<PAGE> 1
As filed with the Securities and Exchange Commission on August ____, 1997
Registration No. 333-___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ULTRATECH STEPPER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3169580
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
3050 ZANKER ROAD, SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices) (Zip code)
----------------------
1993 STOCK OPTION/STOCK ISSUANCE PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
----------------------
ARTHUR W. ZAFIROPOULO
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
ULTRATECH STEPPER, INC.
3050 ZANKER ROAD, SAN JOSE, CALIFORNIA 95134
(Name and address of agent for service)
(408) 321-8835
(Telephone number, including area code, of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ---------- --------- ----- ---
<S> <C> <C> <C> <C>
1993 Stock Option/
Stock Issuance Plan
Common Stock,
$0.001 par value 450,000 shares $26.9688 $12,135,960.00 $3,678.00
Employee Stock Purchase Plan
Common Stock,
$0.001 par value 250,000 shares $26.9688 $1,742,200.00 $2,043.00
Aggregate Filing Fee: $5,721.00
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1993 Stock Option/Stock
Issuance Plan and/or the Employee Stock Purchase Plan by reason of any
stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which
results in an increase in the number of the outstanding shares of
Common Stock of Ultratech Stepper, Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, (the "1933 Act"), on the basis
of the average of the high and low selling prices per share of Common
Stock of Ultratech Stepper, Inc. on August 6, 1997 as reported by the
Nasdaq National Market.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Ultratech Stepper, Inc. (the "Registrant") hereby incorporates
by reference into this Registration Statement the following documents
previously filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, filed with the Commission on
March 28, 1997;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997, filed with the Commission on May
14, 1997;
(c) The Registrant's report on Form 8-K filed with the Commission
on February 26, 1997; and
(d) The Registrant's Registration Statement No. 0-22248 on Form
8-A, filed with the Commission on August 13, 1993, pursuant to
Section 12 of the Securities and Exchange Act of 1934 (the
"1934 Act") in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and 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 into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained in any subsequently filed document
which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Amended and Restated Certificate of Incorporation
limits the liability of directors to the maximum extent permitted by the
Delaware General Corporation Law ("Delaware Law"). Delaware Law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except for liability (i) for
any breach of their duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) for unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or (iv) for any transaction from
which the director derives an improper personal benefit.
<PAGE> 3
The Registrant's Bylaws provide that the Registrant shall indemnify
its directors and may indemnify its officers, employees and other agents to the
fullest extent permitted by law. The Registrant believes that indemnification
under its Bylaws covers at least negligence and gross negligence on the part of
an indemnified party in connection with the defense of any action or proceeding
arising out of such party's status or service as a director, officer, employee
or other agent of the Registrant upon an undertaking by such party to repay
such advances if it is ultimately determined that such party is not entitled to
indemnification.
The Registrant has entered into separate indemnification agreements
with each of its directors and officers. These agreements require the
Registrant, among other things, to indemnify such director or officer against
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts paid by such individual in connection with any action, suit or
proceeding arising out of such individual's status or service as a director or
officer of the Company (other than expenses arising from willful misconduct or
conduct that is knowingly fraudulent or deliberately dishonest) and to advance
expenses incurred by such individual in connection with any proceeding against
such individual with respect to which such individual may be entitled to
indemnification by the Registrant. The Registrant believes that its
Certificate of Incorporation and Bylaw provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Exhibit
-------------- -------
4 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-22248 on
Form 8-A which is incorporated herein by reference
pursuant to Item 3(d).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1993 Stock Option/Stock Issuance Plan (as Amended and
Restated on March 18, 1997).
99.2* Notice of Grant of Stock Option and Stock Option
Agreement.
99.3* Addendum to Stock Option Agreement (Change in Control).
99.4* Addendum to Stock Option Agreement (Special Tax
Elections).
99.5* Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.6* Addendum to Stock Option Agreement (Financial Assistance).
99.7 Notice of Grant of Non-Employee Director Automatic Stock
Option and Non-Employee Director Automatic Stock Option
Agreement.
99.8* Stock Issuance Agreement.
99.9* Addendum to Stock Issuance Agreement (Special Tax
Elections).
99.10** Employee Stock Purchase Plan.
99.11** Form of Stock Purchase Agreement under Employee Stock
Purchase Plan.
99.12** Form of Enrollment/Change Form under Employee Stock
Purchase Plan.
99.13** Special Officer Participation Form under Employee Stock
Purchase Plan.
99.14 Amendment to Employee Stock Purchase Plan.
* Exhibits 99.2 through 99.6 are incorporated herein by reference to
Exhibits 99.2 through 99.9, respectively, to Registrant's Registration
Statement No. 33-70790 on Form S-8, filed with the Commission on October 22,
1993.
* Exhibits 99.8 and 99.9 are incorporated herein by reference to
Exhibits 99.8 and 99.9, respectively, to Registrant's Registration Statement
No. 33-70790 on Form S-8, filed with the Commission on October 22, 1993.
II-2
<PAGE> 4
** Exhibits 99.10 through 99.13 are incorporated herein by reference
to Exhibits 99.11 through 99.13, respectively, to Registrant's Registration
Statement No. 33-92572 on Form S-8, filed with the Commission on May 22, 1995.
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 1933 Act, (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, and (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 clauses
(1)(i) and (1)(ii) shall 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 Section 15(d) of the
1934 Act that are incorporated by reference into the Registration Statement;
(2) that for the purpose of determining any liability under the 1933 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; and (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 Registrant's 1993 Stock Option/Stock Issuance Plan and/or
Employee Stock Purchase Plan.
