
expiration of the term for which elected and until their successors are
elected, except in the case of the death, resignation or removal of any
director.
Section 2 Vacancies and Newly Created Directorships. Subject to
the rights of the holders of any series of Preferred Stock then outstanding,
newly created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification or other cause (other than
removal from office by a vote of stockholders) may be filled only by a majority
vote of
__________________________________
* As amended April 30, 1997.
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<PAGE> 8
the directors then in office, though less than a quorum, and directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires. No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
Section 3 Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any directors, or the entire Board
of Directors, may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of at least a majority of the
voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class. Vacancies in the Board of Directors resulting from
such removal may be filled by (i) a majority of the directors then in office,
though less than a quorum, or (ii) the stockholders at a special meeting of the
stockholders properly called for that purpose, by the vote of the holders of a
majority of the shares entitled to vote at such special meeting. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires.
Section 4 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place or places, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall not be
required.
Section 5 Special Meetings. Special meetings of the Board of
Directors may be called by one-third of the directors then in office (rounded
up to the nearest whole number), the Chairman of the Board or by the chief
executive officer and shall be held at such place, on such date, and at such
time as they or he shall fix. Notice of the place, date, and time of each such
special meeting shall be given each director by whom it is not waived by
mailing written notice not fewer than five (5) days before the meeting or by
telecopying or delivering by overnight courier
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service the same not fewer than twenty-four (24) hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 6 Quorum. At any meeting of the Board of Directors, a
majority of the total number of authorized Directors shall constitute a quorum
for all purposes. If a quorum shall fail to attend any meeting, a majority of
those present may adjourn the meeting to another place, date, or time, without
further notice or waiver thereof.
Section 7 Participation in Meetings by Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and such participation shall constitute
presence in person at such meeting.
Section 8 Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the
vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
Section 9 Powers. The Board of Directors may, except as otherwise
required by, law, exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
i. To declare dividends from time to time in accordance with law;
ii. To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
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iii. To authorize the creation, making and issuance, in such form as
it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
iv. To remove any officer of the Corporation with or without cause,
and from time to time to devolve the powers and duties of any officer upon any
other person for the time being;
v. To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
vi. To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
vii. To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
viii. To adopt from time to time regulations, not inconsistent with
these By-Laws, for the management of the Corporation's business and affairs.
SECTION 10 Compensation of Directors. Directors, as such, may
receive, pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.
SECTION 11 Nomination of Director Candidates. Subject to the
rights of holders of any class or series of Preferred Stock then outstanding,
nominations for the election of directors may be made by the Board of Directors
or any nominating or proxy committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of Directors generally who
complies with the notice and procedural requirements of this Section 11. All
nominees for election to the Board shall satisfy the qualification requirements
for membership on the Board of
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Directors of the Corporation established by any nominating committee designated
by the Board, which requirements shall be designed to evaluate, without
limitation, the following:
i. The applicability of the Candidate's business experience and
knowledge to the Corporation's business, including any technical skills,
industry contacts or other special qualifications which would make the
Candidate a valuable member of the Board.
ii. The resulting balance of knowledge and experience which would
exist on the Board if the Candidate were elected in light of the business
experience and knowledge of the other persons likely to be elected to the
Board.
iii. The Candidate's other business interests and commitments and
the extent to which such interests and commitments are inconsistent or
incompatible with such Candidate's effective board membership, including the
extent to which the Nominating Committee believes that such Candidate's
membership on the Board may be detrimental to the long-term interests of the
Corporation and to the maximization of the value of the Corporation's
stockholders' investment in the Corporation.
In addition to any other applicable requirements, any such stockholder
nomination shall be made only pursuant to timely notice in writing to the
Secretary of the Corporation setting forth such stockholder's intent to make a
nomination or nominations. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal offices of the Corporation
not later than the date on which stockholder proposals to be included in the
proxy statement with respect to any annual or special meeting must be received
by the Corporation under the requirements of the Securities Exchange Act of
1934, as amended, and the rules promulgated thereunder.
Each such notice by a stockholder shall set forth: (a) the name and
address, as they appear on the Corporation's stock register, of the stockholder
who intends to make the nomination; (b) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote for the
election of Directors on the date of such notice and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice;
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(c) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
stockholder; (d) the name, age, business and residence address and principal
occupation of each person the stockholder proposes to nominate for election as
a director; (e) such other information regarding the stockholder and each
nominee proposed by such stockholder as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission, whether or not proxies are in fact solicited for the
election of such person; and (f) the signed consent of each nominee to serve as
a director of the Corporation if so elected. The Corporation or any nominating
committee designated by the Board of Directors may require any proposed nominee
to furnish such other information as may reasonably be required by the
Corporation or such committee to determine the qualification of such nominee
for election as a director of the Corporation.
In the event that a person is validly designated as a nominee in accordance
with this Section 11 and shall thereafter become unable or unwilling to stand
for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee as the case may be, may designate a
substitute nominee; provided, however, that (i) in the case of the persons
nominated by a stockholder, such a substitution may only be made if a written
notice to the Secretary setting forth such information regarding such
substitute nominee as would have been required to be delivered to the Secretary
pursuant to this Section 11 had such substitute nominee been initially proposed
as a nominee is received by the Corporation at its principal executive offices
not less than thirty (30) days before the date of the election at which the
initial nominee was nominated to stand or (ii) in the case of persons nominated
by the Board of Directors the substitute nominee must be designated not less
than thirty (30) days before the date of the election at which the initial
nominee was nominated to stand.
If the chairman of the meeting for the election of Directors determines
that a nomination of any candidate for election as a Director at such meeting
was not made in accordance with the applicable provisions of this Section 11,
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such nomination shall be void; provided, however, that nothing in this Section
11 shall be deemed to limit any voting rights upon the occurrence of dividend
arrearages, provided to holders of Preferred Stock pursuant to the Preferred
Stock designation for any series of Preferred Stock.
ARTICLE 3.
COMMITTEES
Section 1 Committees of the Board of Directors. The Board of
Directors, by a resolution passed by a vote of a majority of the whole Board,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating,
if it desires, other directors as alternate members who may replace any absent
or disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may by unanimous vote appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2 Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings;
one-third of the authorized members shall
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constitute a quorum unless the committee shall consist of one or two members,
in which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of such committee.
ARTICLE 4.
OFFICERS
* Section 1 Generally. The officers of the Corporation shall consist
of a Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents, a Secretary, a Chief Financial Officer and such other officers
as may from time to time be appointed by the Board of Directors. Officers
shall be elected by the Board of Directors, which shall consider that subject
at its first meeting after every annual meeting of stockholders. Each officer
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal. The Chairman of the Board, the Chief Executive
Officer and the President shall each be members of the Board of Directors. Any
number of offices may be held by the same person.
* Section 2 Chairman of the Board. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may from
time to time be assigned to him by the Board of Directors or as may be
prescribed by these By-Laws. If there is no Chief Executive Officer, then the
Chairman of the Board shall also be the Chief Executive Officer of the
Corporation and shall have the powers and duties prescribed in Article IV,
Section 3 of these By-Laws.
* Section 3 Chief Executive Officer. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the Chairman of
the Board, if there be such an officer, the Chief Executive Officer of the
__________________________________
* As amended April 30, 1997.
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<PAGE> 15
Corporation shall, subject to the control of the Board of Directors, have
general supervision, direction, and control of the business and the officers of
the Corporation. He shall preside at all meetings of the stockholders and, in
the absence or nonexistence of a Chairman of the Board, at all meetings of the
Board of Directors. He shall have the general powers and duties of management
usually vested in the Chief Executive Officer of a Corporation and shall have
such other powers and duties as may be prescribed by the Board of Directors or
these By-Laws.
* Section 4 President. The President shall be the chief operating
officer of the Corporation with such duties and powers as may be prescribed by
the Chief Executive Officer or the Board of Directors.
* Section 5 Vice President. Each Vice President shall have such
powers and duties as may be delegated to him by the Board of Directors.
Section 6 Chief Financial Officer. The Chief Financial Officer
shall have the responsibility for maintaining the financial records of the
Corporation and shall have custody of all monies and securities of the
Corporation. He shall make or cause to be made such disbursements of the funds
of the Corporation as are authorized and shall render from time to time an
account of all such transactions and of the financial condition of the
Corporation. The Chief Financial Officer shall also perform such other duties
as the Board of Directors may from time to time prescribe.
Section 7 Secretary. The Secretary shall issue all authorized
notices for, and shall keep, or cause to be kept, minutes of all meetings of
the stockholders, the Board of Directors, and all committees of the Board of
Directors. The Secretary shall keep, or cause to be kept at the principal
executive office or at the office of the Corporation's transfer agent or
registrar, a record of the Corporation's stockholders, giving the names and
addresses of all stockholders and the number and class of shares held by each.
The Secretary shall have charge of the seal and the corporate books of the
Corporation and shall perform such other duties as the Board of Directors may
from time to time prescribe.
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<PAGE> 16
Section 8 Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.
Section 9 Removal. Any officer of the Corporation may be removed
at any time, with or without cause, by the Board of Directors.
* Section 10 Action With Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the Chairman of the Board,
the Chief Executive Officer or any officer of the Corporation authorized by the
Chairman of the Board or the Chief Executive Officer shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
__________________________________
* As amended April 30, 1997.
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<PAGE> 17
ARTICLE 5.
STOCK
* Section 1 Certificates of Stock. Each stockholder shall be
entitled to a certificate signed by, or in the name of the Corporation by, the
Chairman of the Board, the Chief Executive Officer, the President or a Vice
President, and by the Secretary or an Assistant Secretary, or the Chief
Financial Officer or Treasurer (if there be such an officer), certifying the
number of shares owned by him or her. Any of or all the signatures on the
certificate may be facsimile.
Section 2 Transfers of Stock. Transfers of stock shall be made
only upon the transfer books of the Corporation kept at an office of the
Corporation or by transfer agents designated to transfer shares of the stock of
the Corporation. Except where a certificate is issued in accordance with
Section 4 of Article V of these By-Laws, an outstanding certificate for the
number of shares involved shall be surrendered for cancellation before a new
certificate is issued therefor.
Section 3 Record Date. The Board of Directors may fix a record
date, which shall not be more than sixty (60) days nor fewer than ten (10) days
before the date of any meeting of stockholders, no more than sixty (60) days
prior to the time for other action hereinafter described, as of which there
shall be determined the stockholders who are entitled: to notice of or to vote
at any meeting of stockholders or any adjournment thereof; to express consent
to corporate action in writing without a meeting (if the Corporation's charter
allows such action without a meeting); to receive payment of any dividend or
other distribution or allotment of any rights; or to exercise any rights with
respect to any change, conversion or exchange of stock or with respect to any
other lawful action.
Section 4 Lost, Stolen or Destroyed Certificates. In the event of
the loss, theft or destruction of any certificate of stock, another may be
issued in its place pursuant to such regulations as the Board of Directors may
__________________________________
* As amended April 30, 1997.
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<PAGE> 18
establish concerning proof of such loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds of indemnity.
Section 5 Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE 6.
NOTICES
Section 1 Notices. Except as otherwise specifically provided
herein or required by law, all notices required to be given to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, or by sending such notice by
prepaid telegram, mailgram or commercial courier service. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his or her last known address as the same appears on the books of the
Corporation. The time when such notice shall be deemed to given shall be the
time such notice is received by such stockholder, director, officer, employee
or agent, or by any person accepting such notice on behalf of such person, if
hand delivered, or the time such notice is dispatched, if delivered through the
mails or by telegram, mailgram or courier.
Section 2 Waivers. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent
to the notice required to be given to such stockholder, director, officer,
employee or agent. Neither the business nor the purpose of any meeting need be
specified in such a waiver. Attendance of a person at a meeting shall
constitute a waiver of notice for such meeting, except when the person attends
a meeting for the express purpose of objecting,
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at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE 7.
MISCELLANEOUS
Section 1 Facsimile Signatures. In addition to the provisions for
use of facsimile signatures elsewhere specifically authorized in these By-Laws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
Section 2 Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Chief Financial Officer or by an Assistant Secretary.
Section 3 Reliance Upon Books, Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records
of the Corporation, including reports made to the Corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
Section 4 Fiscal Year. The fiscal year of the Corporation shall be
as fixed by the Board of Directors.
Section 5 Time Periods. In applying any provision of these By-Laws
which require that an act be done or not done a specified number of days prior
to an event or that an act be done during a period of a specified number of
days prior to an event, calendar days shall be used, the day of the doing of
the act shall be excluded, and the day of the event shall be included.
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ARTICLE 8.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1 Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or a person of whom he is the
legal representative, is or was a director, officer or employee of the
Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer or employee or in any other
capacity while serving as a director, officer or employee, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by
Delaware Law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said Law permitted
the Corporation to provide prior to such amendment) against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties, amounts paid or to be paid in settlement and amounts
expended in seeking indemnification granted to such person under applicable
law, this by-law or any agreement with the Corporation) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer or employee
and shall inure to the benefit of his or her heirs, executors and
administrators; provided however, that, except as provided in Section 2 of this
Article VIII, the Corporation shall indemnify any such person seeking indemnity
in connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such right shall be a
contract right and shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; provided,
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<PAGE> 21
however, that, if the Delaware General Corporation Law then so requires, the
payment of such expenses incurred by a director or officer of the Corporation
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery
to the Corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it should be determined ultimately
that such director or officer is not entitled to be indemnified under this
Section 1 or otherwise.
Section 2 Right of Claimant to Bring Suit. If a claim under
Section 1 of this Article VIII is not paid in full by the Corporation within
twenty (20) days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if such suit is not frivolous or
brought in bad faith, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to this Corporation) that the claimant
has not met the standards of conduct which make it permissible under the
Delaware General Corporation Law for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
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<PAGE> 22
Section 3 Non-Exclusivity of Rights. The rights conferred on any
person in Sections 1 and 2 of this Article VIII shall not be exclusive of any
other right which such persons may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4 Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VIII.
Section 5 Insurance. The Corporation shall maintain insurance to
the extent reasonably available, at its expense, to protect itself and any such
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 6 Effect of Amendment. Any amendment, repeal or
modification of any provision of this Article VIII by the stockholders and the
Directors of the Corporation shall not adversely affect any right or protection
of a director or officer of the Corporation existing at the time of such
amendment, repeal or modification.
Section 7 Savings Clause. If this Article VIII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director,
officer, employee and agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative
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or investigative, including an action by or in the right of the Corporation, to
the full extent permitted by an applicable portion of this Article VIII that
shall not have been invalidated and to the full extent permitted by applicable
law.
ARTICLE 9.
AMENDMENTS
The Board of Directors is expressly empowered to adopt, amend or repeal
By-Laws or the Corporation. Any adoption, amendment or repeal of By-Laws of
the Corporation by the Board of Directors shall require the approval of a
majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is presented to the
Board). The stockholders shall also have power to adopt, amend or repeal the
By-Laws of the Corporation. In the event of any such adoption, amendment or
repeal of these By-Laws by Stockholders, in addition to any vote of the holders
or any class or series of stock of this Corporation required by law or by these
By-Laws, the affirmative vote of the holders of at least a majority of the
voting power of all of the then-outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required.
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<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD]
May 7, 1997
KLA-Tencor 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 May 7, 1997 (the "Registration
Statement") in connection with the registration under the Securities Act of
1933, as amended, of an aggregate of 3,133,335 shares of your Common Stock, par
value $0.001 per share (the "Shares") to be issued pursuant to the Tencor
Instruments Second Amended and Restated 1984 Stock Option Plan, Tencor
Instruments Amended and Restated 1993 Equity Incentive Plan, Tencor Instruments
1993 Nonemployee Directors Stock Option Plan, Tencor Instruments 1993 Employee
Stock Purchase Plan, Tencor Instruments 1993 Foreign Subsidiary Employee Stock
Purchase Plan, 1983 Employee Incentive Stock Option Plan of Prometrix
Corporation and 1993 Employee Incentive Stock Option Plan of Prometrix
Corporation (collectively, the "Plans"). As your counsel in connection with
this transaction, we have examined the proceedings taken and are familiar with
the proceedings proposed to be taken by you in connection with the issuance and
sale of the Shares pursuant to the Plans.
It is our opinion that, when issued and sold in the manner described in the
Plans and pursuant to the agreements which accompany each grant under 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.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE> 1
EXHIBIT 10.1
AMENDED
THROUGH
11/16/92
TENCOR INSTRUMENTS
SECOND AMENDED AND RESTATED
1984 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The purposes of this Second Amended and Restated 1984 Stock Option Plan
(the "Plan") of Tencor Instruments (the "Company") are to:
(a) encourage selected officers, directors, and consultants to
improve operations and increase profits of the Company;
(b) encourage selected officers to accept or continue
employment with the Company or its Affiliates; and
(c) increase the interest of selected officers, directors, and
consultants in the Company's welfare through participation in the growth in
value of the Company's no par value common stock of the Company (the "Common
Stock").
Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonqualified
options" ("NQOs").
2. ELIGIBLE PERSONS
Every person who at the date of grant of an Option is a key employee of
the Company or of any Affiliate (as defined below) (including employees who are
also officers or directors of the Company or of any Affiliate) is eligible to
receive NQOs or ISOs under this Plan. The term "Affiliate" as used in the Plan
means a parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. Every person who
is a director of or consultant to the Company or any Affiliate at the date of
grant of an Option is eligible to receive NQOs under this Plan.
<PAGE> 2
3. STOCK SUBJECT TO THIS PLAN
Subject to the provisions of Section 6.1.1 of the Plan, the maximum
aggregate number of shares of stock which may be granted pursuant to this Plan
is 1,550,352(1) shares of Common Stock. The shares covered by the portion of any
grant under the Plan which expires unexercised shall become available again for
grants under the Plan.
4. ADMINISTRATION
4.1 Option Committee. This Plan shall be administered by the
Board of Directors of the Company (the "Board") or by a committee of at least
two Board members to which administration of the plan is delegated (in either
case, the "Option Committee"). No member of this Option Committee shall be
liable for any decision, action or omission respecting the Plan, any options or
any option shares.
4.2 Disinterested Administration. From and after such time as
the Company registers a class of equity securities under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Plan
shall be administered in accordance with the disinterested administration
requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission ("Rule 16b-3"), or any successor rule thereto.
4.3 Authority of the Option Committee. Subject to the other
provisions of this Plan, the Option Committee shall have the authority, in its
discretion: (i) to grant Options; (ii) to determine the fair market value of the
Common Stock subject to Options; (iii) to determine the exercise price of
Options granted; (iv) to determine the persons to whom, and the time or times at
which, Options shall be granted, and the number of shares subject to each
Option; (v) to interpret this Plan; (vi) to prescribe, amend and rescind rules
and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the optionee, to modify or amend any Option; (ix) to defer
(with the consent of the optionee) or accelerate the exercise date or vesting of
any Option; (x) to authorize any person to execute on behalf of the Company any
instrument evidencing the grant of an Option; and (xi) to make all other
determinations deemed necessary or advisable for the administration of this
Plan. The Option
- --------
(1) The number of shares initially authorized to be issued under the Plan
was 77,856. On 7 May 1984, the Company effected a "three-for-one" stock split
which, pursuant to Section 11 of the Plan (as it appeared prior to this
Amendment and Restatement), automatically increased the number of shares under
the Plan to 233,568. On 2 May 1986, the Company's shareholders approved an
amendment adopted by the Board of Directors on 27 March 1986 increasing the
number of shares by 300,000. On 4 May 1990, the Company's shareholders approved
an amendment adopted by the Board of Directors on 13 March 1990 increasing the
number of shares by 500,000. On 26 March 1992, the Company effected a
"three-for-two stock split which, pursuant to Section 6.1.1 of the Plan,
automatically increased the number of shares under the Plan to 1,550,352.
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<PAGE> 3
Committee may delegate nondiscretionary administrative duties to such employees
of the Company as it deems proper.
4.4 Determinations Final. All questions of interpretation,
implementation, and application of this Plan shall be determined by the Option
Committee. Such determinations shall be final and binding on all persons.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
5.1 Ten-Year Term. No Options shall be granted under this Plan
after ten years from the date of adoption of this Plan by the Board.
5.2 Option Agreement. Each Option shall be evidenced by a
written stock option agreement, in form satisfactory to the Company, executed by
the Company and the person to whom such Option is granted; provided, however,
that the failure by the Company, the optionee, or both to execute such an
agreement shall not invalidate the granting of any Option granted after February
10, 1992.
5.3 Designation as ISO or NQO. The agreement shall specify
whether each Option it evidences is a NQO or an ISO.
(i) Notwithstanding designation of any Option granted
after February 10, 1992 as an ISO or a NQO, if the aggregate fair market value
of the shares under Options designated as ISOs would become exercisable for the
first time by any Optionee at a rate in excess of $100,000 in any calendar year
(under all plans of the Company), then unless otherwise provided in the stock
option agreement or by the Option Committee, such Options shall be NQOs to the
extent of the excess above $100,000. For purposes of this Section 5.3, Options
shall be taken into account in the order in which they were granted, and the
fair market value of the shares shall be determined as of the time the Option
with respect to such shares is granted.
