<PAGE>
As filed with the Securities and Exchange Commission on July 25, 1996
Registration No. 333-
--------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Tencor Instruments
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
California 94-2464767
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3333 Octavius Street, Santa Clara, California 95054
----------------------------------------------------
(Address of Principal Executive Offices)
1993 Equity Incentive Plan
1993 Employee Stock Purchase Plan
1993 Non-Employee Director Stock Plan
-------------------------------------
(Full Title of the Plan)
Bruce R. Wright
Tencor Instruments
3333 Octavius Street
Santa Clara, California 95054
(Name and Address of Agent For Service)
(408) 970-9500
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent For Service)
Copy to: Richard A. Peers, Esq.
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1908
(415) 324-7000
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Offering Registration
to be Registered Registered per Share (1) Price Fee
- --------------------------------------------------------------------------------
Common Stock, no par
value 2,050,000 $16.31 $33,435,500 $11,532
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of registration
fee pursuant to Rule 457(c) under the Securities Act, as amended, based on
the average of the high and low prices of the Registrant's Common Stock
reported on the Nasdaq National Market on July 19, 1996.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") by the registrant are incorporated by
reference in this Registration Statement:
(a) The Registrant's latest annual report (Form 10-K) filed pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or the latest prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933, as amended (the "Securities Act"), that
contains audited financial statements for the Registrant's latest fiscal year
for which such statements have been filed;
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by
the annual report or prospectus referred to in (a) above;
(c) The description of the Common Stock of the Registrant contained
in the Registration Statement filed under the Exchange Act registering such
Common Stock under Section 12 of the Exchange Act.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
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 thereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock offered hereby will be passed upon
for the Registrant by Heller, Ehrman, White & McAuliffe, Palo Alto, California.
As of the date of this Registration Statement, members of Heller, Ehrman, White
& McAuliffe beneficially own 3,099 shares of the Registrant's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Registrant provide that the
liability of the directors of the Registrant for monetary damages is to be
eliminated to the fullest extent possible under California law. The Articles
also authorize the Registrant to indemnify its agents (which includes officers
and directors), whether by bylaw, agreement or otherwise, in excess of the
indemnification expressly permitted by Section 317 of the California
Corporations Code, and to advance defense expenses to its agents in connection
with such matters as they are incurred.
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<PAGE>
Section 29 of the Registrant's Bylaws provides for the indemnification of
directors and officers of the Registrant to the fullest extent permissible under
California law, and in excess of that which is expressly permitted by Section
317 of the California Corporations Code. The Bylaws provide that the Registrant
shall indemnify its directors and officers against all expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred by them in
connection with any proceeding, including an action by or in the right of the
Registrant, by reason of the fact that such person is or was a director or
officer of the Registrant or is or was serving at the request of the Registrant
as a director, officer, trustee, employee or agent of another entity. The
Bylaws also provide that, to the fullest extent permissible under California
law, expenses incurred by a director or officer seeking indemnification under
the Registrant's Bylaws in defending any proceeding are to be advanced by the
Registrant as they are incurred, upon receipt by the Registrant of an
undertaking by or on behalf of the director or officer to repay such amount if
it is ultimately determined that the director or officer is not entitled to be
indemnified by the Registrant for those expenses.
Section 317 of the California Corporations Code permits a corporation to
include in its charter documents and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Price Waterhouse LLP, Independent Accountants
23.2 Consent of Coopers & Lybrand L.L.P., Independent Accountants
23.3 Consent of Heller Ehrman White & McAuliffe
(filed as part of Exhibit 5)
24.1 Power of Attorney (see page II-4)
99.1 1993 Equity Incentive Plan, as amended
99.1 1993 Employee Stock Purchase Plan, as amended
99.3 1993 Non-Employee Director Stock Plan, as amended
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;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
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(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) 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;
PROVIDED, HOWEVER, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 liability under the Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed 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.
C. Insofar as indemnification for liabilities arising under the
Securities Act 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 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 and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Mountain View, State of California, on this 25th day
of July, 1996.