B. The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the 1933 Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the 1934 Act that is incorporated by reference into the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the 1933 Act may be permitted to directors, officers or controlling
persons of the Registrant pursuant to the indemnification provisions summarized
in Item 6 above or otherwise, the Registrant has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the 1933 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 1933
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Santa Clara, State of California, on this 8th
day of August, 1997.
ULTRATECH STEPPER, INC.
/s/ Arthur W. Zafiropoulo
By:___________________________________
Arthur W. Zafiropoulo
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Ultratech
Stepper, Inc., a Delaware corporation, do hereby constitute and appoint Arthur
W. Zafiropoulo and William G. Leunis, III, and each of them, the lawful
attorneys and agents, with full power and authority to do any and all acts and
things and to execute any and all instruments which said attorneys and agents,
and any one of them, determine may be necessary or advisable or required to
enable said corporation to comply with the Securities Act of 1933, as amended,
and any rules or regulations or requirements of the Securities and Exchange
Commission in connection with this Registration Statement. Without limiting
the generality of the foregoing power and authority, the powers granted include
the power and authority to sign the names of the undersigned officers and
directors in the capacities indicated below to this Registration Statement, to
any and all amendments, both pre-effective and post-effective, and supplements
to this Registration Statement, and to any and all instruments or documents
filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Arthur W. Zafiropoulo Chairman of the Board August 8, 1997
- ------------------------------------ and Chief Executive Officer
Arthur W. Zafiropoulo (Principal Executive Officer)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ William G. Leunis, III Senior Vice President, Finance, Secretary, August 8, 1997
- ------------------------------------ William G. Leunis, III
Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Gregory Harrison Director August 8, 1997
- ------------------------------------
Gregory Harrison
/s/ Kenneth Levy Director August 8, 1997
- ------------------------------------
Kenneth Levy
Director August 8, 1997
- ------------------------------------
Joseph Parkinson
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining Rights of Shareholders. Reference is made to Registrant's Registration
Statement No. 0-22248 on Form 8-A which is incorporated herein by reference pursuant to Item 3(d).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 1993 Stock Option/Stock Issuance Plan (as Amended and Restated on March 18, 1997).
99.2* Notice of Grant of Stock Option and Stock Option Agreement.
99.3* Addendum to Stock Option Agreement (Change in Control).
99.4* Addendum to Stock Option Agreement (Special Tax Elections).
99.5* Addendum to Stock Option Agreement (Limited Stock Appreciation Right).
99.6* Addendum to Stock Option Agreement (Financial Assistance).
99.7 Notice of Grant of Non-Employee Director Automatic Stock Option and Non-Employee Director Automatic
Stock Option Agreement.
99.8* Stock Issuance Agreement.
99.9* Addendum to Stock Issuance Agreement (Special Tax Elections).
99.10** Employee Stock Purchase Plan.
99.11** Form of Stock Purchase Agreement under Employee Stock Purchase Plan.
99.12** Form of Enrollment/Change Form under Employee Stock Purchase Plan.
99.13** Special Officer Participation Form under Employee Stock Purchase Plan.
99.14 Amendment to the Employee Stock Purchase Plan.
</TABLE>
* Exhibits 99.2 through 99.6 are incorporated herein by reference to
Exhibits 99.2 through 99.9, respectively, to Registrant's Registration
Statement No. 33-70790 on Form S-8, filed with the Commission on October 22,
1993.
* Exhibits 99.8 and 99.9 are incorporated herein by reference to
Exhibits 99.8 and 99.9, respectively, to Registrant's Registration Statement
No. 33-70790 on Form S-8, filed with the Commission on October 22, 1993.
** Exhibits 99.10 through 99.13 are incorporated herein by reference
to Exhibits 99.11 through 99.13, respectively, to Registrant's Registration
Statement No. 33-92572 on Form S-8, filed with the Commission on May 22, 1995.
<PAGE> 1
EXHIBIT 5
[BROBECK LETTERHEAD]
August 6, 1997
ULTRATECH STEPPER, INC.
3050 Zanker Road
San Jose, California 95134
Re: Ultratech Stepper, Inc. (the "Company")
Registration Statement for Registration
of an Aggregate of 700,000 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) an additional
450,000 shares of the common stock ("Common Stock") of Ultratech Stepper, Inc.
(the "Company") issuable under the Company's 1993 Stock Option/Stock Issuance
Plan, as amended and restated (the "Option Plan"), and (ii) an additional
250,000 shares of Common Stock issuable under the Company's Employee Stock
Purchase Plan (the "Purchase Plan"). We advise you that, in our opinion, when
such shares have been issued and sold pursuant to the applicable provisions of
the Option Plan and/or the Purchase Plan and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
non-assessable shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
--------------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the 1993 Stock Option/Stock Issuance Plan and the
Employee Stock Purchase Plan of Ultratech Stepper, Inc. of our report dated
January 23, 1997 with respect to the consolidated financial statements of
Ultratech Stepper, Inc. incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1996, and the related financial statement
schedule included therein, filed with the Securities and Exchange Commission.
Ernst & Young LLP
/s/ Ernst & Young LLP
San Jose, California
August 4, 1997
<PAGE> 1
EXHIBIT 99.1
ULTRATECH STEPPER, INC.