(ii) Options granted after 1986 and on or before February
10, 1992 are subject to the provisions of Section 6.1.3(b).
5.4 Grant to Prospective Employees. The Option Committee may
approve the grant of Options under this Plan to persons who are expected to
become employees of the Company, but are not employees at the date of approval.
In such cases, the Option shall be deemed granted, without further approval, on
the date the optionee is first treated as an employee for payroll purposes.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be designated as a NQO or an
ISO. Each Option shall be subject to the terms and conditions set forth in
Section 6.1. NQOs shall be also
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<PAGE> 4
subject to the terms and conditions set forth in Section 6.2, but not those set
forth in Section 6.3. ISOs shall also be subject to the terms and conditions set
forth in Section 6.3, but not those set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are Subject. All
Options granted under this Plan shall be subject to the following terms and
conditions:
6.1.1 Changes in Capital Structure. The existence of
outstanding Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any of other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company's or any
other corporation's assets or business or any other corporate act whether
similar to the events described above or otherwise. Subject to Section 6.1.2, if
the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, recapitalization, or other event, or converted into or
exchanged for other securities as a result of a merger, consolidation,
reorganization, or other event, appropriate adjustments shall be made in (a) the
number and class of shares of stock subject to this Plan and each Option
outstanding under this Plan, and (b) the exercise price of each outstanding
Option; provided, however, that the Company shall not be required to issue
fractional shares as a result of any such adjustments. Each such adjustment
shall be subject to approval by the Option Committee in its sole discretion, and
may be made without regard to any resulting tax consequences to the optionee.
6.1.2 Corporate Transactions. In connection with (i) any
merger, consolidation, acquisition, separation, or reorganization under which
more than 50 percent of the shares of the Company outstanding immediately before
such event are converted into cash or into another security, (ii) any
dissolution or liquidation of the Company or any partial liquidation involving
50 percent or more of the assets of the Company, (iii) any sale of more than 50
percent of the Company's assets, or (iv) any like occurrence in which the
Company is involved, the Option Committee may, in its absolute discretion, do
one or more of the following upon 10 days' prior written notice to optionees:
(a) accelerate any vesting schedule to which an Option is subject (subject to
the limitation on exercisability of ISOs granted after 1986 and before February
10, 1992 provided in Section 6.1.3(b) of this Plan); (b) cancel Options upon
payment to each optionee in cash, with respect to each Option to the extent then
exercisable, of any amount which, in the absolute discretion of the Option
Committee, is determined to be equivalent to any excess of the market value (at
the effective time of such event) of the consideration that such optionee would
have received if the Option had been exercised before the effective time over
the exercise price of the Option; (c) shorten the period during which such
Options are exercisable (provided they remain exercisable, to the extent
otherwise exercisable, for at least 10 days after the date the notice is given);
or (d) arrange that new option rights be substituted for the option rights
granted under this Plan, or that the Company's obligations as to Options
outstanding under this Plan be assumed, by an employer corporation other than
the Company or by a parent or subsidiary of such employer corporation. The
actions described in this Section 6.1.2 may be taken without regard to any
resulting tax consequences to the optionee.
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<PAGE> 5
6.1.3 Time of Option Exercise.
(a) Options Granted After February 10, 1992. Except as
necessary to satisfy the requirements of Section 422 of the Code and subject to
Section 5, Options granted under this Plan after February 10, 1992, shall be
exercisable (a) immediately as of the effective date of the stock option
agreement granting the Option, or (b) at such other times as are specified in
the written stock option agreement relating to such Option; provided, however,
that so long as the optionee is a director or officer, as those terms are used
in Section 16 of the Exchange Act, such Option may not be exercisable, in whole
or in part, at any time prior to the six-month anniversary of the date of Option
grant, unless the Option Committee determines that the foregoing provision is
not necessary to comply with the provisions of Rule 16b-3 or that Rule 16b-3 is
not applicable to the Plan. No Option granted after February 10, 1992, shall be
exercisable, however, until a written stock option agreement in form
satisfactory to the Company is executed by the Company and the optionee.
(b) Options Granted After 1986 and Before February 10, 1992.
Subject to the provisions of this Plan, Options granted under this Plan after
1986 and before February 10, 1992 are exercisable in their entirety upon the
optionee's execution of the written stock option agreement evidencing the
Option or at such times and in such amounts as are specified in the written
stock option agreement. However, no portion of any ISO granted after 1986 and
before February 10, 1992 shall become exercisable for the first time if, and
to the extent that, such vesting would, taken together with vesting of
all other ISOs granted to the optionee after 1986 under all option plans of the
Company and any Affiliate, occur at a rate in excess of $100,000 worth of stock
(measured on the grant date) in any calender year. If, by their terms, such
ISOs taken together would vest at a faster rate, and unless otherwise provided
by the Option Committee, the vesting limitation described above shall be
applied by deferring the exercisability of those ISOs or portions thereof which
have the highest per share exercise prices. The ISOs or portions thereof, the
exercisability of which is so deferred, shall become exercisable on the first
day of the first subsequent calendar year during which they may be exercised by
their terms (without regard to this limitation), as determined by applying
these same principles and all other provisions of this Plan, including those
relating to the expiration and termination of Options. In no event, however,
will the operation of this Section 6.1.3(b) cause an ISO to vest before its
terms or, having vested, cease to be vested.
(c) Options Granted Before 1987. Subject to the other
provisions of this Plan, Options granted before 1987 shall be exercisable in
their entirety upon the Optionee's execution of the written stock option
agreement evidencing the Option or at such times and in such amounts as are
specified in the written stock option agreement. ISOs granted before 1987 shall
not be exercisable while the optionee holds a previously granted outstanding ISO
to purchase stock in the Company, a company which at the time of grant was a
parent or subsidiary of the Company, or a company which is a predecessor
corporation of any of the foregoing. For these purposes, an option shall be
considered outstanding until it is exercised in full or expires by reason of
lapse of time within the meaning of Section 422A(c)(7) of the Internal Revenue
Code of 1954, an in effect before the enactment of the Tax Reform Act of 1986.
(d) All Options. The Option Committee, in its absolute
discretion, may later waive any limitations respecting the time at which an
Option or any portion of an Option first becomes exercisable.
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6.1.4 Option Grant Date. Except as provided in Section 5.4 or as
otherwise specified by the Option Committee, the date of grant of an Option
under this Plan shall be the date as of which the Option Committee approves the
grant.
6.1.5 Nonassignability of Option Rights. No ISO granted under this
Plan or NQO granted on or before February 10, 1992, shall be assignable or
otherwise transferable by the optionee except by will or by the laws of descent
and distribution. No NQO granted after February 10, 1992, shall be assignable or
otherwise transferable by the optionee except by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code. During the life of the optionee, an Option shall be exercisable
only by the optionee.
6.1.6 Payment.
(a) All Options. Except as provided below, payment in full
shall be made for all stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. Payment may be made in cash, by delivery to the
Company of shares of Common Stock owned by the optionee (duly endorsed in favor
of the Company or accompanied by a duly endorsed stock power), or by a
combination of cash and stock. Any shares delivered shall be valued as of the
date of exercise of the Option in the manner set forth in Section 6.1.12.
Optionees may not exercise Options by delivery of shares more frequently than at
six-month intervals. Notwithstanding the foregoing, in the event that an
optionee's termination of employment with the Company or an Affiliate occurs
less than six months after a previous exercise of Options by the optionee by
delivery of shares, as described above, the optionee shall be permitted to
exercise Options granted on or after November 16, 1992, to the extent they were
exercisable on the date of the termination, by delivery of shares.
(b) Options Granted to Officers After May 3, 1991. The
Option Committee, in its discretion, may accept as payment for all or part of
the Option price of Options granted to an officer of the Company after May 3,
1991, the optionee's full recourse promissory note, having such terms as
determined by the Option Committee. In the case of Options granted after
February 10, 1992, a promissory note delivered in payment of the purchase price
may in no event bear interest at less than the minimum interest rate specified
under the Code at which no additional interest on debt instruments of such type
would be imputed, and may be either secured or unsecured in such manner as the
Option Committee shall approve (including, without limitation, by a security
interest in the shares of the Company).
(c) Options Granted After February 10, 1992. In the case of
Options granted after February 10, 1992, the Option Committee may accept as
payment any other consideration and method of payment to the extent permitted
under the California Corporations Code.
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6.1.7 Termination of Employment.
(a) Options Granted After February 10, 1992. Unless
determined otherwise by the Option Committee in its absolute discretion, to the
extent not already expired or exercised, an Option granted after February 10,
1992 shall terminate at the earlier of (a) the Expiration Date (as defined in
Section 6.1.13) or (b) three months after termination of employment with the
Company or any Affiliate; provided, that an Option shall be exercisable after
the date of termination of employment only to the extent exercisable on the date
of termination; and provided further, that if termination of employment is due
to the optionee's death or "disability" (as determined in accordance with
Section 22(e)(3) of the Code), the optionee, or the optionee's personal
representative (or any other person who acquires the Option from the optionee by
will or the applicable laws of descent and distribution), may at any time within
18 months after the termination of employment (or such lesser period as is
specified in the option agreement but in no event after the Expiration Date of
the Option), exercise the rights to the extent they were exercisable on the date
of the termination.
(b) Options Granted on or Before February 10, 1992. An
Option granted on or before February 10, 1992 shall terminate on the earlier of
(i) the Expiration Date and (ii) three months after termination of employment
with the Company or any Affiliate; provided, that an Option shall be exercisable
after the date of termination of employment only to the extent exercisable on
the date or termination; and provided further, that if the optionee dies while
employed by the Company or any Affiliate or within the period that the Option
remains exercisable after termination of employment, the optionee's personal
representative (or any other person who acquires the Option from the optionee by
will or the applicable laws of descent and distribution) may at any time within
12 months after the optionee's death or any lesser period specified in the
option agreement (but in no event after the Expiration Date), exercise the
rights to the extent they were exercisable on the date of the optionee's death.
(c) All Options. A transfer of an optionee from the Company
to an Affiliate or vice versa, or from one Affiliate to another, or a leave of
absence due to sickness, military service, or other cause duly approved by the
Company, shall not be deemed a termination of employment for purposes of this
Plan. For the purpose of this Section 6.1.7, "employment" means engagement with
the Company or any subsidiary of the Company either as an employee, as a
director, or as a consultant.
6.1.8 Repurchase of Stock. In addition to the right of first
refusal set forth in Section 6.1.9, at the time it grants Options under this
Plan, the Company may retain, for itself or others, rights to purchase the
shares acquired under the Option or impose other restrictions on the shares. The
terms and conditions of any such rights or other restrictions shall be set forth
in the option agreement evidencing the Option.
6.1.9 Company's Right of First Refusal.
(a) Company's Right; Notice. Stock delivered pursuant to the
exercise of any Option granted under this Plan, shall be subject to a right of
first refusal by the Company in the event that the holder of such shares
proposes to sell, pledge or otherwise transfer
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<PAGE> 8
such shares or any interest in such shares to any person or entity. Any holder
of shares purchased under this Plan pursuant to such an Option desiring to
transfer such shares or any interest in such shares shall give a written notice
(the "Offer Notice") to the Company describing the proposed transfer, including
the number of shares proposed to be transferred, the proposed transfer price and
terms and the name and address of the proposed transferee. The Company shall
have the right within 20 days after receipt of the Offer Notice to purchase the
shares proposed to be transferred, on the same terms (including, without
limitation, price terms) offered by the proposed transferee. The Company's
rights under this Section 6.1.9 shall be freely assignable.
(b) Exercise. Except as provided under any repurchase right
imposed under Section 6.1.8, if the Company fails to exercise its right of first
refusal within 20 days from the date on which the company receives the Offer
Notice, the shareholder may, within the next 90 days, conclude a transfer to the
proposed transferee of the exact number of shares covered by that notice on
terms not more favorable to the transferee than those described in the notice.
Any subsequent proposed transfer shall again be subject to the Company's right
of first refusal. If the Company exercises its right of first refusal, the
shareholder shall endorse and deliver to the Company the stock certificates
representing the shares being repurchased. The Company shall pay the shareholder
the total repurchase price for the shares no later than the later of (i) 60 days
after receipt of the Offer Notice and (ii) the end of such period for payment
offered by the bona fide third party transferor. The holder of the shares being
repurchased shall cease to have any rights with respect to such shares
immediately upon receipt of the repurchase price.
(c) Exceptions. Notwithstanding the foregoing, no notice of
a proposed transfer shall be required and no right of first refusal shall exist
with respect to transfers, including sales, to an optionee's children,
grandchildren, or parents or to trusts, estates, or custodianships of or for the
account of an optionee or an optionee's children, grandchildren, or parents.
(d) Termination of Company's Right. The right of first
refusal set forth in this Section 6.1.9 shall terminate upon the consummation of
an underwritten public offering of the Company's Common Stock registered under
the Securities Act of 1933.
(e) No Limitation. Nothing in this Section 6.1.9 shall limit
the rights of the Company under any repurchase right imposed under Section
6.1.8.
6.1.10 Withholding and Employment Taxes. At the time of exercise
of an Option (or at such later time(s) as the Company may prescribe), the
optionee shall remit to the Company in cash all applicable federal and state
withholding and employment taxes. The Option Committee may, in the exercise of
its sole discretion, permit an optionee to pay some or all of such taxes by
means of a promissory note on such terms as the Option Committee deems
appropriate. If authorized by the Option Committee in its sole discretion, and
if the Option has been held for six months or more, an optionee may elect to
have shares of Common Stock which are acquired upon exercise of the Option
withheld by the Company or to tender to the company other shares of Common Stock
or other securities of the Company owned by the optionee on the date of
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<PAGE> 9
determination of the amount of tax to be withheld as a result of the exercise of
such Option (the "Tax Date") to pay the amount of tax that is required by law to
be withheld by the Company as a result of the exercise of such Option, provided
that such election satisfies the following requirements:
(a) such election shall be irrevocable, shall be made at
least six months prior to the Option exercise transaction, and shall be subject
to the disapproval of the Option Committee at any time prior to the consummation
of the Option exercise; or
(b) such election shall be made in advance to take effect in
a subsequent "window period" (as defined below) in which the Option is
exercised, and the Option Committee shall approve such election when it is made
or at any time thereafter up to consummation of the Option exercise; or
(c) such election is made in a window period and the
approval of the Option Committee is given after the election is made and within
the same window period, and the Option exercise is consummated within such
window period; or
(d) shares or other previously owned securities are tendered
(but stock is not withheld) at any time up to the consummation of the Option
exercise (in which event, neither a prior irrevocable election nor window period
timing requirements is required);
provided that clauses (b) and (c) shall not be available until the Company has
been subject to the reporting requirements of the Securities Exchange Act of
1934 for at least one year. A "window period" is the period beginning on the
third business day following the date of release for publication of quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date. Any securities so withheld or tendered shall
be valued by the Company as of the Tax Date.
6.1.11 Other Provisions. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Option Committee, and each ISO granted under
this Plan shall include such provisions and conditions as are necessary to
qualify the Option as an "incentive stock option" within the meaning of Section
422 of the Code.
6.1.12 Determination of Value. For purposes of the Plan, the value
of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the stock of the Company 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
Automated Quotation System, its fair market value shall be the closing sales
price for such stock or the closing bid if no sales were reported, as quoted on
such system or exchange (or the largest such exchange) for the date the value is
to be determined (or if there are no sales for such date, then for the last
preceding business day on which there were sales), as reported in the Wall
Street Journal.
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<PAGE> 10
(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for the
stock on the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on which
there were quoted prices).
(c) If the stock of the Company is as described in Section
6.1.12(a) or (b), but is restricted by law, contract, market conditions or
otherwise as to salability or transferability, its fair market value shall be as
set forth in Section 6.1.12(a) or (b), as appropriate, less, as determined by
the Option Committee, an appropriate discount, based on the nature and terms of
the restrictions.
(d) In the absence of an established market for the stock,
the fair market value thereof shall be determined by the Option Committee, with
reference to the Company's net worth, prospective earning power, dividend-paying
capacity, and other relevant factors, including the goodwill of the Company, the
economic outlook in the Company's industry, the company's position in the
industry and its management, and the values of stock of other corporations in
the same or a similar line of business.
6.1.13 Option Term. No Option shall be exercisable more than ten
years after the date of grant, or such lesser period of time as is set forth in
the option agreement (the end of the maximum exercise period stated in the
option agreement is referred to in this Plan as the "Expiration Date"). No
Option granted after February 10, 1992, and no ISO granted on or before that
date, to any person who owns, directly or by attribution, stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or of any Affiliate (a "Ten Percent Stockholder") shall be
exercisable more than five years after the date of grant.
6.1.14 Exercise Price. The exercise price of any Option granted to
any Ten Percent Stockholder shall in no event be less than 110 percent of the
fair market value (determined in accordance with Section 6.1.12) of the stock
covered by the Option at the time the Option is granted.
6.1.15 Compliance with Securities Laws. The Company shall not be
obligated to offer or sell any shares upon exercise of an Option unless the
shares are at that time effectively registered or exempt from registration under
the federal securities laws and the offer and sale of the shares are otherwise
in compliance with all applicable state and local securities laws. The Company
shall have no obligation to register the shares under the federal securities
laws or take whatever other steps may be necessary to enable the shares to be
offered and sold under federal or other securities laws. Upon exercising all or
any portion of an Option, an optionee may be required to furnish representations
or undertakings deemed appropriate by the Company to enable the offer and sale
of the Option shares or subsequent transfers of any interest in the shares to
comply with applicable securities laws. Stock certificates evidencing shares
acquired upon exercise of options shall bear any legend required by, or useful
for purposes of compliance with, applicable securities laws, this Plan or the
option agreement evidencing the Option.
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6.2 Terms and Conditions to Which Only NQOs Are Subject. Options
granted under this Plan which are designated as NQOs shall be subject to the
following terms and conditions:
6.2.1 Exercise Price. Except as set forth in Section 6.1.14, the
exercise price of a NQO shall be not less than 85 percent of the fair market
value (determined in accordance with Section 6.1.12) of the stock subject to the
Option on the date of grant.
6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
6.3.1 Exercise Price. Except as set forth in Section 6.1.14, the
exercise price of an ISO shall be determined in accordance with the applicable
provisions of the Code and shall in no event be less than the fair market value
(determined in accordance with Section 6.1.12) of the stock covered by the
Option at the time the Option is granted.
6.3.2 Disqualifying Dispositions. If stock acquired upon exercise
of an ISO is disposed of in a "disqualifying disposition" within the meaning of
Section 422 of the Code, the holder of the stock immediately before the
disposition shall notify the Company in writing of the date and terms of the
disposition and comply with any other requirements imposed by the Company in
order to enable the Company to secure any related income tax deduction to which
it is entitled.
7. MANNER OF EXERCISE
An optionee wishing to exercise an Option shall give written notice to
the Company at its principal executive office, to the attention of the officer
of the Company designated by the Option Committee, accompanied by payment of the
exercise price as provided in Section 6.1.6. The date the Company receives
written notice of an exercise hereunder accompanied by payment of the exercise
price and, if required, by payment of any federal or state withholding or
employment taxes required to be withheld by virtue of exercise of the Option
will be considered as the date such Option was exercised.
Promptly after receipt of written notice of exercise of an Option, the
Company shall, without stock issue or transfer taxes to the optionee or other
person entitled to exercise the Option, deliver to the optionee or such other
person a certificate or certificates for the requisite number of shares of
stock. Unless the Company specifies otherwise, an optionee or transferee of an
optionee shall not have any privileges as a shareholder with respect to any
stock covered by the Option until the date of issuance of a stock certificate.
Subject to Section 6.1.1 hereof, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date the certificates are
delivered.
8. EMPLOYMENT RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment at any
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<PAGE> 12
time, nor confer upon any optionee any right to continue in the employ of the
Company or any of its Affiliates.
9. AMENDMENTS TO PLAN
The Board may amend this Plan at any time. Without the consent of an
optionee, no amendment may affect outstanding Options except to conform this
Plan and ISOs granted under this Plan to federal or other tax laws relating to
incentive stock options. No amendment shall require shareholder approval unless
shareholder approval is required to preserve incentive stock option treatment
for tax purposes or the Board otherwise concludes that shareholder approval is
advisable.
10. SHAREHOLDER APPROVAL; TERM
The Board of Directors of the Company adopted the 1984 Incentive Stock
Option Plan on February 1, 1984, and the Company's shareholders approved it on
May 5, 1984. The Board amended the Plan on March 27, 1986, and the Company's
shareholders approved such amendment on May 2, 1986. The Board further amended
this Plan on November 20, 1987, and formally adopted the amended and restated
plan incorporating such amendments on May 6, 1988. The Board further amended the
Plan on December 6, 1988, and the Company's shareholders approved such amendment
on May 5, 1989. The Board further amended the Plan on March 13, 1990, and the
Company's shareholders approved such amendment on May 4, 1990. The Board further
amended the Plan on May 3, 1991. The Board further amended this Plan on February
10, 1992, and the shareholders approved such amendment on February 24, 1992. The
Board further amended the Plan on November 16, 1992.