TENCOR INSTRUMENTS
By: /s/ Bruce R. Wright
----------------------------------
Bruce R. Wright
Senior Vice President, Finance and
Administration, and Chief Financial
Officer
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Jon D. Tompkins and Bruce R. Wright, or
either of them, with full power of substitution, such person's true and lawful
attorneys-in-fact and agents for such person in such person's name, place and
stead, in any and all capacities, to sign any or all amendments (including post-
effective amendments) to this Registration Statement on Form S-8 and to file the
same, with all 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 in order
to effectuate the same as fully, to all intents and purposes, as he or such
person might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the dates indicated.
/s/ Jon D. Tompkins
- -------------------------- President, Chief July 25, 1996
Jon D. Tompkins Executive Officer and
Director (Principal
Executive Officer)
/s/ Bruce R. Wright
- -------------------------- Senior Vice July 25, 1996
Bruce R. Wright President, Finance
and Administration,
and Chief Financial
Officer (Principal
Financial Officer)
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/s/ Frederick A. Ball
- -------------------------- Vice President, July 25, 1996
Frederick A. Ball Corporate Controller
and Secretary
(Principal Accounting
Officer)
/s/ Richard J. Elkus, Jr.
- -------------------------- Vice Chairman of the July 25, 1996
Richard J. Elkus, Jr. Board and Executive
Vice President
- -------------------------- Director July __, 1996
James W. Bagley
/s/ Dean O. Morton
- -------------------------- Director July 25, 1996
Dean O. Morton
/s/ Calvin F. Quate
- -------------------------- Director July 25, 1996
Calvin F. Quate
- -------------------------- Director July __, 1996
Lida Urbanek
- -------------------------- Director July __, 1996
Renn Zaphiropoulos
II-6
<PAGE>
INDEX TO EXHIBITS
Sequentially
Item No. Description of Item Numbered Page
- -------- ------------------- -------------
5 Opinion of Heller Ehrman White & McAuliffe . . . . . . . . . .
23.1 Consent of Price Waterhouse LLP, Independent Accountants . . .
23.2 Consent of Coopers & Lybrand L.L.P., Independent Accountants .
23.3 Consent of Heller Ehrman White & McAuliffe
(filed as part of Exhibit 5) . . . . . . . . . . . . . . . .
24.1 Power of Attorney (see page II-4) . . . . . . . . . . . . . .
99.1 1993 Equity Incentive Plan, as amended . . . . . . . . . . . .
99.2 1993 Employee Stock Purchase Plan, as amended. . . . . . . . .
99.3 1993 Non-Employee Director Stock Plan, as amended. . . . . . .
<PAGE>
July 25, 1996
13027-0026
Tencor Instruments
3333 Octavius Street
Santa Clara, California 95054
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to Tencor Instruments, a California
corporation (the "Company"), in connection with the Registration Statement on
Form S-8 (the "Registration Statement") which the Company proposes to file with
the Securities and Exchange Commission on July 25, 1996 for the purpose of
registering under the Securities Act of 1933, as amended, an additional
2,050,000 shares of its no par value Common Stock (the "Shares"). The Shares
are issuable under the Company's Amended and Restated 1993 Equity Incentive
Plan, the Company's 1993 Employee Stock Purchase Plan, and the Company's 1993
Non-Employee Director Stock Plan (collectively the "Plans").
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records,
documents and instruments:
(a) The Restated Certificate of Incorporation of the Company,
certified by the Secretary of State of the State of California
as of July 18, 1996, and certified to us by an officer of the
Company as being complete and in full force as of the date of
this opinion;
(b) The Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(c) A Certificate of an officer of the Company (i) attaching records
certified to us as constituting all records of proceedings and
actions of the Board of Directors, including any committee
thereof, and stockholders of the
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Tencor Instruments Page 2
July 16, 1996
Company relating to the Shares and the Registration Statement,
and (ii) certifying as to certain factual matters;
(d) The Registration Statement;
(d) The Plans; and
(e) A letter from The First National Bank of Boston, the Company's
transfer agent, dated July 24, 1996, as to the number of shares
of the Company's common stock that were outstanding on July 23,
1996.