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(Amended and Restated as of March 18, 1997)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1993 Stock Option/Stock Issuance Plan ("Plan")
is intended to promote the interests of Ultratech Stepper, Inc., a Delaware
corporation (the "Corporation"), by providing (i) key employees (including
officers) of the Corporation (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations), (ii) the non-employee members of
the Corporation's Board of Directors and (iii) independent consultants and
other advisors who provide valuable services to the Corporation (or its parent
or subsidiary corporations) with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation (or its
parent or subsidiary corporations).
B. The Plan became effective on September 29, 1993, the
date on which the shares of the Corporation's Common Stock were registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Such date is hereby designated as the Effective Date for the
Plan.
C. This Plan shall serve as the successor to the
Corporation's existing 1993 Stock Option and 1993 Stock Issuance Plans (the
"Predecessor Plans"), and no further option grants or share issuances shall be
made under the Predecessor Plans from and after the Effective Date of this
Plan. All outstanding stock options and unvested share issuances under the
Predecessor Plans on the Effective Date are hereby incorporated into this Plan
and shall accordingly be treated as outstanding stock options and unvested
share issuances under this Plan. However, each outstanding option grant and
unvested share issuance so incorporated shall continue to be governed solely by
the express terms and conditions of the instrument evidencing such grant or
issuance, and no provision of this Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock thereunder. All
unvested shares of Common Stock outstanding under the Predecessor Plans on the
Effective Date shall continue to be governed solely by the express terms and
conditions of the instruments evidencing such issuances, and no provision of
this Plan shall be deemed to affect or modify the rights or obligations of the
holders of such unvested shares.
<PAGE> 2
II. DEFINITIONS
A. For purposes of the Plan, the following definitions
shall be in effect:
BOARD: the Corporation's Board of Directors.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan.
COMMON STOCK: shares of the Corporation's common stock.
CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:
a. any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders; or
b. there is a change in the composition of the
Board over a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more proxy contests
for the election of Board members, to be comprised of individuals who either
(A) have been Board members continuously since the beginning of such period or
(B) have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause (A) who
were still in office at the time such election or nomination was approved by
the Board.
CORPORATE TRANSACTION: any of the following
stockholder-approved transactions to which the Corporation is a party:
a. a merger or consolidation in which the
Corporation is not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
b. the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
2.
<PAGE> 3
c. any reverse merger in which the Corporation
is the surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to person or persons different from the
persons holding those securities immediately prior to such merger.
EMPLOYEE: an individual who performs services while in the
employ of the Corporation or one or more parent or subsidiary corporations,
subject to the control and direction of the employer entity not only as to the
work to be performed but also as to the manner and method of performance.
FAIR MARKET VALUE: the Fair Market Value per share of Common
Stock determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed
or admitted to trading on any national stock exchange but is traded on the
Nasdaq National Market, the Fair Market Value shall be the closing selling
price per share on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no reported closing selling price for the Common
Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of Fair
Market Value.
b. If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the Fair Market Value
shall be the closing selling price per share on the date in question on the
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
HOSTILE TAKE-OVER: the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
OPTIONEE: any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in effect under
the Plan.
PARTICIPANT: any person who receives a direct issuance of
Common Stock under the Stock Issuance Program in effect under the Plan.
3.
<PAGE> 4
PLAN ADMINISTRATOR: the Committee in its capacity as the
administrator of the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability
of the Optionee or the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.
SERVICE: the performance of services on a periodic basis to
the Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-Over or (b) the highest reported price per
share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over. However, if the surrendered option is an Incentive Option, the
Take-Over Price shall not exceed the clause (a) price per share.
B. The following provisions shall be applicable in
determining the parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be considered
to be a PARENT of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
Each corporation (other than the Corporation) in an
unbroken chain of corporations which begins with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
III . STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into three
separate components: the Discretionary Option Grant Program specified in
Article Two, the Automatic Option Grant Program specified in Article Three and
the Stock Issuance Program specified in Article Four. Under the Discretionary
Option Grant Program, eligible
4.
<PAGE> 5
individuals may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock in accordance with the provisions of
Article Two. Under the Automatic Option Grant Program, non-employee Board
members will receive a series of automatic option grants over their period of
continued Board service to purchase shares of Common Stock in accordance with
the provisions of Article Three. Under the Stock Issuance Program, eligible
individuals may be issued shares of Common Stock directly, either through the
immediate purchase of such shares at Fair Market Value at the time of issuance
or as a bonus tied to the performance of services or the Corporation's
attainment of financial objectives, without any cash payment required of the
recipient.
B. General Provisions. Unless the context clearly
indicates otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN
A. Both the Discretionary Option Grant Program and the
Stock Issuance Program shall be administered by a committee ("Committee") of
two or more non-employee Board members. Members of the Committee shall serve
for such period of time as the Board may determine and shall be subject to
removal by the Board at any time.
B. The Committee as Plan Administrator shall have full
power and authority (subject to the express provisions of the Plan) to
establish rules and regulations for the proper administration of the
Discretionary Option Grant and Stock Issuance Programs and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding option grants or stock issuances thereunder as it
may deem necessary or advisable. Decisions of the Plan Administrator shall be
final and binding on all parties who have an interest in the Discretionary
Option Grant or Stock Issuance Program or any outstanding option or share
issuance thereunder.
C. Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the express terms and conditions of
Article Three, and the Committee as Plan Administrator shall exercise no
discretionary functions with respect to option grants made pursuant to that
program.
V . OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to participate in the
Discretionary Option Grant Program under Article Two or the Stock Issuance
Program under Article Four shall be limited to the following:
(1) officers and other key employees of the
Corporation (or its parent or subsidiary corporations) who render
services which contribute to
5.