This second amended and restated Plan incorporating amendments adopted
by the Board on November 16, 1992 became effective upon adoption by the Board.
This Plan shall terminate ten years after initial adoption by the Board
unless terminated earlier by the Board. The Board may terminate this Plan at any
time without shareholder approval. No Options shall be granted after termination
of this Plan, but termination shall not affect rights and obligations under then
outstanding options.
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EXHIBIT 10.2
TENCOR INSTRUMENTS
AMENDED AND RESTATED 1993 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, Tencor Instruments, a California
corporation, and its Affiliates an opportunity to participate in the Company's
future by offering them an opportunity to acquire stock in the Company so as to
retain, attract and motivate them.
(b) Definitions. For purposes of the Plan, the following
terms have the following meanings:
(i) "Administrator" shall mean the entity, either
the Board or the committee of the Board, responsible for administering this
Plan as provided in Section 2.
(ii) "Affiliate" means a parent or subsidiary
corporation as defined in the applicable provisions (currently, Sections 424(e)
and (f), respectively) of the Code.
(iii) "Award" means any award under the Plan,
including any Option, Stock Appreciation Right, Restricted Stock, Stock
Purchase Right or Performance Shares.
(iv) "Award Agreement" means, with respect to each
Award, the signed written agreement between the Company and the Plan
participant setting forth the terms and conditions of the Award.
(v) "Board" means the Board of Directors of the
Company, as constituted from time to time.
(vi) "Change in Control" has the meaning set forth
in Section 10(a).
(vii) "Change in Control Price" has the meaning set
forth in Section 10(c).
(viii) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
(ix) "Commission" means the Securities and Exchange
Commission and any successor agency.
(x) "Company" means Tencor Instruments, a
California corporation, or any successor corporation which assumes any
outstanding Awards pursuant to Section 10(d).
(xi) "Disability" means permanent and total
disability as determined by the Administrator in accordance with the standards
set forth in Section 22(e)(3) of the Code.
<PAGE> 2
(xii) "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time, and any successor statute.
(xiii) "Fair Market Value" means as of any given date
(a) the closing price of the Stock on the Nasdaq National Market as reported in
the Wall Street Journal; or (b) if the Stock is no longer quoted on the Nasdaq
National Market but is listed on an established stock exchange or quoted on any
other established interdealer quotation system, the closing price for the Stock
on such exchange or system, as reported in the Wall Street Journal; or (c) in
the absence of an established market for the Stock, the fair market value of
the Stock as determined by the Administrator in good faith.
(xiv) "Incentive Stock Option" means any Option
designated in writing as an "incentive stock option" within the meaning of
Section 422 of the Code.
(xv) "Nonqualified Stock Option" means any Option
that is not an Incentive Stock Option.
(xvi) "Option" means an option granted under Section
5.
(xvii) "Performance Period" means the period
determined by the Administrator under Section 9(a).
(xviii) "Performance Share" means a share of Stock
subject to an Award under Section 9.
(xix) "Plan" means this Tencor Instruments 1993
Equity Incentive Plan, as amended from time to time.
(xx) "Restricted Stock" means an Award of Stock
subject to restrictions, as more fully described in Section 7.
(xxi) "Restriction Period" means the period
determined by the Administrator under Section 7(b), which shall not be less
than three years, unless the Restricted Stock is performance-based, in which
case the Restriction Period shall not be less than one year.
(xxii) "Rule 16b-3" means Rule 16b-3 under Section
16(b), as amended from time to time, and any successor to such rule.
(xxiii) "Section 16(b)" means Section 16(b) of the
Exchange Act, as amended from time to time, and any successor section.
(xxiv) "Stock" means the Common Stock of the Company,
and any successor security.
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(xxv) "Stock Appreciation Right" means an Award
issued pursuant to Section 6.
(xxvi) "Stock Purchase Right" means an Award granted
under Section 8.
(xxvii) "Tax Date" means the date defined in Section
11(f).
(xxiii) "Termination" means, for purposes of the Plan,
with respect to a participant, that the participant has ceased to be, for any
reason, employed by, or consulting to, the Company or an Affiliate.
(xxiv) "Window Period" means any 10-day period
beginning on the third business day following the date of release for
publication of the Company's quarterly or annual summary statements of earnings
or such other period as is specified in Rule 16b-3(e) under the Exchange Act,
as such rule may be amended from time to time, or any successor to such rule.
SECTION 2. ADMINISTRATION.
(a) Administrator. The Plan shall be administered by the
Board or, upon delegation by the Board, by a committee consisting of not less
than two directors (in either case, the "Administrator"). In connection with
the administration of the Plan, the Administrator shall have the powers
possessed by the Board. The Administrator may act only by a majority of its
members, except that the Administrator (i) may authorize any one or more of its
members or any officer of the Company to execute and deliver documents on
behalf of the Administrator and (ii) so long as not otherwise required for the
Plan to comply with Rule 16b-3, may delegate to one or more officers or
directors of the Company authority to grant Awards to persons who are not
subject to Section 16 of the Exchange Act with respect to Stock. The
Administrator may delegate administrative duties to such employees of the
Company as it deems proper, so long as such delegation is not otherwise
prohibited by Rule 16b-3. The Board at any time may terminate the authority
delegated to any committee of the Board pursuant to this Section 2(a) and
revest in the Board the administration of the Plan.
(b) Authority. The Administrator shall grant Awards to
selected eligible employees and consultants. In particular and without
limitation, the Administrator, subject to the terms of the Plan, shall:
(i) select the officers, other employees and
consultants to whom Awards may be granted;
(ii) determine whether and to what extent Awards are
to be granted under the Plan;
(iii) determine the number of shares to be covered by
each Award granted under the Plan;
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<PAGE> 4
(iv) determine the terms and conditions of any Award
granted under the Plan and any related loans to be made by the Company, based
upon factors determined by the Administrator; and
(v) determine to what extent and under what
circumstances any Award payments may be deferred by a participant.
(c) Administrator Determinations Binding. The Administrator
may adopt, alter and repeal administrative rules, guidelines and practices
governing the Plan as it from time to time shall deem advisable, may interpret
the terms and provisions of the Plan, any Award and any Award Agreement and may
otherwise supervise the administration of the Plan. Any determination made by
the Administrator pursuant to the provisions of the Plan with respect to any
Award shall be made in its sole discretion at the time of the grant of the
Award or, unless in contravention of any express term of the Plan or Award, at
any later time. All decisions made by the Administrator under the Plan shall
be binding on all persons, including the Company and Plan participants. No
member of the Administrator shall be liable for any action that he or she has
in good faith taken or failed to take with respect to this Plan or any Award.
The Administrator may grant Awards not satisfying the specific limitations of
the second proviso of Section 5(b)(iii) or of Section 7(b) regarding limits on
accelerating or waiving restrictions for Restricted Stock; provided, that such
Awards shall not exceed in amount 5% of the number of shares of Stock issuable
under the Plan.
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Number of Shares. Subject to Section 3(b) below, the
total number of shares of Stock reserved and available for issuance pursuant to
Awards under this Plan shall be 4,300,000 shares. Such shares may consist, in
whole or in part, of authorized and unissued shares or shares reacquired in
private transactions or open market purchases, but all shares issued under the
Plan regardless of source shall be counted against the 4,300,000 share
limitation.
(b) Adjustments. Subject to Section 10, in the event of any
merger, reorganization, consolidation, recapitalization, stock dividend, stock
split or other change in corporate structure affecting the Stock, such
substitution or adjustments shall be made in the aggregate number and kind of
shares of Stock reserved for issuance under the Plan, in the number of shares
of Stock specified in Section 3(c), in the number, kind and exercise price of
shares subject to outstanding Options, and in the number, kind and purchase
price of shares subject to other outstanding Awards, as may be determined to be
appropriate by the Administrator, in its sole discretion; provided, however,
that the number of shares subject to any Award shall always be a whole number.
Such adjusted exercise price shall also be used to determine the amount payable
by the Company upon exercise of any Stock Appreciation Right associated with
any Option.
(c) Individual Limitation. The Company may not issue Stock
Purchase Rights with a Fair Market Value purchase price as of the date of
grant, Options with a Fair Market
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Value exercise price as of the date of grant, or Stock Appreciation Rights with
a Fair Market Value exercise price as of the date of grant, covering in the
aggregate more than 240,000 shares of Stock (subject to adjustments and
substitutions as required under Section 3(b) above) to any one participant in
any one-year period.
SECTION 4. ELIGIBILITY.
Awards may be granted to officers and other employees of, and
consultants to, the Company and its Affiliates, except that Incentive Stock
Options may only be granted to employees of the Company or an Affiliate of the
Company, including employees who may also be officers or directors.
SECTION 5. STOCK OPTIONS.
(a) Types. Any Option granted under the Plan shall be in
such form as the Administrator may from time to time approve. The
Administrator shall have the authority to grant to any participant Incentive
Stock Options, Nonqualified Stock Options or both types of Options (in each
case with or without Stock Appreciation Rights). Incentive Stock Options may
be granted only to employees of the Company and its Affiliates. Any portion of
an Option that is not designated as, or does not qualify as, an Incentive Stock
Option shall constitute a Nonqualified Stock Option.
(b) Terms and Conditions. Options granted under the Plan
shall be subject to the following terms and conditions:
(i) Option Term. The term of each Option shall be
fixed by the Administrator, but no Incentive Stock Option shall be exercisable
more than 10 years after the date the Option is granted, and no Nonqualified
Stock Option shall be exercisable more than 15 years after the date the Option
is granted. If, at the time the Company grants an Incentive Stock Option, the
optionee owns directly or by attribution stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any
Affiliate of the Company, the Incentive Stock Option shall not be exercisable
more than five years after the date of grant.
(ii) Grant Date. The Company may grant Options
under the Plan at any time and from time to time before the Plan terminates.
The Administrator shall specify the date of grant or, if it fails to, the date
of grant shall be the date of action taken by the Administrator to grant the
Option. However, if an Option is approved in anticipation of employment, the
date of grant shall be the date the intended optionee is first treated as an
employee for payroll purposes.
(iii) Exercise Price. The exercise price per share
of Stock purchasable under an Option shall be equal to at least 85% of the Fair
Market Value on the date of grant, and in the case of Incentive Stock Options
shall be equal to at least the Fair Market Value on the date of grant;
provided, however, that if, at the time the Company grants an Incentive Stock
Option, the optionee owns directly or by attribution stock possessing more than
10% of
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the total combined voting power of all classes of stock of the Company, or any
Affiliate of the Company, then the exercise price shall be not less than 110%
of the Fair Market Value on the date the Incentive Stock Option is granted;
provided, further, that, subject to Section 2(c), if the exercise price of an
Option is less than 100% of Fair Market Value on the date of grant, the
discount below 100% of Fair Market Value shall be expressly granted by the
Administrator in lieu of a reasonable amount of salary or cash bonus.
(iv) Exercisability. Subject to the other
provisions of the Plan, an Option shall be exercisable in its entirety at grant
or at such times and in such amounts as are specified in the Award Agreement
evidencing the Option. The Administrator, in its absolute discretion, at any
time may waive any limitations respecting the time at which an Option first
becomes exercisable in whole or in part.
(v) Method of Exercise. To the extent the right to
purchase shares has accrued, Options may be exercised, in whole or in part,
from time to time, by written notice from the optionee to the Company stating
the number of shares being purchased, accompanied by payment of the exercise
price for the shares.
(vi) No Disqualification. Notwithstanding any other
provision in the Plan, no term of the Plan relating to Incentive Stock Options
shall be interpreted, amended or altered nor shall any discretion or authority
granted under the Plan be exercised so as to disqualify the Plan under Section
422 of the Code or, without the consent of the optionee affected, to disqualify
any Incentive Stock Option under such Section 422.
(vii) Exercisability Limitation. The aggregate Fair
Market Value (determined from grant date) of the Stock with respect to which an
Incentive Stock Option becomes exercisable for the first time by a participant
("vests") during a calendar year (under all plans of the Company and its
Affiliates) shall not exceed $100,000 (the "exercisability limitation"). In
applying this provision, Incentive Stock Options with lower exercise prices
shall vest before Incentive Stock Options with higher exercise prices,
regardless of grant date, unless the Award Agreements, or the Administrator,
specifically provide a different order of vesting. Nonqualified Stock Options
are not subject to the exercisability limitation.
(viii) Disqualifying Dispositions. If Stock acquired
by exercise of an Incentive Stock Option granted pursuant to the Plan is
disposed of in a "disqualifying disposition" within the meaning of Section 422
of the Code, the holder of the Stock immediately prior to the disposition shall
promptly notify the Company in writing of the date and terms of the disposition
and shall provide such other information regarding the disposition as the
Company may reasonably require.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Relationship to Options; No Payment by Participant. A
Stock Appreciation Right may be awarded either (i) with respect to Stock
subject to an Option held by a participant, or (ii) without reference to an
Option. If an Option is an Incentive Stock Option, a Stock Appreciation Right
granted with respect to such Option may be granted only
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at the time of grant of the related Incentive Stock Option, but if the Option
is a Nonqualified Stock Option, the Stock Appreciation Right may be granted
either simultaneously with the grant of the related Nonqualified Stock Option
or at any time during the term of such related Nonqualified Stock Option. No
consideration shall be paid by a participant with respect to the grant of a
Stock Appreciation Right.
(b) When Exercisable. A Stock Appreciation Right shall be
exercisable at such times and in whole or in part, each as determined by the
Administrator, subject, with respect to participants subject to Section 16(b),
to Rule 16b-3. To exercise a Stock Appreciation Right in whole or in part for
cash, a participant must make an election prior to or during a Window Period to
take effect in that or any later Window Period; provided that such election
shall be subject to the approval of the Administrator. If a Stock Appreciation
Right is granted with respect to an Option, unless the Award Agreement
otherwise provides, the Stock Appreciation Right may be exercised only to the
extent to which shares covered by the Option are not at the time of exercise
subject to repurchase by the Company.
(c) Effect on Related Right; Termination of Stock
Appreciation Right. If a Stock Appreciation Right granted with respect to an
Option is exercised, the Option shall cease to be exercisable and shall be
canceled to the extent of the number of shares with respect to which the Stock
Appreciation Right was exercised. Upon the exercise or termination of an
Option, related Stock Appreciation Rights shall terminate to the extent
of the number of shares as to which the Option was exercised or terminated,
except that, unless otherwise determined by the Administrator at the time of
grant, a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Option shall not be reduced until the
number of shares covered by exercise or termination of the related Option
exceeds the number of shares not covered by the Stock Appreciation Right. A
Stock Appreciation Right granted independently from an Option shall terminate
and shall be no longer exercisable at the time determined by the Administrator
at the time of grant, but not later than 15 years from the date of grant. Upon
the death or Disability of the participant, a Stock Appreciation Right granted
with respect to an Option shall be exercisable only to the extent to which the
Option is then exercisable.
(d) Form of Payment Upon Exercise. Despite any attempt by a
participant to elect payment in a particular form upon exercise of a Stock
Appreciation Right, the Administrator, in its discretion, may elect to cause
the Company to pay cash, Stock, or a combination of cash and Stock upon
exercise of the Stock Appreciation Right.
(e) Amount of Payment Upon Exercise. Upon the exercise of a
Stock Appreciation Right, the participant shall be entitled to receive one of
the following payments, as determined by the Administrator under Section 6(d);
(i) Stock. That number of whole shares of Stock
equal to the number computed by dividing (A) an amount (the "Stock Appreciation
Right Spread"), rounded to the nearest whole dollar, equal to the product
computed by multiplying (x) the excess of (1) if the Stock Appreciation Right
may only be exercised during the Window Period, the highest Fair Market Value
on any day during the Window Period, and otherwise, the Fair Market
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Value on the date the Stock Appreciation Right is exercised, over (2) the
exercise price per share of Stock of the related Option, or in the case of a
Stock Appreciation Right granted without reference to an Option, such other
price as the Administrator establishes at the time the Stock Appreciation Right
is granted, by (y) the number of shares of Stock with respect to which a Stock
Appreciation Right is being exercised by (B) (1) if the Stock Appreciation
Right may only be exercised during the Window Period, the highest Fair Market
Value during the Window Period in which the Stock Appreciation Right was
exercised, and (2) otherwise, the Fair Market Value on the date the Stock
Appreciation Right is exercised; plus, if the foregoing calculation yields a
fractional share, an amount of cash equal to the applicable Fair Market Value
multiplied by such fraction (such payment to be the difference of the
fractional share); or
(ii) Cash. An amount in cash equal to the Stock
Appreciation Right Spread; or
(iii) Cash and Stock. A combination of cash and
Stock, the combined value of which shall equal the Stock Appreciation Right
Spread.
SECTION 7. RESTRICTED STOCK.
(a) Price. The Administrator may grant to a participant
Restricted Stock. The grantee shall pay no consideration therefor.
(b) Restrictions. Subject to the provisions of the Plan and
the Award Agreement, during the Restriction Period set by the Administrator,
commencing with, and not exceeding 10 years from, the date of such Award, the
participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Administrator may provide for the lapse of such restrictions in installments,
but, subject to Sections 2(c) and 10, may not accelerate or waive such
restrictions. The Administrator shall determine the performance objectives, if
any, to be used in awarding Restricted Stock and the extent to which the
performance objectives, if any, have been satisfied.
(c) Dividends. Unless otherwise determined by the
Administrator, with respect to dividends on shares of Restricted Stock,
dividends payable in cash shall be automatically reinvested in additional
Restricted Stock, and dividends payable in Stock shall be paid in the form of
Restricted Stock.
(d) Termination. Except to the extent otherwise provided in
the Award Agreement and pursuant to Section 7(b), in the event of a Termination
during the Restriction Period, all shares then subject to restriction shall be
forfeited by the participant.
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SECTION 8. STOCK PURCHASE RIGHTS.
(a) Price. The Administrator may grant Stock Purchase Rights
which shall enable the recipient to purchase Stock at a price equal to not less
than 85% of its Fair Market Value on the date of grant.
(b) Exercisability. Stock Purchase Rights shall be
exercisable for a period determined by the Administrator not exceeding 30 days
from the date of the grant. The Administrator, however, may provide that if
required to exempt the Award from Section 16(b) pursuant to Rule 16b-3 Stock
Purchase Rights granted to persons subject to Section 16(b) shall not become
exercisable until six months and one day after the grant date and shall then be
exercisable for 10 trading days at the purchase price specified by the
Administrator in accordance with Section 8(a).
SECTION 9. PERFORMANCE SHARES.
(a) Awards. The Administrator shall determine the nature,
length and starting date of the Performance Period for each Award of
Performance Shares, which period shall be at least two years (subject to
Section 10) and not more than six years. The consideration payable by a
participant with respect to an Award of Performance Shares shall be an amount
determined by the Administrator in the exercise of the Administrator's
discretion at the time of the Award; provided, that the amount of consideration
may be zero and may in no event exceed 50% of the Fair Market Value at the time
of grant. The Administrator shall determine the performance objectives to be
used in awarding Performance Shares and the extent to which such Performance
Shares have been earned. Performance Periods may overlap and participants may
participate simultaneously with respect to Performance Share Awards that are
subject to different Performance Periods and different performance factors and
criteria. At the beginning of each Performance Period, the Administrator shall
determine for each Performance Share Award subject to such Performance Period
the number of shares of Stock (which may consist of Restricted Stock) to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Performance Share
Award are met. Such number of shares of Stock may be fixed or may vary in
accordance with such performance or other criteria as may be determined by the
Administrator. The Administrator may provide that (i) amounts equivalent to
interest at such rates as the Administrator may determine, or (ii) amounts
equivalent to dividends paid by the Company upon outstanding Stock shall be
payable with respect to Performance Share Awards.
(b) Termination. Except as otherwise provided in the Award
Agreement or in Section 11(d) or as otherwise determined by the Administrator,
in the event of a Termination during a Performance Period, the participant
shall not be entitled to any payment with respect to the Performance Shares
subject to the Performance Period.
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SECTION 10. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of
Section 10(b), a "Change in Control" means the occurrence of any one of the
following:
(i) any "person", as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company, an Affiliate, or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(ii) the solicitation of proxies (within the meaning
of Rule 14a-1(k) under the Exchange Act and any successor rule) with respect to
the election of any director of the Company where such solicitation is for any
candidate who is not a candidate proposed by a majority of the Board in office
prior to the time of such election; or
(iii) the dissolution or liquidation (partial or
total) of the Company or a sale of assets involving 30% or more of the assets
of the Company, any merger or reorganization of the Company whether or not
another entity is the survivor, a transaction pursuant to which the holders, as
a group, of all of the shares of the Company outstanding prior to the
transaction hold, as a group, less than 70% of the shares of the Company
outstanding after the transaction, or any other event which the Board
determines, in its discretion, would materially alter the structure of the
Company or its ownership.