This opinion is limited to the federal law of the United States of
America and the State of California, and we disclaim any opinion as to the laws
of any other jurisdiction. We further disclaim any opinion as to any other
statute, rule, regulation, ordinance, order or other promulgation of any other
jurisdiction or any regional or local governmental body or as to any related
judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plans is paid for each Share, and (iii) all
applicable securities laws are complied with, it is our opinion that, when
issued and sold by the Company, after payment therefore in the manner provided
in the Plans and the Registration Statement, the Shares will be legally issued,
fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose, or relied upon by any other person, firm,
corporation or other entity for any purpose, without our prior written consent.
We disclaim any obligation to advise you of any change of law that occurs, or
any facts of which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Heller Ehrman White & McAuliffe
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 6, 1996 which appears on
page 28 of the 1995 Annual Report to Shareholders of Tencor Instruments,
which is incorporated by reference in Tencor Instruments' Annual Report on
Form 10-K for the year ended December 31, 1995.
/s/ Price Waterhouse LLP
San Jose, California
July 22, 1996
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of Tencor Instruments on Form S-8 of our report dated December 12,
1993, except for the matter discussed in Note 11 for which the date is
December 17, 1993, on our audit of the consolidated financial statements of
Prometrix Corporation and Subsidiaries as of October 31, 1993, and for the
year then ended (none of which is presented in Tencor Instruments Annual
Report on Form 10-K for the year ended December 31, 1995, or in this
registration statement).
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Jose, California
July 22, 1996
<PAGE>
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).
<PAGE>
(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.
(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.
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(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.
(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, either in its entirety or only as it relates to persons
subject to Section 16 of the Exchange Act, 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;
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(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;
(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 5,800,000 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 5,800,000 share limitation.
If (i) any Option terminates or expires without being exercised in full, (ii)
any shares of Stock issued as Restricted Stock or Performance Shares or issued
pursuant to Stock Purchase Rights are forfeited prior to conferring on their
holder benefits of ownership other than voting rights or accumulated dividends
that are not realized, or (iii) an Award otherwise terminates without a payment
being made to the participant in the form of Stock, the shares issuable under
such Option or Award shall again be available for issuance in connection with
other Awards. If shares of Stock issued pursuant to an Award are repurchased by
the Company or are forfeited after conferring benefits as described above, such
Stock shall not again be available for issuance in connection with Awards. To
the extent an Award is paid in cash or the
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<PAGE>
number of shares of Stock issued pursuant to an Award is reduced to satisfy
withholding tax obligations, the number of shares of Stock representing, at Fair
Market Value on the date of the payment, the value of the cash payment or the
number of shares withheld to satisfy the withholding tax obligations shall not
be available for later grant under the Plan.
(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 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:
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(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 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.
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(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 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,
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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 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.
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(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.
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
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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.
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
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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, 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
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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 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
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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
(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
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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 held for at least
six months, 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
election pursuant to clause (iii) above by a participant 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 Stock shall
take place during such Window Period) and shall be subject to approval by the
Administrator, which approval may be given any time after such election has been
made, and the Award 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 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 and
statements required to be filed pursuant to that section for that year. The
right to so withhold shares of Stock shall relate separately to each Award.
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
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distribution. During the life of a participant, an Award shall be exercisable,
and any elections with respect 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
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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 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. With respect to persons subject to Section 16 of the
Exchange Act, if any, transactions under this Plan are intended to comply with
the applicable conditions of Rule 16b-3. 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.
(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.
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(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.
(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. 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
Awards under the Plan or in such other circumstances as the Board deems
appropriate to comply with Rule 16b-3 or with Section 422 of the Code or
otherwise.
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.
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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.
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 5,800,000 approved by the
Board of Directors on February 12, 1996.
Amendment to Plan increasing the number of shares to 5,800,000 approved by the
Shareholders on May 13, 1996.
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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.
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(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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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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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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(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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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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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 the
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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>
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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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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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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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>
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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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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(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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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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(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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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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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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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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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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