<PAGE> 6
the management, growth and financial success of the Corporation (or
its parent or subsidiary corporations);
(2) non-employee members of the Board; and
(3) those independent consultants or other
advisors who provide valuable services to the Corporation (or its
parent or subsidiary corporations).
B. The Plan Administrator shall have full authority to
determine, (I) with respect to the option grants made under the Discretionary
Option Grant Program, which eligible individuals are to receive option grants,
the time or time when such grants are to be made, the number of shares to be
covered by each such grant, the status of the granted option as either an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Code or a non-statutory option not intended to meet such
requirements, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding
and (II), with respect to stock issuances under the Stock Issuance Program, the
number of shares to be issued to each Participant, the vesting schedule (if
any) to be applicable to the issued shares, and the consideration to be paid by
the individual for such shares.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock reserved for issuance
over the term of the Plan shall be limited to 5,240,251 shares.1 Such share
reserve includes (i) the initial number of shares incorporated into this Plan
from the Predecessor Plans on the Effective Date, (ii) an additional
600,000-share increase authorized by the Board on March 21, 1996 and approved
by the stockholders at the 1996 Annual Stockholders Meeting, (iii) an
additional 277,239 shares attributable to the automatic annual share increase
for fiscal 1996 which was effected on January 2, 1996, (iv) an additional
284,346 shares attributable to the automatic annual share increase for fiscal
1997 which was effected on January 2, 1997, and (v) an additional 450,000
shares authorized by the Board on March 18, 1997, subject to stockholder
approval at the 1997 Annual Meeting. Such share reserve shall automatically
increase over the next three (3) years on the first trading day in fiscal years
1998, 1999, and 2000, by an amount equal to 1.4% of the total number of shares
of Common Stock outstanding on the last trading day of the fiscal year
immediately preceding the fiscal year of each such increase. The share reserve
in effect from time to
__________________________
1 All figures have been adjusted to reflect the 2:1 stock split the
Corporation effected May 10, 1995.
6.
<PAGE> 7
time under the Plan shall be subject to periodic adjustment in accordance with
the provisions of this Section VI. To the extent one or more outstanding
options under the Predecessor Plans which have been incorporated into this Plan
are subsequently exercised, the number of shares issued with respect to each
such option shall reduce, on a share-for-share basis, the number of shares
available for issuance under this Plan.
B. In no event may the aggregate number of shares of
Common Stock for which any one individual participating in the Plan may be
granted stock options, separately-exercisable stock appreciation rights and
direct stock issuances exceed 400,000 shares per fiscal year, beginning with
the 1995 fiscal year. However, for the fiscal year in which an individual
receives his or her initial stock option grant or direct stock issuance under
the Plan, the limit shall be increased to 600,000 shares. Such limitations
shall be subject to adjustment from time to time in accordance with the
provisions of this Section VI.
C. Should one or more outstanding options under this
Plan (including outstanding options under the Predecessor Plans incorporated
into this Plan) expire or terminate for any reason prior to exercise in full
(including any option cancelled in accordance with the cancellation-regrant
provisions of Section IV of Article Two of the Plan), then the shares subject
to the portion of each option not so exercised shall be available for
subsequent issuance under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the original exercise or issue
price paid per share, pursuant to the Corporation's repurchase rights under the
Plan shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance
through one or more subsequent option grants or direct stock issuances under
the Plan. Shares subject to any option or portion thereof surrendered or
cancelled in accordance with Section V of Article Two shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent issuance under the Plan. In addition, should the exercise price of
an outstanding option under the Plan (including any option incorporated from
the Predecessor Plans) be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation
in satisfaction of the withholding taxes incurred in connection with the
exercise of an outstanding option under the Plan or the vesting of a direct
share issuance made under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised or which vest under the share
issuance, and not by the net number of shares of Common Stock actually issued
to the holder of such option or share issuance.
D. Should any change be made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, then appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
maximum number and/or class of securities for which any one person may be
granted stock
7.
<PAGE> 8
options, separately exercisable stock appreciations rights and direct stock
issuances under this Plan per calendar year, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made per
eligible non-employee Board member under the Automatic Option Grant Program,
(iv) the number and/or class of securities and price per share in effect under
each option outstanding under either the Discretionary Option Grant or
Automatic Option Grant Program and (v) the number and/or class of securities
and price per share in effect under each outstanding option incorporated into
this Plan from the Predecessor Plans. Such adjustments to the outstanding
options are to be effected in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options. The adjustments determined
by the Plan Administrator shall be final, binding and conclusive.
8.
<PAGE> 9
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I . TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant
Program shall be authorized by action of the Plan Administrator and may, at the
Plan Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted non-statutory options. Each
granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.
A. Option Price.
(1) The option price per share shall be fixed by
the Plan Administrator and shall in no event be less than one hundred percent
(100%) of the fair market value of such Common Stock on the grant date.
(2) The option price shall become immediately due
upon exercise of the option and, subject to the provisions of Section I of
Article Four and the instrument evidencing the grant, shall be payable in one
of the following alternative forms specified below:
- full payment in cash or check drawn
to the Corporation's order; or
- full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as such term is defined
below); or
- full payment in a combination of
shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date and cash
or check drawn to the Corporation's order; or
9.
<PAGE> 10
- full payment through a broker-dealer
sale and remittance procedure pursuant to which the Optionee (I) shall
provide irrevocable written instructions to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate option
price payable for the purchased shares plus all applicable Federal and
State income and employment taxes required to be withheld by the
Corporation in connection with such purchase and (II) shall provide
written directives to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the option
price for the purchased shares must accompany such notice.