(b) Impact of Event. In the event of a "Change in Control"
as defined in Section 10(a), but only if and to the extent so specifically
determined by the Board in its discretion, which determination may be amended
or reversed only by the affirmative vote of a majority of the persons who were
directors at the time such determination was made, acceleration and valuation
provisions no more favorable to participants than one or more of the following
may apply, subject to the termination provisions set forth in Section 10(d):
(i) Any Stock Appreciation Rights and, subject to
Section 5(b)(vi), any Options outstanding as of the date such Change in Control
is determined to have occurred and not then exercisable and vested shall become
fully exercisable and vested and any rights of the Company to repurchase the
Stock issuable upon exercise thereof shall lapse; provided, that in the case of
the holder of Stock Appreciation Rights who is actually subject to Section
16(b), such Stock Appreciation Rights shall have been outstanding for at least
six months at the date such Change in Control is determined to have occurred.
(ii) The restrictions and limitations applicable to
any Restricted Stock and Stock Purchase Rights shall lapse, and such Restricted
Stock shall become fully vested.
(iii) The value (net of any exercise or purchase
price) of all outstanding Options, Stock Appreciation Rights, Restricted Stock
and Stock Purchase Rights, unless otherwise determined by the Administrator at
or after grant and subject to Rule 16b-3,
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shall be paid to participants in cash on the basis of the "Change in Control
Price", as defined in Section 10(c), as of the date such Change in Control is
determined to have occurred or such other date as the Board may determine prior
to the Change in Control.
(iv) Any outstanding Performance Share Awards shall
be vested and paid in full as if all performance criteria had been met.
(c) Change in Control Price. For purposes of this Section
10, "Change in Control Price" means the highest price per share paid in any
transaction reported on the Nasdaq National Market or paid or offered in any
bona fide transaction related to a potential or actual Change in Control of the
Company at any time during the preceding 60-day period as determined by the
Board, except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the Board decides to
cash out such Options.
(d) Assumption or Termination of Awards. New rights may be
substituted for Awards granted under the Plan, or the Company's obligations as
to Awards outstanding under the Plan may be assumed, by an employer corporation
other than the Company, or by an Affiliate of such employer corporation, in
connection with any merger, consolidation, acquisition, reorganization,
liquidation or like occurrence in which the Company is involved and, in the
case of a merger, consolidation acquisition or similar occurrence, the Company
is not the surviving corporation, in such manner that the then outstanding
Options which are Incentive Stock Options will continue to be "incentive stock
options" within the meaning of Section 422 of the Code to the full extent
permitted thereby. Notwithstanding the foregoing or the provisions of Section
3(b), if such employer corporation, or an Affiliate of such employer
corporation, does not substitute new and substantially equivalent rights for
the Awards granted hereunder, or assume the Awards granted hereunder, the
Awards granted hereunder, at the election of the Board, shall terminate (a)
upon dissolution or liquidation of the Company, or similar occurrence, or (b)
upon any merger, consolidation, acquisition, or similar occurrence, where the
Company will not be a surviving corporation; provided that each participant
shall be mailed notice at least 10 days prior to such dissolution, liquidation,
merger, consolidation, acquisition, or similar occurrence.
SECTION 11. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or
in addition to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Administrator shall determine
the consideration, if any, payable by the participant for any Award and, in
addition to those set forth in the Plan, any other terms and conditions of the
Awards. The Administrator may condition the grant or payment of any Award upon
the attainment of specified performance goals or such other factors or
criteria, including vesting based on continued employment or consulting, as the
Administrator shall determine. Performance objectives may vary from
participant to participant and among groups of participants and shall be based
upon such Company, subsidiary, group or division factors or criteria as the
Administrator may deem appropriate, including, but not limited to, earnings per
share or return on equity. The other provisions of Awards also need not be the
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same with respect to each recipient. Unless specified otherwise in the Plan or
by the Administrator, the date of grant of an Award shall be the date of action
by the Administrator to grant the Award. The Administrator may also substitute
new Options for previously granted Options, including previously granted
Options having higher exercise prices.
(b) Award Agreement. As soon as practicable after the date
of an Award grant, the Company and the participant shall enter into a written
Award Agreement identifying the date of grant, and specifying the terms and
conditions of the Award. Options are not exercisable until after execution of
the Award Agreement by the Company and the Plan participant, but a delay in
execution of the agreement shall not affect the validity of the Option grant.
Any Award under this Plan shall be governed by the terms of the Plan and the
applicable Award Agreement.
(c) Certificates. All certificates for shares of Stock or
other securities delivered under the Plan shall be subject to such stock
transfer orders, legends and other restrictions as the Administrator may deem
advisable under the rules, regulations and other requirements of the
Commission, any market in which the Stock is then traded and any applicable
federal, state or foreign securities law.
(d) Termination. Unless otherwise provided in the applicable
Award Agreement or by the Administrator or as otherwise set forth below, in the
event of Termination, Awards held at the date of Termination (and only to the
extent then exercisable or payable, as the case may be) may be exercised in
whole or in part at any time within three months after the date of Termination,
or such lesser period specified in the Award Agreement (but in no event after
the expiration date of the Award), but not thereafter. Notwithstanding the
foregoing, if Termination is due to retirement or to death or Disability or if
the participant dies within three months after Termination, Awards held at the
date of Termination (and only to the extent then exercisable or payable, as the
case may be) may be exercised in whole or in part by the participant in the
case of retirement or Disability, by the participant's guardian or legal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within 18 months from the date of
Termination or any lesser period specified in the Award Agreement (but in no
event after the expiration of the Award). Notwithstanding the foregoing, the
tax treatment available pursuant to Section 422 of the Code upon the exercise
of an Incentive Stock Option will not be available to a participant who
exercises any Incentive Stock Options more than (i) 12 months after the
Termination if due to death or Disability or if the participant dies within
three months after Termination, or (ii) three months after Termination if due
to retirement.
At the option of the Administrator, the Stock to be
delivered pursuant to an Award under this Plan may be subject to a right of
repurchase in favor of the Company upon Termination, the terms and conditions
of which shall be set forth in the Award Agreement.
(e) Delivery of Purchase Price. If and only to the extent
authorized by the Administrator, participants may make all or any portion of
any payment due to the Company
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(i) with respect to the consideration payable for
an Award,
(ii) upon exercise of an Award, or
(iii) with respect to federal, state, local or
foreign tax payable in connection with an Award,
by delivery of (x) cash, (y) check, or (z) any property other than cash
(including a promissory note of the participant or shares of Stock or
securities) so long as, if applicable, such property constitutes valid
consideration for the Stock under, and otherwise complies with, applicable law.
No promissory note under the Plan shall have a term (including extensions) of
more than five years or shall be of a principal amount exceeding 90% of the
purchase price paid by the borrower. If authorized by the Administrator,
exercise of an Option may be made pursuant to a "cashless exercise/sale"
procedure pursuant to which funds to pay for exercise of the Option are
delivered to the Company by a broker upon receipt of stock certificates from
the Company, or pursuant to which participants obtain margin loans from brokers
to fund the exercise of the Option.
(f) Tax Withholding. Unless the Administrator permits
otherwise, promptly upon the lapse of restrictions imposed upon an Award, upon
exercise or issuance of an Award, or upon a transfer or other disposition of
shares of Stock acquired upon exercise or payment of an Award, or, if later,
when the amount of such obligations becomes determinable (in any case, the "Tax
Date"), the participant shall pay to the Company in cash all applicable
federal, state, local and foreign withholding taxes that the Administrator, in
its discretion, determines to result from the lapse of restrictions imposed
upon an Award or upon exercise or issuance of an Award or from a transfer or
other disposition of shares of Stock acquired upon exercise or payment of an
Award or otherwise related to the Award or shares of Stock acquired in
connection with an Award.
If and to the extent authorized by the Administrator, in
its sole discretion, a person who has received an Award, exercised an Award or
received payment under an Award, may make an election (i) to deliver to the
Company a promissory note of the participant on the terms set forth in Section
11(e), (ii) to tender to the Company previously-owned shares of Stock, or (iii)
to have shares of Stock to be obtained upon exercise of the Award or lapse of
restrictions applicable to an Award withheld by the Company on behalf of the
participant, to pay the amount of tax that the Administrator, in its
discretion, determines to be required to be withheld by the Company.
Any shares tendered to or withheld by the Company will be
valued at Fair Market Value on such date. The value of the shares of Stock
tendered or withheld may not exceed the required federal, state, local and
foreign withholding tax obligations as computed by the Company.
(g) No Transferability of Awards. No Award shall be
assignable or otherwise transferable by the participant other than by will or
by the laws of descent and distribution. During the life of a participant, an
Award shall be exercisable, and any elections with respect
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to an Award may be made, only by the participant or participant's guardian or
legal representative.
(h) Adjustment of Awards; Waivers. Subject to Section
5(b)(vi), the Administrator may adjust the performance goals and measurements
applicable to Awards (i) to take into account changes in law and accounting and
tax rules, (ii) to make such adjustments as the Administrator deems necessary
or appropriate to reflect the inclusion or exclusion of the impact of
extraordinary or unusual items, events or circumstances in order to avoid
windfalls or hardships, and (iii) to make such adjustments as the Administrator
deems necessary or appropriate to reflect any material changes in business
conditions. In the event of hardship or other special circumstances of a
participant and otherwise in its discretion, the Administrator may waive in
whole or in part any or all restrictions, conditions, vesting, or forfeiture
with respect to any Award granted to such participant.
(i) Non-Competition. The Administrator, in addition to any
other requirement it may impose, may condition its discretionary waiver of a
forfeiture, the acceleration of vesting at the time of Termination of a
participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a
period not longer than that provided by the Plan upon such participant's
agreement (and compliance with such agreement) to (i) not engage in any
business or activity competitive with any business or activity conducted by the
Company and (ii) be available for consultations at the request of the Company's
management, all on such terms and conditions (including conditions in addition
to (i) and (ii)) as the Administrator may determine.
(j) Dividends. The reinvestment of dividends in additional
Stock or Restricted Stock at the time of any dividend payment pursuant to
Section 7(c) shall only be permissible if sufficient shares of Stock are
available under Section 3 for such reinvestment (taking into account then
outstanding Awards).
(k) Regulatory Compliance. Each Award under the Plan shall
be subject to the condition that, if at any time the Administrator shall
determine that (i) the listing, registration or qualification of the shares of
Stock upon any securities exchange or for trading in any securities market or
under any state or federal law, (ii) the consent or approval of any government
or regulatory body or (iii) an agreement by the participant with respect
thereto, is necessary or desirable, then such Award shall not be consummated in
whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Administrator. The Company shall have no
obligation to register any shares of Stock issuable pursuant to Awards under
the federal securities laws or to take any other steps necessary to enable the
shares to be offered and issued under federal or other securities laws. As a
condition to the issuance of shares of Stock pursuant to an Award, the Company
may require the person acquiring such shares at the time of any such
acquisition to make such representations, warranties and undertakings deemed
appropriate by the Company to enable the offer and issuance of the shares or
subsequent transfers of the shares to comply with applicable securities laws.
Certificates evidencing shares of Stock acquired pursuant to the Plan shall
bear any legend
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<PAGE> 15
required by, or useful for purposes of compliance with, applicable securities
laws, the Plan, or the Award Agreement pursuant to which the Shares were
issued.
(l) Rights as Shareholder. Unless the Plan or the
Administrator expressly specifies otherwise, a participant shall have no rights
as a shareholder with respect to any shares of Stock covered by an Award until
the issuance (as evidenced by the appropriate entry on the books of the Company
or a duly authorized transfer agent) of a certificate representing the shares
of Stock. Subject to Sections 3(b) and 7(c), no adjustment shall be made for
dividends or other rights for which the record date is prior to the date the
certificate is issued.
(m) Beneficiary Designation. The Administrator, in its
discretion, may establish procedures for a participant to designate a
beneficiary to whom any amounts payable in the event of the participant's death
are to be paid.
(n) Additional Plans. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements for its employees and consultants.
(o) No Employment Rights. The adoption of the Plan shall not
confer upon any employee any right to receive any Award or to any right to
continued employment nor shall it interfere in any way with the right of the
Company or an Affiliate to terminate the employment of any employee or the
consulting arrangement with any consultant at any time.
(p) Rule 16b-3. Notwithstanding any provisions of the Plan,
it is intended that Awards shall always be granted and exercised in such a
manner as to conform to the provisions of Rule 16b-3. Notwithstanding the
foregoing, it shall be the responsibility of persons subject to Section 16 of
the Exchange Act, not of the Company or the Administrator, to comply with the
requirements of Section 16 of the Exchange Act; and neither the Company nor the
Administrator shall be liable if this Plan or any transaction under this Plan
fails to comply with the applicable conditions of Rule 16b-3, or if any such
person incurs any liability under Section 16 of the Exchange Act.
(q) Governing Law. The Plan and all Awards shall be governed
by and construed in accordance with the laws of the State of California.
(r) Use of Proceeds. All cash proceeds to the Company under
the Plan shall constitute general funds of the Company.
(s) Unfunded Status of Plan. The Plan shall constitute an
"unfunded" plan for incentive and deferred compensation. The Administrator may
authorize the creation of trusts or arrangements to meet the obligations
created under the Plan to deliver Stock or make payments; provided, however,
that unless the Administrator otherwise determines, the existence of such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan.
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(t) Transfer Limitation on Stock. In addition to any other
transfer restrictions which may be imposed under the Plan or any Award
Agreement, a participant subject to Section 16 of the Exchange Act may not sell
or otherwise transfer, in whole or in part, any shares of Stock issued pursuant
to an Award at any time prior to (i) with respect to Stock issued pursuant to
an Option, the six-month anniversary of the issuance of the Option, and (b)
with respect to all other Awards, the six-month anniversary of the issuance of
the Stock, unless the Administrator determines that the foregoing provisions
are not necessary to make the transaction exempt from Section 16(b) of the
Exchange Act pursuant to Rule 16b-3.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan or any
Award, but no amendment, alteration or discontinuance shall be made which would
impair the rights of a participant under an outstanding Award without the
participant's consent. No amendment, alteration or discontinuance shall
require stockholder approval except (a) an increase in the total number of
shares reserved for issuance pursuant to Awards under the Plan, (b) with
respect to provisions solely as they relate to Incentive Stock Options, to the
extent required for the Plan to comply with Section 422 of the Code, (c) to the
extent required by other applicable laws, regulations or rules, or (d) to the
extent the Board otherwise concludes that stockholder approval is advisable.
SECTION 13. EFFECTIVE DATE OF PLAN.
This Plan and any amendment increasing the number of shares of
stock reserved for issuance under this Plan shall become effective upon
adoption by the Board provided, however, that no Award shall be exercisable and
no restrictions imposed upon an Award shall lapse unless and until written
consent of the shareholders of the Company, or approval of shareholders of the
Company voting at a validly called shareholders' meeting, is obtained within 12
months after adoption by the Board. If such shareholder approval is not
obtained within such time, any Awards granted under this Plan or any such
amendment shall terminate and be of no force and effect from and after
expiration of such 12-month period.
SECTION 14. TERM OF PLAN.
No Award shall be granted under the Plan after 10 years from
the earlier of the adoption of the Plan by the Board or the approval of the
Plan by the shareholders of the Company, but Awards granted prior to that date
may extend beyond that date.
Plan approved by the Board of Directors on May 10, 1993.
Amendments to Plan approved by the Board of Directors on February 14, 1994.
Plan, as amended, approved by the Shareholders on May 4, 1994.
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Amendment to Plan increasing the number of shares to 1,000,000 approved by the
Board of Directors on May 20, 1994.
Amendment to Plan increasing the number of shares to 1,400,000 approved by the
Board of Directors on March 23, 1995.
Amendment to Plan increasing the number of shares to 1,400,000 approved by the
Shareholders on May 15, 1995.
Two-for-one stock split with a record date of May 31, 1995 and a distribution
date of June 21, 1995, which increased the number of shares from 1,400,000 to
2,800,000, was approved by the Board of Directors on May 15, 1995.
Amendments to Plan, including increasing the number of shares to 4,300,000,
approved by the Board of Directors on February 12, 1996.
Amendment to Plan increasing the number of shares to 4,300,000 approved by the
Shareholders on May 13, 1996.
Amendment to the Plan approved by the Board of Directors on August 12, 1996.
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EXHIBIT 10.3
TENCOR INSTRUMENTS
1993 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
1. Purpose.
The purpose of this Plan is to offer Nonemployee Directors of
Tencor Instruments an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, by purchasing shares of
the Company's Common Stock. This Plan provides for the grant of Options to
purchase Shares. Options granted hereunder shall be "Nonstatutory Options,"
and shall not include "incentive stock options" intended to qualify for
treatment under Sections 421 and 422 of the Internal Revenue Code of 1986, as
amended.
2. Definitions.
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the
Board or the committee of the Board, responsible for administering this Plan,
as provided in Section 3.
(b) "Affiliate" means a parent or subsidiary corporation as
defined in the applicable provisions (currently, Sections 424(e) and (f),
respectively) of the Code.
(c) "Board" shall mean the Board of Directors of the
Company, as constituted from time to time.
(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
(e) "Company" shall mean Tencor Instruments, a California
corporation.
(f) "Common Stock" shall mean the Common Stock of the
Company.
(g) "Disability" means permanent and total disability as
determined by the Administrator in accordance with the standards set forth in
Section 22(e)(3) of the Code.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
(i) "Expiration Date" shall mean the last day of the term
of an Option established under Section 6(c).
(j) "Fair Market Value" means as of any given date (a)
the closing price of the Common Stock on the NASDAQ National Market System as
reported in the Wall Street Journal; or (b) if the Common Stock is no longer
quoted on the NASDAQ National Market System but is listed on an established
stock exchange or quoted on any other established interdealer quotation system,
the
<PAGE> 2
closing price for the Common Stock on such exchange or system, as reported in
the Wall Street Journal.
(k) "Nonemployee Director" shall mean any person who is a
member of the Board but is not an employee of the Company or any Affiliate of
the Company and has not been an employee of the Company or any Affiliate of the
Company at any time during the preceding twelve months. Service as a director
does not in itself constitute employment for purposes of this definition.
(l) "Option" shall mean a stock option granted pursuant
to this Plan. Each Option shall be a nonstatutory option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Option Agreement" shall mean the written agreement
described in Section 6 evidencing the grant of an Option to a Nonemployee
Director and containing the terms, conditions and restrictions pertaining to
such Option.
(n) "Optionee" shall mean a Nonemployee Director who
holds an Option.
(o) "Plan" shall mean this Tencor Instruments 1993
Nonemployee Directors Stock Option Plan, as it may be amended from time to
time.
(p) "Section" unless the context clearly indicates
otherwise, shall refer to a Section of this Plan.
(q) "Shares" shall mean the shares of Common Stock
subject to an Option granted under this Plan.
(r) "Tax Date" means the date defined in Section 7(c).
(s) "Termination" means, for purposes of the Plan, with
respect to an Optionee, that the Optionee has ceased to be, for any reason, a
director of the Company.
(t) "Window Period" means any 10-day period beginning on the
third business day following the date of release for publication of the
Company's quarterly or annual summary statements of earnings or such other
period as is specified in Rule 16b-3(e) under the Exchange Act, as such rule
may be amended from time to time, or any successor to such rule.
3. Administration.
(a) Administrator. The Plan shall be administered by the
Board or, upon delegation by the Board, by a committee consisting of not less
than two directors (in either case, the "Administrator"). The Administrator
shall have no authority, discretion or power to select the Nonemployee
Directors who will
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<PAGE> 3
receive Options hereunder or to set the number of shares to be covered by each
Option granted hereunder, the exercise price of such Option, the timing of the
grant of such Option or the period within which such Option may be exercised.
In connection with the administration of the Plan, the Administrator shall have
the powers possessed by the Board. The Administrator may act only by a
majority of its members. The Administrator may delegate administrative duties
to such employees of the Company as it deems proper, so long as such delegation
is not otherwise prohibited by Rule 16b-3 under the Exchange Act. The Board at
any time may terminate the authority delegated to any committee of the Board
pursuant to this Section 3(a) and revest in the Board the administration of the
Plan.
(b) Administrator Determinations Binding. Subject to the
limitations set forth in Section 3(a), the Administrator may adopt, alter and
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Option and any Option Agreement and may otherwise supervise
the administration of the Plan. All decisions made by the Administrator under
the Plan shall be binding on all persons, including the Company and Optionees.
No member of the Administrator shall be liable for any action that he or she
has in good faith taken or failed to take with respect to this Plan or any
Option.
4. Eligibility.
Only Nonemployee Directors may receive Options under this
Plan.