B. Term and Exercise of Options. Each option granted
under this Discretionary Option Grant Program shall be exercisable at such time
or times and during such period as is determined by the Plan Administrator and
set forth in the instrument evidencing the grant. No such option, however,
shall have a maximum term in excess of ten (10) years from the grant date.
C. Limited Transferability. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, non-statutory
options may, in connection with the Optionee's estate plan, be assigned in
whole or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
D. Termination of Service.
(1) The following provisions shall govern the
exercise period applicable to any outstanding options held by the Optionee at
the time of cessation of Service or death.
- Should an Optionee cease Service for any
reason (including death or Permanent Disability) while holding one or
more outstanding options under this Article Two, then none of those
options shall
10.
<PAGE> 11
(except to the extent otherwise provided pursuant to subparagraph
D.(3) below) remain exercisable for more than a thirty-six (36)-month
period (or such shorter period determined by the Plan Administrator
and set forth in the instrument evidencing the grant) measured from
the date of such cessation of Service.
- Any option held by the Optionee under this
Article Two and exercisable in whole or in part on the date of his or
her death may be subsequently exercised by the personal representative
of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution. Such exercise, however,
must occur prior to the earlier of (i) the first anniversary of the
date of the Optionee's death or (ii) the specified expiration date of
the option term. Upon the occurrence of the earlier event, the option
shall terminate.
- Under no circumstances shall any such option
be exercisable after the specified expiration date of the option term.
- During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares (if any) in which the Optionee is vested at the
time of his or her cessation of Service. Upon the expiration of the
limited post-Service exercise period or (if earlier) upon the
specified expiration date of the option term, each such option shall
terminate and cease to be outstanding with respect to any vested
shares for which the option has not otherwise been exercised.
However, each outstanding option shall, immediately upon the
Optionee's cessation of Service for any reason, terminate and cease to
be outstanding with respect to any shares for which the option is not
otherwise at that time exercisable or in which the Optionee is not
otherwise at that time vested.
- Should (i) the Optionee's Service be
terminated for misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or (ii) the
Optionee make any unauthorized use or disclosure of confidential
information or trade secrets of the Corporation or its parent or
subsidiary corporations, then in any such event all outstanding
options held by the Optionee under this Article Two shall terminate
immediately and cease to be outstanding.
(2) The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to permit one or more options held by the
Optionee under this Article Two to be exercised, during the limited
post-Service exercise period applicable under subparagraph (1) above, not only
with respect to the number of vested shares of Common Stock for which each such
11.
<PAGE> 12
option is exercisable at the time of the Optionee's cessation of Service but
also with respect to one or more subsequent installments of the option shares
in which the Optionee would have otherwise vested had such cessation of Service
not occurred.
(3) The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under subparagraph (1) above to such greater period of
time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
E. Stockholder Rights.
An Optionee shall have no stockholder rights with
respect to any shares covered by the option until such individual shall have
exercised the option and paid the option price for the purchased shares.
F. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of any
Article Two option grant may be subject to repurchase by the Corporation in
accordance with the following provisions:
(a) The Plan Administrator shall have the
discretion to authorize the issuance of unvested shares of Common Stock under
this Article Two. Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase any or all
of those unvested shares at the option price paid per share. The terms and
conditions upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Plan Administrator and set forth
in the instrument evidencing such repurchase right.
(b) All of the Corporation's outstanding
repurchase rights under this Article Two shall automatically terminate, and all
shares subject to such terminated rights shall immediately vest in full, upon
the occurrence of a Corporate Transaction, except to the extent: (i) any such
repurchase right is expressly assigned to the successor corporation (or parent
thereof) in connection with the Corporate Transaction or (ii) such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator at
the time the repurchase right is issued.
(c) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the Optionee's
cessation of Service, to cancel the Corporation's outstanding repurchase rights
with respect to one or more shares purchased
12.
<PAGE> 13
or purchasable by the Optionee under this Option Grant Program and thereby
accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable
to all Incentive Options granted under this Article Two. Incentive Options may
only be granted to individuals who are Employees of the Corporation. Options
which are specifically designated as "non-statutory" options when issued under
the Plan shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock
for which one or more options granted to any Employee after December 31, 1986
under this Plan (or any other option plan of the Corporation or its parent or
subsidiary corporations) may for the first time become exercisable as incentive
stock options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options are
granted. Should the number of shares of Common Stock for which any Incentive
Option first becomes exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then that option may
nevertheless be exercised in that calendar year for the excess number of shares
as a non-statutory option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an
Incentive Option is granted is the owner of stock (as determined under Section
424(d) of the Code) possessing ten percent (10%) or more of the total combined
voting power of all classes of stock of the Corporation or any one of its
parent or subsidiary corporations, then the option price per share shall not be
less than one hundred and ten percent (110%) of the fair market value per share
of Common Stock on the grant date, and the option term shall not exceed five
(5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
III . CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each
option which is at the time outstanding under this Article Two shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
13.
<PAGE> 14
time subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares. However, an outstanding option under this
Article Two shall NOT so accelerate if and to the extent: (i) such option is,
in connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the option spread existing
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately following the consummation of the
Corporate Transaction, all outstanding options under this Article Two shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
C. Each outstanding option under this Article Two which
is assumed in connection with the Corporate Transaction or is otherwise to
continue in effect shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be
made to the option price payable per share, provided the aggregate option price
payable for such securities shall remain the same. In addition, appropriate
adjustments to reflect the Corporate Transaction shall be made to (i) the class
and number of securities available for issuance over the remaining term of the
Plan, (ii) the maximum number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances under this Plan per calendar year and (iii)
the maximum number and/or class of securities which may be issued pursuant to
Incentive Options granted under the Plan.
D. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide (upon such terms as it may deem
appropriate) for the automatic acceleration of one or more outstanding options
which are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time, in the event the Optionee's Service should
subsequently terminate within a designated period following the effective date
of such Corporate Transaction.
E. The grant of options under this Article Two shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
14.
<PAGE> 15
F. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to provide for the automatic acceleration
of one or more outstanding options under this Article Two (and the termination
of one or more of the Corporation's outstanding repurchase rights under this
Article Two) upon the occurrence of any Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee's Service within a specified
period following the Change in Control.
G. Any options accelerated in connection with the Change
in Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
H. The exercisability as incentive stock options under
the Federal tax laws of any options accelerated under this Section III in
connection with a Corporate Transaction or Change in Control shall remain
subject to the dollar limitation of Section II of this Article Two. To the
extent such dollar limitation is exceeded, the accelerated option shall be
exercisable as a non-statutory option under the Federal tax laws.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under this Article Two
(including outstanding options under the Predecessor Plans incorporated into
this Plan) and to grant in substitution new options under the Plan covering the
same or different numbers of shares of Common Stock but with an option price
per share not less than the Fair Market Value of the Common Stock on the new
grant date.
V . STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator
determines in its discretion to implement the stock appreciation right
provisions of this Section V, one or more Optionees may be granted the right,
exercisable upon such terms and conditions as the Plan Administrator may
establish, to surrender all or part of an unexercised option under this Article
Two in exchange for a distribution from the Corporation in an amount equal to
the excess of (i) the Fair Market Value (on the option surrender date) of the
number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (ii) the aggregate
option price payable for such vested shares.
B. No surrender of an option shall be effective
hereunder unless it is approved by the Plan Administrator. If the surrender is
so approved, then the distribution to which the Optionee shall accordingly
become entitled under this Section V may be made in shares of Common Stock
valued at Fair Market Value on the option surrender date, in
15.
<PAGE> 16
cash, or partly in shares and partly in cash, as the Plan Administrator shall
in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii)
the last day on which the option is otherwise exercisable in accordance with
the terms of the instrument evidencing such option, but in no event may such
rights be exercised more than ten (10) years after the date of the option
grant.
D. One or more officers of the Corporation subject to
the short-swing profit restrictions of the Federal securities laws may, in the
Plan Administrator's sole discretion, be granted limited stock appreciation
rights in tandem with their outstanding options under the Plan. Upon the
occurrence of a Hostile Take-Over effected at any time when the Corporation's
outstanding Common Stock is registered under Section 12(g) of the 1934 Act, the
officer shall have a thirty (30)-day period in which he or she may surrender
any outstanding option with such a limited stock appreciation right to the
Corporation, to the extent such option is at the time exercisable for
fully-vested shares of Common Stock. The officer shall in return be entitled
to a cash distribution from the Corporation in an amount equal to the excess of
(i) the Take-Over Price of the vested shares of Common Stock at the time
subject to each surrendered option (or surrendered portion of such option) over
(ii) the aggregate exercise price payable for such shares. The cash
distribution payable upon such option surrender shall be made within five (5)
days following the consummation of the Hostile Take-Over. The Plan
Administrator shall pre-approve, at the time the limited stock appreciation
right is granted, the subsequent exercise of that right in accordance with the
terms of the grant and the provisions of this Section V.D. No additional
approval of the Plan Administrator or the Board shall be required at the time
of the actual option surrender and distribution. Any unsurrendered portion of
the option shall continue to remain outstanding and become exercisable in
accordance with the terms of the instrument evidencing such grant.
E. The shares of Common Stock subject to any option
surrendered for an appreciation distribution pursuant to this Section V shall
NOT be available for subsequent issuance under the Plan.
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<PAGE> 17
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I . ELIGIBILITY
The provisions of the Automatic Option Grant Program were
revised, effective March 1, 1996, to eliminate the special one-time option
grant for 28,800 shares of Common Stock to each newly-elected or
newly-appointed non-employee Board member and to implement a new program of
periodic option grants to all eligible non-employee Board members. Under the
revised Automatic Option Grant Program, the following individuals shall be
eligible to receive automatic option grants over their period of Board service:
(i) those individuals who were serving as non-employee Board members on the
date of the 1996 Annual Stockholders Meeting but who first joined the Board
after September 29, 1993, (ii) those individuals who first join the Board as
non-employee Board members after the date of the 1996 Annual Stockholders
Meeting and (iii) those individuals who first joined the Board prior to
September 30, 1993 and continue to serve as non-employee Board members through
one or more Annual Stockholders Meetings, beginning with the 1996 Annual
Meeting. However, a non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible
to receive a 12,000-share option grant at the time of his or her initial
election or appointment to the Board, but such individual shall be eligible to
receive one or more 4,000-share annual option grants over his or her period of
continued Board service. Each non-employee Board member eligible to
participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of the Plan.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Date.