5. Shares Subject to Plan.
(a) Aggregate Number. Subject to Section 9 (relating to
adjustments upon changes in Shares), the total number of shares of Common Stock
reserved and available for issuance pursuant to Options under this Plan shall
be 150,000 shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or shares reacquired in private transactions or open market
purchases, but all shares issued under the Plan regardless of source shall be
counted against the 150,000 share limitation. If any Option terminates or
expires without being exercised in full, the shares issuable under such Option
shall again be available for issuance in connection with other Options. If
shares of Common Stock issued pursuant to an Option are repurchased by the
Company, such Common Stock shall not again be available for issuance in
connection with Options. To the extent the number of shares of Common Stock
issued pursuant to an Option is reduced to satisfy withholding tax obligations,
the number of shares withheld to satisfy the withholding tax obligations shall
not be available for later grant under the Plan.
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<PAGE> 4
(b) No Rights as a Shareholder. An Optionee shall have
no rights as a shareholder with respect to any Shares covered by his or her
Option until the issuance (as evidenced by the appropriate entry on the books
of the Company or its duly authorized transfer agent) of a stock certificate
evidencing such Shares. Subject to Section 9, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions, or other rights for which the record date is prior to
the date the certificate is issued.
6. Grant of Options.
(a) Mandatory Initial Option Grants. Subject to the
terms and conditions of this Plan, if any person who is not an officer or
employee of the Company and who has not previously been a member of the Board
is elected or appointed as a member of the Board, then on the effective date of
such appointment or election the Company shall grant to such new Nonemployee
Director an Option to purchase 5,000 Shares at an exercise price equal to the
Fair Market Value of such Shares on the date of such option grant.
(b) Mandatory Annual Option Grants. Subject to the terms
and conditions of this Plan, the Company shall grant to each Nonemployee
Director who was first elected or appointed to the Board more than twelve
months prior to the date of approval of the Plan by the Board an Option to
purchase 2,500 Shares at the Board meeting at which this Plan is approved at an
exercise price equal to the Fair Market Value of such Shares on the date of
such option grant. Subject to the terms and conditions of this Plan, on the
date of the first meeting of the Board immediately following the annual meeting
of shareholders of the Company (even if held on the same day as the meeting of
shareholders) which is held more than twelve months after a Nonemployee
Director is first elected or appointed to the Board, commencing with the annual
meeting of shareholders held in 1994, the Company shall grant to each such
Nonemployee Director then in office an Option to purchase 2,500 Shares at an
exercise price equal to the Fair Market Value of such Shares on the date of
such option grant.
(c) Terms; Vesting. Subject to the other provisions of
this Plan, each Option granted pursuant to this Plan shall be for a term of ten
years. Each Option granted under Section 6(a) shall become exercisable with
respect to one third of the number of Shares covered by such Option on the
first anniversary of the date such Option was granted and one thirty-sixth of
the number of shares covered by such Option each month thereafter, so that such
Option shall be fully exercisable on the third anniversary of the date such
Option was granted. Each Option granted under Section 6(b) shall become
exercisable with respect to one thirty-sixth of the number of shares covered by
such Option each month after the date of grant, so that such Option shall be
fully
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<PAGE> 5
exercisable on the third anniversary of the date such Option was granted.
(d) Limitation on Other Grants. The Administrator shall
have no discretion to grant Options under this Plan other than as set forth in
Sections 6(a) and 6(b).
(e) Option Agreement. As soon as practicable after the
grant of an Option, the Optionee and the Company shall enter into a written
Option Agreement which specifies the date of grant, the number of Shares, the
option price, and the other terms and conditions applicable to the Option.
(f) Transferability. No Option shall be transferable
otherwise than by will or the laws of descent and distribution, and an Option
shall be exercisable during the Optionee's lifetime only by the Optionee.
(g) Limits on Exercise. Subject to the other provisions
of this Plan, an Option shall be exercisable in such amounts as are specified
in the Option Agreement.
(h) Exercise Procedures. To the extent the right to
purchase Shares has accrued, Options may be exercised, in whole or in part,
from time to time, by written notice from the Optionee to the Company stating
the number of Shares being purchased, accompanied by payment of the exercise
price for the Shares, and other applicable amounts, as provided in Section 7.
(i) Termination. In the event of Termination, Options held
at the date of Termination (and only to the extent then exercisable) may be
exercised in whole or in part at any time within three months after the date of
Termination (but in no event after the expiration date of the Option), but not
thereafter. Notwithstanding the foregoing, if Termination is due to retirement
or to death or Disability or if the Optionee dies within three months after
Termination, Options held at the date of Termination (and only to the extent
then exercisable) may be exercised in whole or in part by the Optionee in the
case of retirement or Disability, by the participant's guardian or legal
representative or by the person to whom the Option is transferred by will or
the laws of descent and distribution, at any time within 18 months from the
date of Termination (but in no event after the expiration of the Option).
7. Payment and Taxes upon Exercise of Options.
(a) Purchase Price. The purchase price of Shares issued
under this Plan shall be paid in full at the time an Option is exercised.
(b) Delivery of Purchase Price. Optionees may make all or
any portion of any payment due to the Company
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<PAGE> 6
(i) upon exercise of an Option, or
(ii) with respect to federal, state, local or
foreign tax payable in connection with the exercise of an Option,
by delivery of (x) cash, (y) check, or (z) a promissory note of the Optionee or
shares of Common Stock so long as, if applicable, such property constitutes
valid consideration for the Common Stock under, and otherwise complies with,
applicable law. No promissory note under the Plan shall have a term (including
extensions) of more than five years or shall be of a principal amount exceeding
90% of the purchase price paid by the borrower. Exercise of an Option may be
made pursuant to a "cashless exercise/sale" procedure pursuant to which funds
to pay for exercise of the Option are delivered to the Company by a broker upon
receipt of stock certificates from the Company, or pursuant to which Optionees
obtain margin loans from brokers to fund the exercise of the Option.
(c) Tax Withholding. The Optionee shall pay to the Company
in cash, promptly upon exercise of an Option or, if later, the date that the
amount of such obligations becomes determinable (in either case, the "Tax
Date"), all applicable federal, state, local and foreign withholding taxes that
the Administrator, in its discretion, determines to result upon exercise of an
Option or from a transfer or other disposition of shares of Common Stock
acquired upon exercise of an Option or otherwise related to an Option or shares
of Common Stock acquired in connection with an Option.
A person who has exercised an Option may make an election (i)
to deliver to the Company a promissory note of the Optionee on the terms set
forth in Section 7(b), (ii) to tender to the Company previously-owned shares of
Common Stock held for at least six months, or (iii) to have shares of Common
Stock to be obtained upon exercise of the Option withheld by the Company on
behalf of the Optionee, to pay the amount of tax that the Administrator, in its
discretion, determines to be required to be withheld by the Company. Any
election pursuant to clause (iii) above by a Optionee subject to Section 16 of
the Exchange Act shall be subject to the following limitations: (1) such
election must be made at least six months before the Tax Date and shall be
irrevocable; or (2) such election must be made in (or made earlier to take
effect in) any Window Period (and the withholding of the shares of Common Stock
shall take place during such Window Period) and shall be subject to approval by
the Board, which approval may be given any time after such election has been
made, and the Option must be held at least six months prior to the Tax Date;
provided, that, the election referenced in clause (2) above may not be made
unless (A) such election is consistent with Rule 16b-3(c)(2)(ii) under the
Exchange Act, and (B) the Company has been subject to the reporting
requirements of Section 13(a) of the Exchange Act for at least one year and has
filed all reports
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<PAGE> 7
and statements required to be filed pursuant to that section for that year.
The right to so withhold shares of Common Stock shall relate separately to each
Option.
Any shares tendered to or withheld by the Company will be valued at
Fair Market Value on such date. The value of the shares of Common Stock
tendered or withheld may not exceed the required federal, state, local and
foreign withholding tax obligations as computed by the Company.
8. Use of Proceeds.
Proceeds from the sale of Shares pursuant to this Plan shall
be used for general corporate purposes.
9. Adjustment of Shares.
(a) Adjustments. Subject to Section 9(d), in the event
of any merger, reorganization, consolidation, recapitalization, stock dividend,
stock split or other change in corporate structure affecting the Common Stock,
such substitution or adjustments shall be made in the aggregate number and kind
of shares of Stock reserved for issuance under the Plan and in the number, kind
and exercise price of shares subject to outstanding Options, as may be
determined to be appropriate by the Administrator, in its sole discretion;
provided, however, that the number of shares subject to any Option shall always
be a whole number.
(b) Definition of "Change in Control". For purposes of
Section 9(c), a "Change in Control" means the occurrence of any one of the
following:
(i) Any "person", as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company, an Affiliate, or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(ii) the solicitation of proxies (within the meaning
of Rule 14a-1(k) under the Exchange Act and any successor rule) with respect to
the election of any director of the Company where such solicitation is for any
candidate who is not a candidate proposed by a majority of the Board in office
prior to the time of such election; or
(iii) the dissolution or liquidation (partial or
total) of the Company or a sale of assets involving 30% or more of the assets
of the Company, or any merger or reorganization of the Company (other than a
merger effected before May 31, 1994),
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<PAGE> 8
whether or not another entity is the survivor, or other transaction pursuant to
which the holders, as a group, of all of the shares of the Company outstanding
prior to the transaction hold, as a group, less than 70% of the shares of the
Company outstanding after the transaction.
(c) Impact of Event. In the event of a "Change in Control"
as defined in Section 9(b), any Options outstanding as of the date such Change
in Control is determined to have occurred and not then exercisable and vested
shall become fully exercisable and vested.
10. No Right to Directorship.
Neither, this Plan nor any Option granted hereunder shall
confer upon any Optionee any right with respect to continuation of the
Optionee's membership on the Board or shall interfere in any way with
provisions in the Company's Articles of Incorporation and By-Laws relating to
the election, appointment, terms of office, and removal of members of the
Board.
11. Legal Requirements.
The Company shall not be obligated to offer or sell any Shares
upon exercise of any Option unless the Shares are at that time effectively
registered or exempt from registration under the federal securities laws and
the offer and sale of the Shares are otherwise in compliance with all
applicable securities laws and the regulations of any stock exchange on which
the Company's securities may then be listed. The Company shall have no
obligation to register the securities covered by this Plan under the federal
securities laws or take any other steps as may be necessary to enable the
securities covered by this Plan to be offered and sold under federal or other
securities laws. Upon exercising all or any portion of an Option, an Optionee
may be required to furnish representations or undertakings deemed appropriate
by the Company to enable the offer and sale of the Shares or subsequent
transfers of any interest in the Shares to comply with applicable securities
laws. Certificates evidencing Shares acquired upon exercise of Options shall
bear any legend required by, or useful for purposes of compliance with,
applicable securities laws, this Plan or the Option Agreements.
12. Duration and Amendments.
(a) Duration. This Plan shall become effective upon
adoption by the Board provided, however, that no Option shall be exercisable
unless and until written consent of the shareholders of the Company, or
approval of shareholders of the Company voting at a validly called
shareholders' meeting, is obtained within 12 months after adoption by the
Board. If such shareholder approval is not obtained within such time, Options
granted hereunder shall
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<PAGE> 9
terminate and be of no force and effect from and after expiration of such
12-month period.
(b) Amendment and Termination. The Board may amend,
alter or discontinue the Plan or any Option, but no amendment, alteration or
discontinuance shall be made which would impair the rights of an Optionee under
an outstanding Option without the Optionee's consent. In addition, the Board
may not amend or alter the Plan without the approval of shareholders of the
Company entitled to vote at a duly held shareholders' meeting or by an action
by written consent and, if at a meeting, a quorum of the voting power of the
Company is represented in person or by proxy, where such amendment or
alteration would, except as expressly provided in the Plan, increase the total
number of shares reserved for issuance pursuant to Options under the Plan or in
such other circumstances as the Board deems appropriate to comply with Rule
16b- 3 under the Exchange Act or otherwise. Notwithstanding any other
provision of this Section 12(b), the provisions of the Plan governing (A) who
is granted Options, (B) the number of Shares to be covered by each Option, (C)
the exercise price of each Option, (D) the timing of the grant of each Option,
or (E) the period within which each Option may be exercised, shall not be
amended more than once every six months, other than to comport with changes in
the Code or the rules thereunder or the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
(c) Effect of Amendment or Termination. No Shares shall
be issued or sold under this Plan after the termination hereof, except upon
exercise of an Option granted before termination. Termination or amendment of
this Plan shall not affect any Shares previously issued and sold or any Option
previously granted under this Plan.
13. Rule 16b-3.
With respect to persons subject to Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with the applicable
conditions of Rule 16b-3 under the Exchange Act. To the extent any provision
of this Plan or action by the Administrator fails to so comply, it shall be
adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed
advisable by the Administrator. It shall be the responsibility of persons
subject to Section 16 of the Exchange Act, not of the Company or the
Administrator, to comply with the requirements of Section 16 of the Exchange
Act; and neither the Company nor the Administrator shall be liable if this Plan
or any transaction under this Plan fails to comply with the applicable
conditions of Rule 16b-3, or if any such person incurs any liability under
Section 16 of the Exchange Act.
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<PAGE> 10
Adopted by the Board of Directors: May 10, 1993
Amendment approved by the Board of Directors: February 14, 1994
Plan, as amended, approved by the shareholders: May 4, 1994
Two-for-one stock split with a record date of May 31, 1995 and a distribution
date of June 21, 1995, which increased the number of shares from 50,000 to
100,000, was approved by the Board of Directors on May 15, 1995.
Amendment to Plan increasing the number of shares to 150,000 approved by the
Board of Directors on February 12, 1996.
Amendment to Plan increasing the number of shares to 150,000 approved by the
Shareholders on May 13, 1996.
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<PAGE> 1
EXHIBIT 10.4
U.S. Plan
TENCOR INSTRUMENTS
1993 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
This Tencor Instruments 1993 Employee Stock Purchase Plan is
designed to encourage and assist employees of Tencor Instruments and
participating subsidiaries to acquire an equity interest in the Company through
the purchase of shares of Tencor common stock.
2. Definitions
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the
Board or the committee of the Board, responsible for administering this Plan,
as provided in Section 3.
(b) "Board" shall mean the Board of Directors of the
Company, as constituted from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
(d) "Company" shall mean Tencor and Participating
Subsidiaries.
(e) "Common Stock" shall mean the Common Stock of Tencor.
(f) "Employee" shall mean any individual who is an
employee of the Company or a Participating Subsidiary within the meaning of
Section 3401(c) of the Code and the Treasury Regulations thereunder.
(g) "Enrollment Date" shall have the meaning set forth in
Section 6.
(h) "Fair market value" means as of any given date: (i)
the closing price of the Common Stock on the NASDAQ National Market System as
reported in the Wall Street Journal; or (ii) if the Common Stock is no longer
quoted on the NASDAQ National Market System but is listed on an established
stock exchange or quoted on any other established interdealer quotation system,
the closing price for the Common Stock on such exchange or system, as reported
in the Wall Street Journal; or (iii) in the absence of an established market
for the Common Stock, the fair market value of the Common Stock as determined
by the Administrator in good faith.
<PAGE> 2
U.S. Plan
(i) "Participating Subsidiary" shall mean a Subsidiary
which has been designated by the Administrator as covered by the Plan.
(j) "Plan" shall mean this Tencor Instruments 1993
Employee Stock Purchase Plan, as it may be amended from time to time.
(k) "Purchase Date" shall have the meaning set forth in
Section 9(a).
(l) "Section" unless the context clearly indicates
otherwise, shall refer to a Section of this Plan.
(m) "Subsidiary" shall mean a "subsidiary corporation" of
the Company, whether now or hereafter existing, within the meaning of Section
424(f) of the Code, but only for so long as it is a "subsidiary corporation."
(n) "Tencor" shall mean Tencor Instruments, a California
corporation.
(o) "Trading Day" means any day on which regular trading
occurs on any established stock exchange or market system on which the Common
Stock is traded.
3. Administration
(a) Administrator. The Plan shall be administered by the
Board or, upon delegation by the Board, by a committee consisting of not fewer
than two directors (in either case, the "Administrator"). In connection with
the administration of the Plan, the Administrator shall have the powers
possessed by the Board. The Administrator may act only by a majority of its
members. The Administrator may delegate administrative duties to such
employees of the Company as it deems proper, so long as such delegation is not
otherwise prohibited by Rule 16b-3 under the Securities Exchange Act of 1934,
as amended. The Board at any time may terminate the authority delegated to any
committee of the Board pursuant to this Section 3(a) and revest in the Board
the administration of the Plan.
(b) Administrator Determinations Binding. The
Administrator may adopt, alter and repeal administrative rules, guidelines and
practices governing the Plan and the options granted under it as it from time
to time shall deem advisable, may interpret the terms and provisions of the
Plan and the Options granted under it, may correct any defect, omission or
inconsistency in the Plan or in any Option; and may otherwise supervise the
administration of the Plan and the Options granted under it. The Administrator
may establish, under guidelines from
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<PAGE> 3
U.S. Plan
the Board, limits on the number of shares which may be purchased by each
participant on an annual or other periodic basis or on the number of shares
which may be purchased on any Purchase Date. All decisions made by the
Administrator under the Plan shall be binding on all persons, including the
Company and all participants in the Plan. No member of the Administrator shall
be liable for any action that he or she has in good faith taken or failed to
take with respect to this Plan.
4. Number of Shares
(a) The Company has reserved for sale under the Plan
1,100,000 shares of Common Stock less any shares sold under the Tencor 1993
Foreign Subsidiary Employee Stock Purchase Plan. Shares sold under the Plan
may be newly issued shares or shares reacquired in private transactions or open
market purchases, but all shares sold under the Plan, regardless of source,
shall be counted against the 1,100,000 share limitation.
(b) In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares,
merger, consolidation, offering of rights, or other similar change in the
capital structure of the Company, the Board may make such adjustment, if any,
as it deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
5. Eligibility Requirements
(a) Each Employee of the Company, except those described
in the next paragraph, shall become eligible to participate in the Plan in
accordance with Section 6 on the first Enrollment Date on or following
commencement of his or her employment by the Company or following such period
of employment as is designated by the Board from time to time. Participation
in the Plan is entirely voluntary.
(b) The following Employees are not eligible to
participate in the Plan:
(i) Employees who would, immediately upon
enrollment in the Plan, own directly or indirectly, or hold options or rights
to acquire stock possessing, five percent (5%) or more of the total combined
voting power or value of all classes of stock of Tencor or any subsidiary of
Tencor; and
(ii) Employees who are customarily employed by the
Company fewer than 20 hours per week or fewer than five months in any calendar
year.
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<PAGE> 4
U.S. Plan
6. Enrollment
Any eligible employee may enroll or re-enroll in the Plan each
year as of the close of the first trading day of: (a) the May, August,
November or February immediately following the adoption of the Plan by the
Board of Directors of the Company; (b) the third month following each such
month; and (c) each yearly anniversary of such months or such other days as may
be established by the Board from time to time (the "Enrollment Dates"). In
order to enroll, an eligible employee must complete, sign, and submit to the
Company an enrollment form. Any enrollment form received by the Company by the
15th day of the month preceding an Enrollment Date (or by the Enrollment Date
in the case of employees hired after such 15th day or in the case of the first
Enrollment Date), or such other date established by the Administrator from time
to time, will be effective on that Enrollment Date. In addition, the
Administrator may re-enroll existing participants in the Plan on any Enrollment
Date on which the fair market value of the Common Stock is lower than the fair
market value on such participant's existing Enrollment Date.
7. Grant of Option Enrollment
(a) Enrollment or re-enrollment by a participant in the
Plan on an Enrollment Date will constitute the grant by the Company to the
participant of an option to purchase shares of Common Stock from the Company
under the Plan. Any participant whose option expires and who has not withdrawn
from the Plan will automatically be re-enrolled in the Plan and granted a new
option on the Enrollment Date immediately following the date on which the
option expires.
(b) Except as provided in Section 10, each option granted
under the Plan shall have the following terms:
(i) the option will have a term of not more than
12 months or such shorter option period as may be established by the Board from
time to time (the "Option Period"). Notwithstanding the foregoing, however,
whether or not all shares have been purchased thereunder, the option will
expire on the earlier to occur of: (A) the completion of the purchase of
shares on the last Purchase Date occurring within 12 months after the
Enrollment Date for such option, or such shorter option period as may be
established by the Board before an Enrollment Date for all options to be
granted on such date; or (B) the date on which the employee's participation in
the Plan terminates for any reason;
(ii) payment for shares purchased under the option
will be made only through payroll withholding in accordance with Section 8;
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<PAGE> 5
U.S. Plan
(iii) purchase of shares upon exercise of the
option will be effected only on the Purchase Dates established in accordance
with Section 9;
(iv) the option, if not altered, amended or
revoked by the Company prior to the relevant Purchase Date, may be accepted
only by (x) there having been withheld from the compensation of the employee in
accordance with the terms of the Plan amounts sufficient to purchase the Common
Stock intended to be purchased under the option, and (y) the employee being
employed by the Company and not having withdrawn from the Plan on the relevant
Purchase Date.