1. Each individual serving as a non-employee
Board member on the date of the 1996 Annual Stockholders Meeting shall be
granted on that date a non-statutory stock option to purchase 12,000 shares of
Common Stock upon the terms and conditions of this Article Three, provided such
individual (i) has not previously been in the employ of the Corporation (or any
Parent or Subsidiary) and (ii) did not join the Board prior to September 30,
1993. If any such individual previously received an automatic option grant for
28,800 shares of Common Stock at the time of his or her initial election or
appointment to the Board, then that option was automatically cancelled upon
stockholder approval of the revised Automatic Option Grant Program at the 1996
Annual Meeting.
2. Each individual who is first elected or
appointed as a non-employee Board member after the date of the 1996 Annual
Stockholders Meeting shall automatically be granted, on the date of such
initial election or appointment, a non-statutory
17.
<PAGE> 18
stock option to purchase 12,000 shares of Common Stock upon the terms and
conditions of this Article Three, provided such individual has not previously
been in the employ of the Corporation (or any Parent or Subsidiary).
3. On the date of each Annual Stockholders
Meeting, beginning with the 1996 Annual Stockholders Meeting, each individual
who is to continue to serve as a non-employee Board member, whether or not he
or she is standing for re-election to the Board at that particular Annual
Meeting, shall automatically be granted a Non-Statutory Option to purchase
4,000 shares of Common Stock, provided such individual did not receive any
other option grants under this Automatic Option Grant Program within the
preceding six (6) months. There shall be no limit on the number of such
4,000-share option grants any one Eligible Director may receive over his or her
period of Board service, and individuals who have previously been in the employ
of the Corporation (or any Parent or Subsidiary) shall be eligible to receive
such annual option grants over their period of continued Board service.
B. Exercise Price. The exercise price per share of
Common Stock subject to each automatic option grant made under this Article
Three shall be equal to one hundred percent (100%) of the Fair Market Value per
share of Common Stock on the automatic grant date.
C. Payment.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made
payable to the Corporation's order; or
(ii) full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(iii) full payment in a combination of
shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's reported earnings and valued at
Fair Market Value on the Exercise Date and cash or check payable to
the Corporation's order; or
(iv) to the extent the option is
exercised for vested shares, full payment through a sale and
remittance procedure pursuant to which the non-employee Board member
(I) shall provide irrevocable written instructions to a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of
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<PAGE> 19
the sale proceeds available on the settlement date, sufficient funds
to cover the aggregate exercise price payable for the purchased shares
and shall (II) concurrently provide written directives to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.
For purposes of this subparagraph C, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the option price for the purchased shares must accompany the
exercise notice. However, if the option is exercised for any unvested shares,
then the optionee must also execute and deliver to the Corporation a stock
purchase agreement for those unvested shares which provides the Corporation
with the right to repurchase, at the exercise price paid per share, any
unvested shares held by the optionee at the time of cessation of Board service
and which precludes the sale, transfer or other disposition of any shares
purchased under the option, to the extent those shares are subject to the
Corporation's repurchase right.
D. Option Term. Each automatic grant under this Article
Three shall have a maximum term of ten (10) years measured from the automatic
grant date.
E. Exercisability/Vesting. Each automatic grant shall
be immediately exercisable for any or all of the option shares. However, any
shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's
cessation of Board service prior to vesting in those shares. The shares
subject to each 12,000-share initial automatic option grant shall vest as
follows: (i) fifty percent (50%) of the shares shall vest upon the optionee's
completion of one (1) year of Board service measured from the grant date, and
(ii) the remaining shares shall vest in three (3) successive equal annual
installments upon the optionee's completion of each of the next three (3) years
of Board service thereafter. The shares subject to each 4,000-share annual
automatic option grant shall vest upon the optionee's completion of one (1)
year of Board service measured from the grant date. Vesting of the option
shares shall be subject to acceleration as provided in Section II.G and Section
III of this Article Three.
F. Limited Transferability. Each option granted under
this Automatic Option Grant Program prior to the 1997 Annual Stockholders
Meeting shall, during the lifetime of the optionee, be exercisable only by the
optionee and shall not be assignable or transferable by the optionee otherwise
than by will or the by the laws of descent and distribution following the
optionee's death. However, each option granted under this Automatic Option
Grant Program on or after the 1997 Annual Stockholders Meeting shall be
assignable in whole or in part by the optionee during his or her lifetime, but
only to the extent such assignment is made in connection with the optionee's
estate plan to one or more members of the optionee's immediate family or to a
trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or
19.
<PAGE> 20
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
G. Effect of Termination of Board Service.
1. Should the Optionee cease to serve as a Board
member for any reason (other than death or Permanent Disability) while holding
an automatic option grant under this Article Three, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise such option for any or all of the option shares in
which the Optionee is vested at the time of such cessation of Board service.
The option shall immediately terminate and cease to be outstanding, at the time
of such cessation of Board service, with respect to any option shares in which
the Optionee is not otherwise at that time vested.
2. Should the Optionee die within six (6) months
after cessation of Board service, then any automatic option grant held by the
Optionee at the time of death may subsequently be exercised, for any or all of
the option shares in which the Optionee is vested at the time of his or her
cessation of Board service (less any vested option shares subsequently
purchased by the Optionee prior to death), by the personal representative of
the Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. Any such exercise must occur within twelve (12)
months after the date of the Optionee's death.
3. Should the Optionee die or become Permanent
Disabled while serving as a Board member, then the shares of Common Stock at
the time subject to each automatic option grant held by such Optionee under
this Article Three shall immediately vest in full, and the Optionee (or the
representative of the Optionee's estate or the person or persons to whom the
option is transferred upon the Optionee's death) shall have a twelve (12)-month
period following the date of the Optionee's cessation of Board service in which
to exercise such option for any or all of those vested shares of Common Stock.