(v) the price per share under the option will be
determined as provided in Section 9;
(vi) the number of shares available for purchase
under an option for each one percent (1%) of compensation designated by an
employee in accordance with Section 8 will, unless otherwise established by the
Board before an Enrollment Date for all options to be granted on such date, be
determined by dividing $25,000 by the fair market value of a share of Common
Stock on the Enrollment Date, dividing the result by the maximum number of
percentage points that an employee may designate under Section 8 at the time
such option is granted, and multiplying the result by the number of calendar
years included in whole or in part in the period from grant to expiration of
the option;
(vii) the option (taken together with all other
options then outstanding under this and all other similar stock purchase or
stock option plans of Tencor and any subsidiary of Tencor, collectively
"Options") will in no event give the participant the right to purchase shares
at a rate per calendar year which accrues in excess of $25,000 of fair market
value of such shares, less the fair market value of any shares accrued and
already purchased during such year under Options which have expired or
terminated, determined at the applicable Enrollment Dates; and
(viii) the option will in all respects be subject to
the terms and conditions of the Plan, as interpreted by the Administrator from
time to time.
8. Payroll and Tax Withholding; Use by Company
(a) Each participant shall elect to have amounts withheld
from his or her compensation paid by the Company during the Option Period, at a
rate equal to any whole percentage up to a maximum of ten percent (10%), or
such lesser percentage as the Board may establish from time to time before an
Enrollment Date.
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<PAGE> 6
U.S. Plan
Compensation includes regular salary payments, annual and quarterly performance
bonuses, hire-on bonuses, cash recognition awards, commissions, overtime pay,
shift premiums, and elective contributions by the participant to qualified
employee benefit plans, but excludes all other payments including, without
limitation, long-term disability or workers compensation payments, car
allowances, employee referral bonuses, relocation payments, expense
reimbursements (including but not limited to travel, entertainment, and moving
expenses), salary gross-up payments, and non-cash recognition awards. The
participant shall designate a rate of withholding in his or her enrollment form
and may elect to increase or decrease the rate of contribution effective as of
any Enrollment Date, by delivery to the Company, not later than 15 days before
such Enrollment Date, of a written notice indicating the revised withholding
rate; provided, however, that an employee who makes an election not to withdraw
under Section 10 may not change his or her rate of contribution prior to the
Purchase Date for which such election was made.
(b) Payroll withholdings shall be credited to an account
maintained for purposes of the Plan on behalf of each participant, as soon as
administratively feasible after the withholding occurs. The Company shall be
entitled to use the withholdings for any corporate purpose, shall have no
obligation to pay interest on withholdings to any participant, and shall not be
obligated to segregate withholdings.
(c) Upon disposition of shares acquired by exercise of an
option, the participant shall pay, or make provision adequate to the Company
for payment of, all federal, state, and other tax (and similar) withholdings
that the Company determines, in its discretion, are required due to the
disposition, including any such withholding that the Company determines in its
discretion is necessary to allow the Company to claim tax deductions or other
benefits in connection with the disposition. A participant shall make such
similar provisions for payment that the Company determines, in its discretion,
are required due to the exercise of an option, including such provisions as are
necessary to allow the Company to claim tax deductions or other benefits in
connection with the exercise of the option.
9. Purchase of Shares
(a) On the last Trading Day of each month immediately
preceding a month containing an Enrollment Date (other than the first
Enrollment Date), or on such other days as may be established by the Board from
time to time, prior to an Enrollment Date for all options to be granted on an
Enrollment Date (each a "Purchase Date"), the Company shall apply the funds
then credited to each participant's payroll withholdings account to the
purchase of whole shares of Common Stock. The cost to the
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<PAGE> 7
U.S. Plan
participant for the shares purchased under any option shall be not less than
eighty-five percent (85%) of the lower of:
(i) the fair market value of the Common Stock on
the Enrollment Date for such option; or
(ii) the fair market value of the Common Stock on
the date such option is exercised.
(b) Any funds in an amount less than the cost of one
share of Common Stock left in a participant's payroll withholdings account on a
Purchase Date shall be carried forward in such account for application on the
next Purchase Date.
(c) If at any Purchase Date, the shares available under
the Plan are less than the number all participants would otherwise be entitled
to purchase on such date, purchases shall be reduced proportionately to
eliminate the deficit. If, at any Purchase Date, the shares which may be
purchased by a participant are restricted on account of a limit on the
aggregate shares which may be purchased per employee, purchases under each
option shall be reduced proportionately. Any funds that cannot be applied to
the purchase of shares due to such reductions shall be refunded to participants
as soon as administratively feasible.
(d) Notwithstanding the terms of Section 9(a), no funds
credited to any employee's payroll withholdings account shall be used to
purchase Common Stock on any date prior to the date that the Plan has been
approved by the shareholders of the Company, as noted in Section 21. If such
approval is not forthcoming within one year from the date that the Plan was
approved by the Board of Directors, all amounts withheld shall be distributed
to the participants as soon as administratively feasible.
10. Withdrawal from the Plan
A participant may withdraw from the Plan in full (but not in
part) at any time, effective after written notice thereof is received by the
Company; provided, however, that if on or before any Enrollment Date an
employee elects, in the manner designated by the Administrator, not to withdraw
prior to the Purchase Date which occurs six months after such Enrollment Date,
such election will be binding on the electing employee. Unless the
Administrator elects to permit a withdrawing participant to invest funds
credited to his or her withholding account on the Purchase Date immediately
following notice of withdrawal, all funds credited to a participant's payroll
withholdings account shall be distributed to him or her without interest within
60 days after notice of withdrawal is received by the Company. Any eligible
employee who has withdrawn from the Plan may enroll in
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<PAGE> 8
U.S. Plan
the Plan again on any subsequent Enrollment Date in accordance with the
provisions of Section 6.
11. Termination of Employment
Participation in the Plan terminates immediately when a
participant ceases to be employed by the Company for any reason whatsoever
(including death or disability) or otherwise becomes ineligible to participate
in the Plan. As soon as administratively feasible after termination, the
Company shall pay to the participant or his or her beneficiary or legal
representative, all amounts credited to the participant's payroll withholdings
account; provided, however, that if a participant ceases to be employed by the
Company because of the commencement of employment with a Subsidiary of the
Company that is not a Participating Subsidiary, funds then credited to such
participant's payroll withholdings account shall be applied to the purchase of
whole shares of Common Stock at the next Purchase Date and any funds remaining
after such purchase shall be paid to the participant.
12. Designation of Beneficiary
(a) Each participant may designate one or more
beneficiaries in the event of death and may, in his or her sole discretion,
change such designation at any time. Any such designation shall be effective
upon receipt in written form by the Company and shall control over any
disposition by will or otherwise.
(b) As soon as administratively feasible after the death
of a participant, amounts credited to his or her account shall be paid in cash
to the designated beneficiaries or, in the absence of a designation, to the
executor, administrator, or other legal representative of the participant's
estate. Such payment shall relieve the Company of further liability with
respect to the Plan on account of the deceased participant. If more than one
beneficiary is designated, each beneficiary shall receive an equal portion of
the account unless the participant has given express contrary written
instructions.
13. Assignment
(a) The rights of a participant under the Plan shall not
be assignable by such participant, by operation of law or otherwise. No
participant may create a lien on any funds, securities, rights, or other
property held by the Company for the account of the participant under the Plan,
except to the extent that there has been a designation of beneficiaries in
accordance with the Plan, and except to the extent permitted by the laws of
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<PAGE> 9
U.S. Plan
descent and distribution if beneficiaries have not been designated.
(b) A participant's right to purchase shares under the
Plan shall be exercisable only during the participant's lifetime and only by
him or her, except that a participant may direct the Company in the enrollment
form to issue share certificates to the participant and his or her spouse in
community property, to the participant jointly with one or more other persons
with right of survivorship, or to certain forms of trusts approved by the
Administrator.
14. Administrative Assistance
If the Administrator in its discretion so elects, it may
retain a brokerage firm, bank, or other financial institution to assist in the
purchase of shares, delivery of reports, or other administrative aspects of the
Plan. If the Administrator so elects, each participant shall (unless
prohibited by the laws of the nation of his or her employment or residence) be
deemed upon enrollment in the Plan to have authorized the establishment of an
account on his or her behalf at such institution. Shares purchased by a
participant under the Plan shall be held in the account in the name in which
the share certificate would otherwise be issued pursuant to Section 13(b).
15. Costs
All costs and expenses incurred in administering the Plan
shall be paid by the Company, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant by the Company. Any brokerage fees for the purchase of shares by a
participant shall be paid by the Company, but brokerage fees for the resale of
shares by a participant shall be borne by the participant.
16. Equal Rights and Privileges
All eligible employees shall have equal rights and privileges
with respect to the Plan so that the Plan qualifies as an "employee stock
purchase plan" within the meaning of Section 423 of the Code and the related
Treasury Regulations. Any provision of the Plan which is inconsistent with
Section 423 of the Code shall without further act or amendment by the Company
or the Board be reformed to comply with the requirements of Section 423. This
Section 16 shall take precedence over all other provisions of the Plan.
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<PAGE> 10
U.S. Plan
17. Applicable Law
The Plan shall be governed by the substantive laws (excluding
the conflict of laws rules) of the State of California.
18. Modification and Termination
(a) The Board may amend, alter, or terminate the Plan at
any time, including amendments to outstanding options. No amendment shall be
effective unless within 12 months after it is adopted by the Board, it is
approved by the holders of a majority of the votes cast at a duly held
shareholders' meeting at which a quorum of the voting power of the Company is
represented in person or by proxy, if such amendment would:
(i) increase the number of shares reserved for
purchase under the Plan; or
(ii) require shareholder approval in order to
comply with SEC Rule 16b-3.
(b) In the event the Plan is terminated, the Board may
elect to terminate all outstanding options either immediately or upon
completion of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior
to expiration, all funds contributed to the Plan that have not been used to
purchase shares shall be returned to the participants as soon as
administratively feasible.
(c) In the event of the sale of all or substantially all
of the assets of Tencor or the Company, or the merger of Tencor or the Company
with or into another corporation, or the dissolution or liquidation of Tencor,
a Purchase Date shall occur on the trading day immediately preceding the date
of such event, unless otherwise provided by the Board in its sole discretion,
including provision for the assumption or substitution of each option under the
Plan by the successor or surviving corporation, or a parent or subsidiary
thereof.
19. Rights as an Employee
Nothing in the Plan shall be construed to give any person the
right to remain in the employ of the Company or to affect the Company's right
to terminate the employment of any person at any time with or without cause.
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<PAGE> 11
U.S. Plan
20. Rights as a Shareholder; Delivery of Certificates
Unless otherwise determined by the Board, certificates
evidencing shares purchased on any Purchase Date shall be delivered to a
participant only if he or she makes a written request to the Administrator.
Participants shall be treated as the owners of their shares effective as of the
Purchase Date.
21. Board and Shareholder Approval
The Plan was approved by the Board of Directors on May 10,
1993, and by the holders of a majority of the votes cast at a duly held
shareholders' meeting on May 4, 1994, at which a quorum of the voting power of
the Company was represented in person or by proxy. The Plan was amended by the
Board of Directors on March 23, 1995 to increase to 300,000 the number of
shares reserved for sale under the Plan and the Company's 1993 Foreign
Subsidiary Employee Stock Purchase Plan. Such amendment was approved by the
holders of a majority of the votes cast at a duly held shareholders' meeting on
May 15, 1995, at which a quorum of the voting power of Tencor was represented
in person or by proxy. A two-for-one stock split with a record date of May 31,
1995, which increased the number of shares from 300,000 to 600,000, was
approved by the Board of Directors on May 15, 1995. The Plan was amended by
the Board of Directors on February 12, 1996 to increase to 1,100,000 the number
of shares reserved for sale under the Plan and the Company's 1993 Foreign
Subsidiary Employee Stock Purchase Plan. Such amendment was approved by the
holders of a majority of the votes cast at a duly held shareholders' meeting on
May 13, 1996, at which a quorum of the voting power of Tencor was represented
in person or by proxy.
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<PAGE> 1
EXHIBIT 10.5
International Plan
TENCOR INSTRUMENTS
1993 FOREIGN SUBSIDIARY EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
This Tencor Instruments 1993 Foreign Subsidiary Employee Stock
Purchase Plan is designed to encourage and assist employees of participating
subsidiaries of Tencor to acquire an equity interest in the Company through the
purchase of shares of Tencor common stock.
2. Definitions
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the
Board or the committee of the Board, responsible for administering this Plan,
as provided in Section 3.
(b) "Board" shall mean the Board of Directors of Tencor,
as constituted from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
(d) "Company" shall mean all Participating Subsidiaries
collectively.
(e) "Common Stock" shall mean the Common Stock of Tencor.
(f) "Employee" shall mean any individual who is an
employee of the Company or a Participating Subsidiary under the standards of
Section 3401(c) of the Code and the Treasury Regulations thereunder.
(g) "Enrollment Date" shall have the meaning set forth in
Section 6.
(h) "Fair market value" means as of any given date: (i)
the closing price of the Common Stock on the NASDAQ National Market System as
reported in the Wall Street Journal; or (ii) if the Common Stock is no longer
quoted on the NASDAQ National Market System but is listed on an established
stock exchange or quoted on any other established interdealer quotation system,
the closing price for the Common Stock on such exchange or system, as reported
in the Wall Street Journal; or (iii) in the absence of an established market
for the Common Stock, the fair market value of the Common Stock as determined
by the Administrator in good faith.
<PAGE> 2
International Plan
(i) "Participating Subsidiary" shall mean a Subsidiary
which has been designated by the Administrator as covered by the Plan;
provided, however, that no Subsidiary participating in the Company's 1993
Employee Stock Purchase Plan may be designated for participation in the Plan.
(j) "Plan" shall mean this Tencor Instruments 1993
Foreign Subsidiary Employee Stock Purchase Plan, as it may be amended from time
to time.
(k) "Purchase Date" shall have the meaning set forth in
Section 9(a).
(l) "Section" unless the context clearly indicates
otherwise, shall refer to a Section of this Plan.
(m) "Subsidiary" shall mean a "subsidiary corporation" of
the Company, whether now or hereafter existing, within the meaning of Section
424(f) of the Code, but only for so long as it is a "subsidiary corporation."
(n) "Tencor" shall mean Tencor Instruments, a California
corporation.
(o) "Trading Day" means any day on which regular trading
occurs on any established stock exchange or market system on which the Common
Stock is traded.
3. Administration
(a) Administrator. The Plan shall be administered by the
Board or, upon delegation by the Board, by a committee consisting of not fewer
than two directors (in either case, the "Administrator"). In connection with
the administration of the Plan, the Administrator shall have the powers
possessed by the Board. The Administrator may act only by a majority of its
members. The Administrator may delegate administrative duties to such
employees of the Company as it deems proper, so long as such delegation is not
otherwise prohibited by Rule 16b-3 under the Securities Exchange Act of 1934,
as amended. The Board at any time may terminate the authority delegated to any
committee of the Board pursuant to this Section 3(a) and revest in the Board
the administration of the Plan.
(b) Administrator Determinations Binding. The
Administrator may adopt, alter and repeal administrative rules, guidelines and
practices governing the Plan and the options granted under it as it from time
to time shall deem advisable, may interpret the terms and provisions of the
Plan and the Options granted under it, may correct any defect, omission or
inconsistency in the Plan or in any Option; and may otherwise
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<PAGE> 3
International Plan
supervise the administration of the Plan and the Options granted under it. The
Administrator may establish, under guidelines from the Board, limits on the
number of shares which may be purchased by each participant on an annual or
other periodic basis or on the number of shares which may be purchased on any
Purchase Date. All decisions made by the Administrator under the Plan shall be
binding on all persons, including the Company and all participants in the Plan.
No member of the Administrator shall be liable for any action that he or she
has in good faith taken or failed to take with respect to this Plan.
4. Number of Shares
(a) Tencor has reserved for sale under the Plan 1,100,000
shares of Common Stock less any shares sold under the Tencor 1993 Employee
Stock Purchase Plan. Shares sold under the Plan may be newly issued shares or
shares reacquired in private transactions or open market purchases, but all
shares sold under the Plan, regardless of source, shall be counted against the
1,100,000 share limitation.
(b) In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares,
merger, consolidation, offering of rights, or other similar change in the
capital structure of Tencor, the Board may make such adjustment, if any, as it
deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
5. Eligibility Requirements
(a) Each Employee of the Company, except those described
in the next paragraph, shall become eligible to participate in the Plan in
accordance with Section 6 on the first Enrollment Date on or following
commencement of his or her employment by the Company or following such period
of employment as is designated by the Board from time to time. Participation
in the Plan is entirely voluntary.
(b) The following Employees are not eligible to
participate in the Plan:
(i) Employees who would, immediately upon
enrollment in the Plan, own directly or indirectly, or hold options or rights
to acquire stock possessing, five percent (5%) or more of the total combined
voting power or value of all classes of stock of Tencor or any subsidiary of
Tencor; and
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<PAGE> 4
International Plan
(ii) Employees who are customarily employed by the
Company fewer than 20 hours per week or fewer than five months in any calendar
year; and
(iii) Employees who are prohibited by the laws of
the nation of their residence or employment from participating in the Plan.
6. Enrollment
Any eligible Employee may enroll or re-enroll in the Plan each
year as of the close of the first trading day of: (a) the May, August,
November or February immediately following the adoption of the Plan by the
Board of Directors of Tencor; (b) the third month following each such month;
and (c) each yearly anniversary of such months or such other days as may be
established by the Board from time to time (the "Enrollment Dates"). In
addition, for purposes of participation in the Plan by an eligible Employee
following termination of such employee's participation in the Company's 1993
Employee Stock Purchase Plan (the "U.S. Plan"), a deemed Enrollment Date may be
designated corresponding to the Employee's most recent Enrollment Date under
the U.S. Plan. In order to enroll, an eligible Employee must complete, sign,
and submit to Tencor or the Employee's Participating Subsidiary an enrollment
form. Any enrollment form received by Tencor or the Employee's Participating
Subsidiary by the 15th day of the month preceding an Enrollment Date (or by the
Enrollment Date in the case of Employees hired after such 15th day or in the
case of the first Enrollment Date), or such other date established by the
Administrator from time to time, will be effective on that Enrollment Date. In
addition, the Administrator may re-enroll existing participants in the Plan on
any Enrollment Date on which the fair market value of the Common Stock is lower
than the fair market value on such participant's existing Enrollment Date.
7. Grant of Option Enrollment
(a) Enrollment or re-enrollment by a participant in the
Plan on an Enrollment Date will constitute the grant by the Company to the
participant of an option to purchase shares of Common Stock under the Plan.
Any participant whose option expires and who has not withdrawn from the Plan
will automatically be re-enrolled in the Plan and granted a new option on the
Enrollment Date immediately following the date on which the option expires.
(b) Except as provided in Section 10 or as determined by
the Administrator, each option granted under the Plan shall have the following
terms:
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<PAGE> 5
International Plan
(i) the option will have a term of not more than
12 months or such shorter option period as may be established by the Board from
time to time (the "Option Period"). Notwithstanding the foregoing, however,
whether or not all shares have been purchased thereunder, the option will
expire on the earlier to occur of: (A) the completion of the purchase of
shares on the last Purchase Date occurring within 12 months after the
Enrollment Date for such option, or such shorter option period as may be
established by the Board before an Enrollment Date for all options to be
granted on such date; or (B) the date on which the employee's participation in
the Plan terminates for any reason;
(ii) payment for shares purchased under the option
will be made only through payroll withholding in accordance with Section 8;
(iii) purchase of shares upon exercise of the
option will be effected only on the Purchase Dates established in accordance
with Section 9;
(iv) the option, if not altered, amended or
revoked prior to the relevant Purchase Date, may be accepted only by (x) there
having been withheld from the compensation of the Employee in accordance with
the terms of the Plan amounts sufficient to purchase the Common Stock intended
to be purchased under the option, and (y) the employee being employed by the
Company and not having withdrawn from the Plan on the relevant Purchase Date.
(v) the price per share under the option will be
determined as provided in Section 9;
(vi) the number of shares available for purchase
under an option for each one percent (1%) of compensation designated by an
Employee in accordance with Section 8 will, unless otherwise established by the
Board before an Enrollment Date for all options to be granted on such date, be
determined by dividing $25,000 by the fair market value of a share of Common
Stock on the Enrollment Date, dividing the result by the maximum number of
percentage points that an Employee may designate under Section 8 at the time
such option is granted, and multiplying the result by the number of calendar
years included in whole or in part in the period from grant to expiration of
the option;
(vii) the option (taken together with all other
options then outstanding under this and all other similar stock purchase or
stock option plans of Tencor and any Subsidiary, collectively "Options") will
in no event give the participant the right to purchase shares at a rate per
calendar year which
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<PAGE> 6
International Plan
accrues in excess of $25,000 of fair market value of such shares, less the fair
market value of any shares accrued and already purchased during such year under
Options which have expired or terminated, determined at the applicable
Enrollment Dates; and
(viii) the option will in all respects be subject to
the terms and conditions of the Plan, as interpreted by the Administrator from
time to time.
8. Payroll and Tax Withholding; Use by Company
(a) Each participant shall elect to have amounts withheld
from his or her compensation paid by the Company during the Option Period, at a
rate equal to any whole percentage up to a maximum of ten percent (10%), or
such lesser percentage as the Board may establish from time to time before an
Enrollment Date. Compensation includes regular salary payments, annual and
quarterly performance bonuses, hire-on bonuses, cash recognition awards,
commissions, overtime pay, shift premiums, and elective contributions by the
participant to qualified employee benefit plans, but excludes all other
payments including, without limitation, long-term disability or workers
compensation payments, car allowances, employee referral bonuses, relocation
payments, expense reimbursements (including but not limited to travel,
entertainment, and moving expenses), salary gross-up payments, and non-cash
recognition awards. The participant shall designate a rate of withholding in
his or her enrollment form and may elect to increase or decrease the rate of
contribution effective as of any Enrollment Date, by delivery to the Company,
not later than 15 days before such Enrollment Date, of a written notice
indicating the revised withholding rate; provided, however, that an Employee
who makes an election not to withdraw under Section 10 may not change his or
her rate of contribution prior to the Purchase Date for which such election was
made.
(b) Payroll withholdings shall be credited to an account
maintained for purposes of the Plan in local currency on behalf of each
participant, as soon as administratively feasible after the withholding occurs.
The Company shall be entitled to use the withholdings for any corporate
purpose, shall have no obligation to pay interest on withholdings to any
participant, and shall not be obligated to segregate withholdings.
(c) Upon acquisition or disposition of shares acquired by
exercise of an option, the participant shall pay, or make provision adequate to
the Company for payment of, all federal, state, and other tax (and similar)
withholdings that the Company determines, in its discretion, are required due
to the disposition, including any such withholding that the Company determines
in its discretion is necessary to allow the Company to claim tax deductions or
other benefits in connection with the
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<PAGE> 7
International Plan
disposition. A participant shall make such similar provisions for payment that
the Company determines, in its discretion, are required due to the exercise of
an option, including such provisions as are necessary to allow the Company to
claim tax deductions or other benefits in connection with the exercise of the
option.
9. Purchase of Shares
(a) On the last Trading Day of each month immediately
preceding a month containing an Enrollment Date (other than the first
Enrollment Date), or on such other days as may be established by the Board from
time to time, prior to an Enrollment Date for all options to be granted on an
Enrollment Date (each a "Purchase Date"), the Company shall convert each
participant's account balance, including amounts carried forward, to U.S.
Dollars, determined as of the Purchase Date, and shall apply the funds then
credited to each participant's payroll withholdings account to the purchase of
whole shares of Common Stock. The cost to the participant for the shares
purchased under any option shall be not less than eighty-five percent (85%) of
the lower of:
(i) the fair market value of the Common Stock on
the Enrollment Date for such option; or
(ii) the fair market value of the Common Stock on
the date such option is exercised.
(b) Any funds in an amount less than the cost of one
share of Common Stock left in a participant's payroll withholdings account on a
Purchase Date shall be carried forward in such account for application on the
next Purchase Date.
(c) If at any Purchase Date, the shares available under
the Plan are fewer than the number all participants would otherwise be entitled
to purchase on such date, purchases shall be reduced proportionately to
eliminate the deficit. If, at any Purchase Date, the shares which may be
purchased by a participant are restricted on account of a limit on the
aggregate shares which may be purchased per employee, purchases under each
option shall be reduced proportionately. Any funds that cannot be applied to
the purchase of shares due to such reductions shall be refunded to participants
as soon as administratively feasible.
(d) Notwithstanding the terms of Section 9(a), no funds
credited to any employee's payroll withholdings account shall be used to
purchase Common Stock on any date prior to the date that the Plan has been
approved by the shareholders of the Company, as noted in Section 21. If such
approval is not forthcoming within one year from the date that the Plan was
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<PAGE> 8
International Plan
approved by the Board of Directors, all amounts withheld shall be distributed
to the participants as soon as administratively feasible.
10. Withdrawal from the Plan
A participant may withdraw from the Plan in full (but not in
part) at any time, effective after written notice thereof is received by the
Company; provided, however, that if on or before any Enrollment Date an
Employee elects, in the manner designated by the Administrator, not to withdraw
prior to the Purchase Date which occurs six months after such Enrollment Date,
such election will be binding on the electing Employee. Unless the
Administrator elects to permit a withdrawing participant to invest funds
credited to his or her withholding account on the Purchase Date immediately
following notice of withdrawal, all funds credited to a participant's payroll
withholdings account shall be distributed to him or her without interest within
60 days after notice of withdrawal is received by the Company. Any eligible
employee who has withdrawn from the Plan may enroll in the Plan again on any
subsequent Enrollment Date in accordance with the provisions of Section 6.
11. Termination of Employment
Participation in the Plan terminates immediately when a
participant ceases to be employed by the Company for any reason whatsoever
(including death or disability) or otherwise becomes ineligible to participate
in the Plan. As soon as administratively feasible after termination, the
Company shall pay to the participant or his or her beneficiary or legal
representative, all amounts credited to the participant's payroll withholdings
account; provided, however, that if a participant ceases to be employed by the
Company because of the commencement of employment with a Subsidiary that is not
a Participating Subsidiary, funds then credited to such participant's payroll
withholdings account shall be applied to the purchase of whole shares of Common
Stock at the next Purchase Date and any funds remaining after such purchase
shall be paid to the participant.
12. Designation of Beneficiary
(a) Each participant may designate one or more
beneficiaries in the event of death and may, in his or her sole discretion,
change such designation at any time. Any such designation shall be effective
upon receipt in written form by Tencor or the Company and shall control over
any disposition by will or otherwise.
(b) As soon as administratively feasible after the death
of a participant, amounts credited to his or her account
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<PAGE> 9
International Plan
shall be paid in cash to the designated beneficiaries or, in the absence of a
designation, to the executor, administrator, or other legal representative of
the participant's estate. Such payment shall relieve Tencor and the Company of
further liability with respect to the Plan on account of the deceased
participant. If more than one beneficiary is designated, each beneficiary
shall receive an equal portion of the account unless the participant has given
express contrary written instructions.
13. Assignment
(a) The rights of a participant under the Plan shall not
be assignable by such participant, by operation of law or otherwise. No
participant may create a lien on any funds, securities, rights, or other
property held by the Company for the account of the participant under the Plan,
except to the extent that there has been a designation of beneficiaries in
accordance with the Plan, and except to the extent permitted by the laws of
descent and distribution if beneficiaries have not been designated.
(b) A participant's right to purchase shares under the
Plan shall be exercisable only during the participant's lifetime and only by
him or her, except that a participant may direct Tencor in the enrollment form
to issue share certificates to the participant and his or her spouse in
community property, to the participant jointly with one or more other persons
with right of survivorship, or to certain forms of trusts approved by the
Administrator.
14. Administrative Assistance
If the Administrator in its discretion so elects, it may
retain a brokerage firm, bank, or other financial institution to assist in the
purchase of shares, delivery of reports, or other administrative aspects of the
Plan. If the Administrator so elects, each participant shall (unless
prohibited by the laws of the nation of his or her employment or residence) be
deemed upon enrollment in the Plan to have authorized the establishment of an
account on his or her behalf at such institution. Shares purchased by a
participant under the Plan shall be held in the account in the name in which
the share certificate would otherwise be issued pursuant to Section 13(b).
15. Costs
All costs and expenses incurred in administering the Plan
shall be paid by the Company, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant by the Company. Any brokerage fees for the purchase of shares by a
participant shall
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<PAGE> 10
International Plan
be paid by the Company, but brokerage fees for the resale of shares by a
participant shall be borne by the participant.
16. Equal Rights and Privileges
All eligible Employees shall have substantially equal rights
and privileges with respect to the Plan; provided, however, that the
Administrator may make such changes to the terms of the Plan from Subsidiary to
Subsidiary that it deems advisable or necessary to reflect or comply with local
laws or conditions. This Section 16 shall take precedence over all other
provisions of the Plan.
17. Applicable Law
The Plan shall be governed by the substantive laws (excluding
the conflict of laws rules) of the State of California.
18. Modification and Termination
(a) The Board may amend, alter, or terminate the Plan at
any time, including amendments to outstanding options. To the extent required
for the Plan to comply with Rule 16b-3 or applicable tax laws, no amendment
shall be effective unless within 12 months after it is adopted by the Board, it
is approved by the holders of a majority of the votes cast at a duly held
shareholders' meeting at which a quorum of the voting power of Tencor is
represented in person or by proxy, if such amendment would:
(i) increase the number of shares reserved for
purchase under the Plan;
(ii) increase benefits under the Plan; or
(iii) modify the requirements for eligibility for
participation in the Plan.
(b) In the event the Plan is terminated, the Board may
elect to terminate all outstanding options either immediately or upon
completion of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior
to expiration, all funds contributed to the Plan that have not been used to
purchase shares shall be returned to the participants as soon as
administratively feasible.
(c) In the event of the sale of all or substantially all
of the assets of Tencor or the Company, or the merger of
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<PAGE> 11
International Plan
Tencor or the Company with or into another corporation, or the dissolution or
liquidation of Tencor, a Purchase Date shall occur on the trading day
immediately preceding the date of such event, unless otherwise provided by the
Board in its sole discretion, including provision for the assumption or
substitution of each option under the Plan by the successor or surviving
corporation, or a parent or subsidiary thereof.
19. Rights as an Employee
Nothing in the Plan shall be construed to give any person the
right to remain in the employ of the Company or to affect the Company's right
to terminate the employment of any person at any time with or without cause.
20. Rights as a Shareholder; Delivery of Certificates
Unless otherwise determined by the Board, certificates
evidencing shares purchased on any Purchase Date shall be delivered to a
participant only if he or she makes a written request to the Administrator.
Participants shall be treated as the owners of their shares effective as of the
Purchase Date.
21. Board and Shareholder Approval
The Plan was approved by the Board of Directors on May 10,
1993, and by the holders of a majority of the votes cast at a duly held
shareholders' meeting on May 4, 1994, at which a quorum of the voting power of
Tencor was represented in person or by proxy. The Plan was amended by the
Board of Directors on March 23, 1995 to increase to 300,000 the number of
shares reserved for sale under the Plan and the Company's 1993 Employee Stock
Purchase Plan. Such amendment was approved by the holders of a majority of the
votes cast at a duly held shareholders' meeting on May 15, 1995, at which a
quorum of the voting power of Tencor was represented in person or by proxy. A
two-for-one stock split with a record date of May 31, 1995, which increased the
number of shares from 300,000 to 600,000, was approved by the Board of
Directors on May 15, 1995. The Plan was amended by the Board of Directors on
February 12, 1996 to increase to 1,100,000 the number of shares reserved for
sale under the Plan and the Company's 1993 Employee Stock Purchase Plan. Such
amendment was approved by the holders of a majority of the votes cast at a duly
held shareholders' meeting on May 13, 1996, at which a quorum of the voting
power of Tencor was represented in person or by proxy.
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<PAGE> 1
EXHIBIT 10.6
AS AMENDED
2/87
1983 EMPLOYEE INCENTIVE STOCK OPTION PLAN
OF
PROMETRIX CORPORATION
1. PURPOSE OF THE PLAN
The purposes of the 1983 Employee Incentive Stock Option Plan*
(the "Plan") of PROMETRIX CORPORATION (the "Company") are to:
(a) furnish incentive to employees chosen to receive options
because they are considered capable of responding by improving operations and
increasing profits;
(b) encourage elected employees to accept or continue
employment with the Company or its subsidiaries; and
(c) increase the interest of employees chosen to receive
options in the Company's welfare by encouraging ownership of its Common Stock.
To accomplish the foregoing objectives, the Plan provides a
means whereby employees may receive stock options which qualify as "incentive
stock options" under Section 422A ("Section 422A") of the Internal Revenue Code
("Code") as it may be amended from time to time.
2. ELIGIBLE PERSONS
Every person who at the date of grant is an employee of the
Company or of any affiliate of the Company is eligible to receive an option or
options under the Plan; provided, however, that options may not be granted under
the Plan to any person who owns, directly or indirectly, stock of the Company
constituting more than 10% of the total combined voting power of the Company's
outstanding stock, or the stock of any affiliate of the Company, unless (i) the
exercise price of options granted to any such person under the Plan, at the time
such option is granted, is equal to at least 110% of the fair market value of
the stock subject to the option, and (ii) any such option is by its terms not
exercisable after the expiration of five years from the date of grant. The term
"affiliate," as used in the Plan, means a parent or subsidiary corporation of
the Company, as defined in the applicable provisions (currently set forth in
Section 425) of the Code. The term "employee" includes an officer or a director
who is an employee.
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* Approved by Board of Directors on August 5, 1983 and by Shareholders on
August 1, 1983.
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<PAGE> 2
3. STOCK SUBJECT TO THE PLAN
An aggregate of 800,000** authorized but unissued shares of
the Common Stock of the Company, or such number and class of securities as
adjusted to give effect to the antidilution provisions contained in Section
6(b) hereof, may be sold upon the exercise of options granted under the Plan.
In the event that any option outstanding under the Plan expires, or is
terminated for any reason, unexercised in whole or in part, prior to the end of
the period during which options may be granted under the Plan, the shares of
stock allocable to the unexercised portion of such option may again be
subjected to option under the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Board of Directors or,
if established by the Board of Directors, by a committee (the "Committee")
consisting of not less than three persons, all of whom are and shall be
directors of the Company, to be appointed by the Company's Board of Directors.
Committee members shall serve for such term as the Board of Directors may in
each case determine, and shall be subject to removal at any time by the Board of
Directors. Vacancies on the Committee, however caused, may be filled by the
Board of Directors. The Committee may select one of its members as chairman, and
may hold meetings at such times and places as it may determine. A majority of
the Committee shall constitute a quorum, and acts of the Committee approved at a
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee, shall be valid acts of the Committee. Subject to the
general purposes, terms and conditions of the Plan, and to the direction of the
Board of Directors, the Committee, if there be one, shall have full power to
implement and carry out the Plan in all ways permissible under the applicable
provisions of the Code including, but not limited to, the following: to construe
and interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee, if there be one,
shall submit to the Board of Directors the names of employees to whom the
Committee recommends that an option or options should be granted under the Plan,
the number of shares of stock to be covered by each option and the terms and
conditions of each option. Options shall be granted and optionees shall be
notified of such grant upon approval by the Board of Directors or, if the
Committee is given general or specific authority to do so by the Board of
Directors, to the extent so authorized, upon approval by the Committee without
submission to, and review by, the Board of Directors, except that the Committee
shall not have authority to approve the grant of options to members of the Board
of Directors without approval by the Board of Directors.
5. GRANTING OF OPTIONS
No options shall be granted under the plan after July 31,
1993.
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** Adjusted for 4-for-1 stock split effected 8/01/84.
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<PAGE> 3
Each option shall be evidenced by a written stock option
agreement executed by the Company and the employee to whom such option is
granted.
In no event shall options granted pursuant to the Plan on or
prior to December 31, 1986 result in the grant to any one employee during any
calendar year of options covering stock in the Company having an aggregate fair
market value, determined as of the date of grant, in excess of $100,000 (plus
any unused limit carryover to such year as permitted by then applicable
provisions of the Code). In no event shall an option be granted to any employee
pursuant to the Plan on or after January 1, 1987 if and to the extent that the
aggregate fair market value (determined at the time the option is granted) of
all stock in the Company with respect to which incentive stock options are
exercisable for the first time by said employee during any calendar year (under
the Plan and under any and all other similar employee incentive stock option
plans qualifying under Section 422A) exceeds $100,000.
6. TERMS AND CONDITIONS OF OPTIONS
Each option shall be subject to the following terms and
conditions:
(a) Option Price. The option price, which shall be approved by
the Board of Directors (or the Committee, if authorized to do so), shall be
determined in accordance with the applicable provisions of the code and shall in
no event be less than the fair market value of the Company's capital stock at
the time the option is granted. In the absence of an established market for such
stock, the fair market value thereof, for the purposes of the Plan, shall be
determined in good faith by the Committee or the Board of Directors. If the
stock of the Company is regularly quoted by a recognized securities dealer, the
fair market value thereof, for the purposes of the Plan, shall be the mean
between the high bid and low asked prices for such stock for the date the option
is granted (or if there are no quoted prices for such date of grant, then for
the last preceding business day on which there were quoted prices). If the stock
of the Company is listed on any stock exchange, the fair market value of such
stock, for the purposes of the Plan, shall be the mean between the highest and
lowest selling prices for such stock as quoted on such exchange for the date the
option is granted (or if there are no sales for such date of grant, then for the
last preceding business day on which there were sales).
(b) Adjustments. In the event that the stock of the Company is
changed by reason of any stock split, reverse stock split, recapitalization, or
other change in the capital structure of the Company, or converted into or
exchanged for other securities as a result of any merger, consolidation or
reorganization, or in the event that the outstanding number of shares of stock
of the Company is increased through payment of a stock dividend, appropriate
proportionate adjustments shall be made in the number and class of shares of
stock subject to the Plan, the number and class of shares of stock subject to
any option outstanding under the Plan, and the exercise price of any such
outstanding option; provided, however, that the Company shall not be required to
issue fractional shares as a result of any such adjustment. Any such adjustment
shall be made upon approval by the Board of Directors, whose determination shall
be conclusive. If there is any other change in the number or kind of the
outstanding shares of stock of the Company, or of any other security into which
such
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<PAGE> 4
stock shall have been changed or for which it shall have been exchanged, and if
the Board of Directors, in its sole discretion, determines that such change
equitably requires any adjustment in the options outstanding under the Plan,
such adjustment shall be made in accordance with the determination of the Board
of Directors. No adjustments shall be required by reason of the issuance or sale
by the Company for cash or other consideration of additional shares of its stock
or securities convertible into or exchangeable for shares of its stock. All
adjustments shall be made in such a manner that each option which is adjusted
will continue to qualify under Section 422A as an "incentive stock option."
(c) Corporate Transactions. New option rights may be
substituted for the option rights granted under the Plan, or the Company's
duties as to options outstanding under the Plan may be assumed, by an employer
corporation other than the Company, or by a parent or subsidiary of such
employer corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved, in such a manner that will allow the then outstanding options to
continue to qualify as "incentive stock options" under Section 422A to the full
extent permitted thereby. Notwithstanding the foregoing or the provisions of
paragraph 6(b) hereof, in the event such employer corporation, or parent or
subsidiary of such employer corporation, does not substitute new option rights
for, and substantially equivalent to, the option rights granted hereunder, or
assume the option rights granted hereunder, or if the Company's Board of
Directors determines, in its sole discretion, that option rights outstanding
under the Plan should not then continue to be outstanding, the option rights
granted hereunder shall terminate and thereupon become null and void (i) upon
dissolution or liquidation of the Company, or similar occurrence, or (ii) upon
any merger, consolidation, acquisition, separation, or similar occurrence, where
the Company will not be a surviving corporation; provided, however, that each
optionee shall have the right immediately prior to or concurrently with such
dissolution, liquidation, merger, consolidation, acquisition, separation, or
similar occurrence, to exercise any unexpired option rights granted hereunder to
the extent such option rights are then exercisable, but in any event subject to
the time limitations for exercise of "incentive stock options" provided in
Section 422A.
(d) Option Exercise Period. Each option granted under the Plan
shall become exercisable and shall expire on a date or in installments, and
shall contain such other terms as may be determined by the Committee or by the
Board of Directors and as set forth in the stock option agreement, but in no
event shall any option hereunder expire later than ten (10) years from the date
such option is granted.
(e) Exercise of Option by Employee Who Holds Other Options.
Notwithstanding any terms of any stock option agreement, no option granted on or
before December 31, 1986 under the Plan ("new option") shall be exercisable
while there is outstanding in favor of the optionee to whom such new option is
granted an "incentive stock option," granted to such optionee prior to said
December 31, 1986 and prior to the granting of the new option, which permits the
employee to purchase stock in such optionee's employer corporation or in a
corporation which, at the time of the granting of the new option, was an
affiliate of the employer corporation, or in a predecessor corporation of any of
such corporations. For such purposes, any incentive stock option shall be
treated as outstanding until such option is exercised in full or expires by
reason of lapse of time. This
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<PAGE> 5
paragraph 6(e), however, shall not restrict the exercisability of any option
granted under the Plan on or after January 1, 1987 or the exercisability of any
other option granted under the Plan except as may be necessary to allow such
option to qualify under Section 422A as an "incentive stock option."
(f) Change of Option Period. Notwithstanding any other
provision of the Plan, the Board of Directors or the Committee may accelerate
the earliest date or dates on which outstanding options (or any installments
thereof) are exercisable.
(g) Option Grant Date. The date of grant of an option granted
under the Plan shall be the date as of which the Board of Directors or the
Committee (if the option is granted by the Committee without review by the Board
of Directors) approves the grant. If for any reason, including a unilateral
decision by the Company not to execute an agreement evidencing such option, a
written stock option agreement evidencing the option is not executed within
sixty (60) days after the date of grant, such option shall be deemed null and
void. No option shall be exercisable until such a stock option agreement is
executed by the Company and the optionee.
(h) Nonassignability of Option Rights. No option granted under
the Plan shall be assignable or otherwise transferable by the optionee except by
will or by the laws of descent and distribution. During the life of an optionee,
an option shall be exercisable only by the optionee.
(i) Payment. Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. Notwithstanding the preceding sentence,
the Board of Directors or the Committee may authorize any one or more of the
following in connection with the grant of any option, and any such payment
rights shall be set forth in the option agreement:
(i) acceptance of the optionee's personal promissory
note for all or part of the option price, bearing such interest rate, if any, as
determined by the Board of Directors, which promissory note may be either
secured or unsecured in such manner as the Board of Directors shall approve
(including, without limitation, by a security interest in the shares of the
Company);
(ii) delivery by optionee of Common Stock of the Company
already owned by such optionee for all or part of the option price, provided the
value of such Common Stock (as determined by the Company pursuant to any
reasonable valuation method) is equal on the date of exercise to the option
price, or such portion thereof as the optionee is authorized to pay by delivery
of such stock;
(iii) a loan by the Company to the optionee of all or a
portion of the option price at such interest rate, if any, as determined by the
Board of Directors, and on an unsecured or secured basis as the Board of
Directors shall approve (including, without limitation, by a security interest
in the shares of the Company); and/or
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<PAGE> 6
(iv) a guaranty by the Company of a loan to the optionee
by a third party of all or part of the option price (but not more than the
option price), and such guaranty may be on an unsecured or secured basis as the
Board at Directors shall approve (including, without limitation, by a security
interest in the shares of the Company).
(j) Termination of Employment. Option rights granted under the
Plan, to the extent such rights have not then expired or been exercised, shall
terminate and become null and void on a date three months after that date that
an optionee ceases, for any reason, to be an employee of the Company or any
affiliate of the Company, and shall not be exercisable on or after said date,
except that:
(i) In the event of such a termination of employment due
to the death of the optionee, the personal representatives of the optionee or
any person or persons who acquire any such option rights from the optionee by
will or the applicable laws of descent and distribution may, at any time within
a period of twelve (12) months after the death of the optionee, exercise any or
all of such option rights to the extent such option rights were exercisable on
the date of the death of the optionee;
(ii) In the event of such a termination of employment by
reason of the permanent and total disability of the optionee (as defined in
Section 105(d)(4) of the Code), the optionee or, if the optionee thereafter
dies, the personal representatives of the optionee or any person or persons who
acquired any such option rights from the optionee by will or the applicable laws
of descent and distribution may, at any time within a period of twelve (12)
months after said termination, exercise any or all of such option rights to the
extent such option rights were exercisable on the date of the termination of
employment;
(iii) For Plan purposes a transfer of an optionee from
the Company to an affiliate or vice versa, or from one affiliate to another, or
leave of absence duly authorized by the Company, shall not be deemed a
termination of employment or a break in continuous employment to the extent that
such transfer or leave of absence is not deemed a termination or break in
continuous employment under the applicable provisions of the Code.
(k) Other Provisions. Each option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Board of Directors or the Committee, and shall
include such provisions and conditions as are necessary to qualify the option
under Section 422A as an "incentive stock option."
7. MANNER OF EXERCISE
An optionee wishing to exercise an option shall give written
notice to the Company at its principal executive office, to the attention of the
Secretary of the Company, accompanied by payment of the exercise price. The date
the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such option was
exercised. As soon as possible after receipt of such written notice, the Company
shall, without
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<PAGE> 7
stock issue or transfer taxes to the optionee or other person entitled to
exercise, deliver to the optionee or other person a certificate or certificates
for the requisite number of shares of stock. An optionee or transferee of an
option shall not have any privileges as a shareholder with respect to any stock
covered by the option until the date of issuance of a stock certificate.
8. EMPLOYMENT RELATIONSHIP
Nothing in the Plan or any option granted thereunder shall
interfere with or limit in any way the right of the Company or of any of its
subsidiaries to terminate any optionee's employment at any time, nor confer upon
any optionee any right to continue in the employ of the Company or any of its
subsidiaries.
9. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors may at any time amend, altar, or
discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any optionee
under any option theretofore granted, without his consent, or which, without the
approval of the shareholders, would:
(a) except as is provided in Section 6 of the Plan, increase
the total number of shares of stock reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which options may be
exercised under the Plan; or
(d) change the class of persons eligible to receive options
granted hereunder.
Without limiting the foregoing, but subject to the provisions of paragraph 6(a)
hereof, the Board of Directors may at any time, or from time to time, authorize
the company, with the consent of the respective optionees, to issue new options
in exchange for the surrender and cancellation of any or all outstanding
options.
10. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective upon approval by the Board of
Directors, provided, however, that any option granted prior to approval by
shareholders of the Company holding a majority (or such greater number as may be
required by law or applicable governmental regulations or order) of the shares
of the Company's capital stock entitled to vote shall be subject to, and
conditioned upon, such shareholder approval, and shall not be exercisable until
such approval is obtained. Options may be granted and exercised under the Plan
only after there has been compliance with all applicable federal and state
securities laws.
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<PAGE> 1
EXHIBIT 10.7
1993 EMPLOYEE INCENTIVE STOCK OPTION PLAN
OF
PROMETRIX CORPORATION
1. PURPOSE OF THE PLAN.
The purposes of the 1993 Employee Incentive Stock Option
Plan(1) (the "Plan") of PROMETRIX CORPORATION, a California corporation (the
"Company") are to:
(a) furnish incentive to employees chosen to receive options
because they are considered capable of responding by improving operations and
increasing profits;
(b) encourage selected employees to accept or continue
employment with the Company or its subsidiaries; and
(c) increase the interest of employees chosen to receive
options in the Company's welfare by encouraging ownership of its Common Stock.
To accomplish the foregoing objectives, the Plan provides a
means whereby employees may receive stock options which qualify as "incentive
stock options" under Section 422(b) ("Section 422(b)") of the Internal Revenue
Code ("Code") as it may be amended from time to time.
2. ELIGIBLE PERSONS.
Every person who at the date of grant is an employee of the
Company or of any affiliate of the Company is eligible to receive an option or
options under the Plan; provided, however, that options may not be granted under
the Plan to any person who owns, directly or indirectly, stock of the Company
possessing more than 10% of the total combined voting power of all classes of
the Company's outstanding stock, or the stock of any affiliate of the Company,
unless (i) the exercise price of options granted to any such person under the
Plan, at the time such option is granted, is equal to at least 110% of the fair
market value of the stock subject to the option, and (ii) any such option is by
its terms not exercisable after the expiration of five years from the date of
grant. The term "affiliate," as used in the Plan, means a parent or subsidiary
corporation of the Company, as defined in the applicable provisions (currently
set forth in Section 424) of the Code. The term "employee" includes an officer
or a director who is an employee.
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(1) Approved by Board of Directors and by Shareholders on March 16, 1993.
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3. STOCK SUBJECT TO THE PLAN.
An aggregate of 400,000 authorized but unissued shares of the
Common Stock of the Company, or such number and class of securities as adjusted
to give effect to the antidilution provisions contained in Section 6(b) hereof,
may be sold upon the exercise of options granted under the Plan. In the event
that any option outstanding under the Plan expires, or is terminated for any
reason, unexercised in whole or in part, prior to the end of the period during
which options may be granted under the Plan, the shares of stock allocable to
the unexercised portion of such option may again be subjected to option under
the Plan.
4. ADMINISTRATION.
The Plan shall be administered by the Board of Directors or,
if established by the Board of Directors, by a committee (the "Committee")
consisting of not less than three persons, all of whom are and shall be
directors of the Company, to be appointed by the Company's Board of Directors.
Committee members shall serve for such term as the Board of Directors may in
each case determine, and shall be subject to removal at any time by the Board of
Directors. Vacancies on the Committee, however caused, may be filled by the
Board of Directors. The Committee may select one of its members as Chairman, and
may hold meetings at such times and places as it may determine. A majority of
the Committee shall constitute a quorum, and acts of the Committee approved at a
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee, shall be valid acts of the Committee. Subject to the
general purposes, terms and conditions of the Plan, and to the direction of the
Board of Directors, the Committee, if there be one, shall have full power to
implement and carry out the Plan in all ways permissible under the applicable
provisions of the Code including, but not limited to, the following: (i) to
construe and interpret the Plan, (ii) to prescribe, amend and rescind rules and
regulations relating to the Plan and (iii) to make all other determinations
necessary or advisable for the administration of the Plan. The Committee, if
there be one, shall submit to the Board of Directors the names of employees to
whom the Committee recommends that an option or options should be granted under
the Plan, the number of shares of stock to be covered by each option and the
terms and conditions of each option. Options shall be granted and optionees
shall be notified of such grant upon approval by the Board of Directors or, if
the Committee is given general or specific authority to do so by the Board of
Directors, to the extent so authorized, upon approval by the Committee without
submission to, and review by, the Board of Directors, except that the Committee
shall not have authority to approve the grant of options to members of the Board
of Directors without approval by the Board of Directors.
5. GRANTING OF OPTIONS.
No options shall be granted under the plan after the
expiration of ten (10) years from the date the Plan is adopted by the Board of
Directors, or the date the Plan is approved by the shareholders, whichever date
is earlier.
Each option shall be evidenced by a written stock option
agreement (the "Stock Option Agreement") executed by the Company and the
employee to whom such option is granted.
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In no event shall an option be granted to any employee
pursuant to the Plan if and to the extent that the aggregate fair market value
(determined at the time the option is granted) of all stock in the Company with
respect to which incentive stock options are exercisable for the first time by
said employee during any calendar year (under the Plan and under any and all
other similar employee incentive stock option plans qualifying under Section
422(b)) exceeds $100,000.
6. TERMS AND CONDITIONS OF OPTIONS.
Each option shall be subject to the following terms and
conditions:
(a) Option Exercise Price. The option exercise price, which
shall be approved by the Board of Directors (or the Committee, if authorized to
do so), shall be determined in accordance with the applicable provisions of the
Code and shall in no event be less than the fair market value of the Company's
capital stock at the time the option is granted. In the absence of an
established market for such stock, the fair market value thereof, for the
purposes of the Plan, shall be determined in good faith by the Committee or the
Board of Directors. If the stock of the Company is regularly quoted by a
recognized securities dealer (but is not reported on the NASDAQ - National
Market System), the fair market value thereof, for the purposes of the Plan,
shall be the mean between the high bid and low asked prices for such stock for
the date the option is granted (or if there are no quoted prices for such date
of grant, then for the last preceding business day on which there were quoted
prices). If the stock of the Company is listed on any stock exchange or is
reported on the NASDAQ - National Market System, the fair market value of such
stock, for the purposes of the Plan, shall be the mean between the highest and
lowest selling prices for such stock as quoted on such exchange or NASDAQ -
National Market System, as the case may be, for the date the option is granted
(or if there are no sales for such date of grant, then for the last preceding
business day on which there were sales).
(b) Adjustments. In the event that the stock of the Company is
changed by reason of any stock split, reverse stock split, recapitalization,
combination, reclassification or other change in the capital structure of the
Company, or converted into or exchanged for other securities as a result of any
merger, consolidation or reorganization, or in the event that the outstanding
number of shares of stock of the Company is increased through payment of a stock
dividend, appropriate proportionate adjustments shall be made in the number and
class of shares of stock subject to the Plan, the number and class of shares of
stock subject to any option outstanding under the Plan, and the exercise price
of any such outstanding option; provided, however, that the Company shall not be
required to issue fractional shares as a result of any such adjustment. Any such
adjustment shall be made upon approval by the Board of Directors, whose
determination shall be conclusive. If there is any other change in the number or
kind of the outstanding shares of stock of the Company, or of any other security
into which such stock shall have been changed or for which it shall have been
exchanged, and if the Board of Directors, in its sole discretion, determines
that such change equitably requires any adjustment in the options then
outstanding under the Plan, such adjustment shall be made in accordance with the
determination of the Board of Directors. No adjustments shall be required by
reason of the issuance or sale by the Company for cash or other consideration of
additional shares of its stock or securities convertible into or exchangeable
for shares of its stock. All adjustments shall be
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<PAGE> 4
made in such a manner that each option which is adjusted will continue to
qualify under Section 422(b) as an "incentive stock option."
(c) Corporate Transactions. New option rights may be
substituted for the option rights granted under the Plan, or the Company's
duties as to options outstanding under the Plan may be assumed, by an employer
corporation other than the Company, or by a parent or subsidiary of such
employer corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved, in such a manner that will allow the then outstanding options to
continue to qualify as "incentive stock options" under Section 422(b) to the
full extent permitted thereby. Notwithstanding the foregoing or the provisions
of paragraph 6(b) hereof, in the event such employer corporation, or parent or
subsidiary of such employer corporation, does not substitute new option rights
for, and substantially equivalent to, the option rights granted hereunder, or
assume the option rights granted hereunder, or if the Company's Board of
Directors determines, in its sole discretion, that option rights outstanding
under the Plan shall not then continue to be outstanding, the option rights
granted hereunder shall terminate and thereupon become null and void (i) upon
dissolution or liquidation of the Company, or similar occurrence, or (ii) upon
any merger, consolidation, acquisition, separation, or similar occurrence, where
the Company will not be a surviving corporation; provided, however, that each
optionee shall be given notice of such dissolution, liquidation, merger,
consolidation, acquisition, separation or similar occurrence, and shall have the
right for a period of at least thirty (30) days after such notice is sent by the
Company, to exercise any exercisable and unexpired option rights granted
hereunder but in any event subject to those time limitations for exercise of
"incentive stock options" provided in Section 422(b) of the Code.
(d) Option Exercise Period. Each option granted under the Plan
shall become exercisable and shall expire on a date or in installments, and
shall contain such other terms as may be determined by the Committee or by the
Board of Directors and as set forth in the Stock Option Agreement, but (i) in no
event shall any option hereunder expire later than ten (10) years from the date
such option is granted, and (ii) all of the rights to purchase shares hereunder
must become exercisable at a rate not less than, and as of a date or dates not
later than, 20% per year commencing one year following the date of the grant
hereof.
(e) Change of Option Period. Except in the case of a
consolidation or merger of the Company into any other corporation, or any other
entity or person, other than a wholly-owned subsidiary, a parent corporation or
as part of a reincorporation, or the case of a reorganization of the Company as
defined in Section 368(a)(1)(B) of the Code or in any other transaction in which
more than fifty percent (50%) of the outstanding stock of the Company is
exchanged (other than a reincorporation) or sold, the Board of Directors or the
Committee may accelerate the earliest date or dates on which outstanding options
(or any installments thereof) are exercisable.
(f) Option Grant Date. The date of grant of an option granted
under the Plan shall be the date as of which the Board of Directors or the
Committee (if the option is granted by the Committee without review by the Board
of Directors) approves the grant. If for any reason, including a unilateral
decision by the Company not to execute an agreement evidencing such option, a
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<PAGE> 5
written Stock Option Agreement evidencing the option is not executed within
sixty (60) days after the date of grant, such option shall be deemed null and
void. No option shall be exercisable until such a Stock Option Agreement is
executed by the Company and the optionee.
(g) Nonassignability of Option Rights. No option granted under
the Plan shall be assignable or otherwise transferable by the optionee except by
will or by the laws of descent and distribution. During the life of an optionee,
an option shall be exercisable only by the optionee.
(h) Payment. Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. Notwithstanding the preceding sentence,
the Board of Directors or the Committee may authorize any one or more of the
following in connection with the grant of any option, and any such payment
rights shall be set forth in the Stock Option Agreement:
(i) acceptance of the optionee's personal promissory note
for all or part of the option price, bearing such interest rate, if any, as
determined by the Board of Directors, which promissory note may be either
secured or unsecured in such manner as the Board of Directors shall approve
(including, without limitation, by a security interest in the shares of the
Company);
(ii) delivery by optionee of Common Stock of the Company
already owned by such optionee for all or part of the option price, provided the
value of such Common Stock (as determined by the Company pursuant to any
reasonable valuation method) is equal on the date of exercise to the option
price, or such portion thereof as the optionee is authorized to pay by delivery
of such stock;
(iii) a loan by the Company to the optionee of all or a
portion of the option price at such interest rate, if any, as determined by the
Board of Directors, and on an unsecured or secured basis as the Board of
Directors shall approve (including, without limitation, by a security interest
in the shares of the Company); and/or
(iv) a guaranty by the Company of a loan to the optionee
by a third party of all or part of the option price (but not more than the
option price), and such guaranty may be on an unsecured or secured basis as the
Board of Directors shall approve (including, without limitation, by a security
interest in the shares of the Company).
(i) Termination of Employment. Option rights granted under the
Plan, to the extent such rights have not then expired or been exercised, shall
terminate and become null and void on the date that an optionee ceases, for any
reason, to be an employee of the Company or any affiliate of the Company, and
shall not be exercisable on or after said date, except that the rights
exercisable upon said date may be exercised within thirty (30) days thereafter
and except further that:
(i) In the event of such a termination of employment due
to the death of the optionee, the personal representatives of the optionee or
any person or persons who acquire any
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<PAGE> 6
such option rights from the optionee by will or the applicable laws of descent
and distribution may, at any time within a period of twelve (12) months after
the death of the optionee, exercise any or all of such option rights to the
extent such option rights were exercisable on the date of the death of the
optionee;
(ii) In the event of such a termination of employment by
reason of the permanent and total disability of the optionee (as defined in
Section 22(e)(3)of the Code), the optionee, or, if the optionee thereafter dies,
the personal representatives of the optionee or any person or persons who
acquired any such option rights from the optionee by will or the applicable laws
of descent and distribution may, at any time within a period of twelve (12)
months after said termination, exercise any or all of such option rights to the
extent such option rights were exercisable on the date of the termination of
employment;
(iii) For Plan purposes, a transfer of an optionee from
the Company to an affiliate or vice versa, or from one affiliate to another, or
leave of absence duly authorized by the Company, shall not be deemed a
termination of employment or a break in continuous employment to the extent that
such transfer or leave of absence is not deemed a termination or break in
continuous employment under the applicable provisions of the Code.
(j) Other Provisions. Each option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Board of Directors or the Committee, and shall
include such provisions and conditions as are necessary to qualify the option
under Section 422(b) as an "incentive stock option."
7. MANNER OF EXERCISE.
An optionee wishing to exercise an option shall give written
notice to the Company at its principal executive office, to the attention of the
Secretary of the Company, accompanied by payment of the exercise price. The date
the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such option was
exercised. As soon as possible after receipt of such written notice, the Company
shall, without payment of stock issue or transfer taxes by the optionee or other
person entitled to exercise, deliver to the optionee or other person a
certificate or certificates for the requisite number of shares of stock. An
optionee or transferee of an option shall not have any privileges as a
shareholder with respect to any stock covered by the option until the date of
issuance of a stock certificate.
8. EMPLOYMENT RELATIONSHIP.
Nothing in the Plan or any option granted thereunder shall
interfere with or limit in any way the right of the Company or of any of its
subsidiaries to terminate any optionee's employment at any time, nor confer upon
any optionee any right to continue in the employ of the Company or any of its
subsidiaries.
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9. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
The Board of Directors may at any time amend, alter, suspend
or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any optionee
under any option theretofore granted, without his or her consent, or which,
without the approval of the shareholders would:
(a) except as is provided in Section 6 of the Plan, increase
the total number of shares of stock reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which options may be
exercised under the Plan; or
(d) change the class of persons eligible to receive options
granted hereunder.
Without limiting the foregoing, the Board of Directors may at any time
or from time to time authorize the Company, with the consent of the respective
optionees, to issue new options in exchange for the surrender and cancellation
of any or all outstanding options.
10. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective upon approval by the Board of
Directors, provided, however, that any option granted prior to approval by
shareholders of the Company holding a majority (or such greater number as may be
required by law or applicable governmental regulations or order) of the shares
of the Company's capital stock entitled to vote shall be subject to, and
conditioned upon, such shareholder approval, and shall not be exercisable until
such approval is obtained. Shareholder approval of the Plan must be obtained
within twelve (12) months before or after the date the Plan is adopted. Options
may be granted and exercised under the Plan only after there has been compliance
with all applicable federal and state securities laws.
11. INFORMATION RIGHTS.
The Company shall furnish and/or make available financial statements to
each optionee under the Plan on an annual basis.
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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 Annual Report to Stockholders of KLA Instruments Corporation, which
is incorporated in reference in KLA Instruments Corporation's Annual Report on
Form 10-K for the year ended June 30, 1996.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
May 7, 1997