4. In no event shall any automatic grant under
this Article Three remain exercisable after the expiration date of the ten
(10)-year option term. Upon the expiration of the applicable post-service
exercise period under subparagraph 1, 2 or 3 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic grant shall
terminate and cease to be outstanding for any option shares in which the
Optionee was vested at the time of his or her cessation of Board service but
which were not otherwise purchased thereunder.
H. Stockholder Rights. The holder of an automatic
option grant under this Article Three shall have none of the rights of a
stockholder with respect to any shares
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<PAGE> 21
subject to such option until such individual shall have exercised the option
and paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions
of each automatic option grant shall be as set forth in the form Non-statutory
Stock Option Agreement attached as Exhibit A.
III . CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares
of Common Stock at the time subject to each outstanding option under this
Article Three but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable for all of the shares of
Common Stock at the time subject to that option and may be exercised for all or
any portion of such shares as fully-vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding,
unless assumed by the successor corporation or its parent company.
B. In connection with any Change in Control of the
Corporation, the shares of Common Stock at the time subject to each outstanding
option under this Article Three but not otherwise vested shall automatically
vest in full so that each such option shall, immediately prior to the specified
effective date for the Change in Control, become fully exercisable for all of
the shares of Common Stock at the time subject to that option and may be
exercised for all or any portion of such shares as fully-vested shares of
Common Stock. Each such option shall remain fully exercisable for the option
shares which vest in connection with the Change in Control until the expiration
or sooner termination of the option term.
C. Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender each option
held by him or her under this Article Three to the Corporation. The Optionee
shall in return be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the shares of Common
Stock at the time subject to the surrendered option (whether or not the
Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the consummation of the Hostile
Take-Over. Stockholder approval of this March 1997 restatement of the Plan
shall constitute pre-approval of each option subsequently granted with a
surrender provision and the subsequent surrender of that option in accordance
with the terms and provisions of this Section III.C. No additional approval of
the Plan Administrator or the Board shall be required at the time of the actual
option cancellation and cash distribution.
21.
<PAGE> 22
D. The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent issuance under this Plan.
E. The automatic option grants outstanding under this
Article Three shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
22.
<PAGE> 23
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I . TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program through
direct and immediate purchases without any intervening stock option grants.
The issued shares shall be evidenced by a Stock Issuance Agreement ("Issuance
Agreement") that complies with the terms and conditions of this Article Four.
A. Consideration.
1. Shares of Common Stock drawn from the
Corporation's authorized but unissued shares of Common Stock ("Newly Issued
Shares") shall be issued under the Stock Issuance Program for one or more of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or cash equivalents (such as a
personal check or bank draft) paid the Corporation;
(ii) a promissory note payable to the
Corporation's order in one or more installments, which may be subject
to cancellation in whole or in part upon terms and conditions
established by the Plan Administrator; or
(iii) past services rendered to the
Corporation or any parent or subsidiary corporation.
2. The consideration for any Newly Issued Shares
issued under this Stock Issuance Program shall have a value determined by the
Plan Administrator to be not less than one-hundred percent (100%) of the Fair
Market Value of those shares at the time of issuance.
3. Shares of Common Stock reacquired by the
Corporation and held as treasury shares ("Treasury Shares") may be issued under
the Stock Issuance Program for such consideration (including one or more of the
items of consideration specified in subparagraph 1. above) as the Plan
Administrator may deem appropriate, whether such consideration is in an amount
less than, equal to, or greater than the Fair Market Value of the Treasury
Shares at the time of issuance. Treasury Shares may, in lieu of any cash
consideration, be issued subject to such vesting requirements tied to the
Participant's period of future Service or the Corporation's attainment of
specified performance objectives as the Plan Administrator may establish at the
time of issuance.
23.
<PAGE> 24
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock
Issuance Program may, in the absolute discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service. The elements of the
vesting schedule applicable to any unvested shares of Common Stock issued under
the Stock Issuance Program, namely:
(i) the Service period to be completed
by the Participant or the performance objectives to be achieved by the
Corporation,
(ii) the number of installments in which
the shares are to vest,
(iii) the interval or intervals (if any)
which are to lapse between installments, and
(iv) the effect which death, Permanent
Disability or other event designated by the Plan Administrator is to
have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the
Issuance Agreement executed by the Corporation and the Participant at the time
such unvested shares are issued.
2. The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to him or her under
the Plan, whether or not his or her interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares. Any new, additional or
different shares of stock or other property (including money paid other than as
a regular cash dividend) which the Participant may have the right to receive
with respect to his or her unvested shares by reason of any stock dividend,
stock split, reclassification of Common Stock or other similar change in the
Corporation's capital structure or by reason of any Corporate Transaction shall
be issued, subject to (i) the same vesting requirements applicable to his or
her unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock under the
Plan, then those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant's purchase-money promissory note), the Corporation
24.
<PAGE> 25
shall repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such surrendered shares.
The surrendered shares may, at the Plan Administrator's discretion, be retained
by the Corporation as Treasury Shares or may be retired to authorized but
unissued share status.
4. The Plan Administrator may in its discretion
elect to waive the surrender and cancellation of one or more unvested shares of
Common Stock (or other assets attributable thereto) which would otherwise occur
upon the non-completion of the vesting schedule applicable to such shares.
Such waiver shall result in the immediate vesting of the Participant's interest
in the shares of Common Stock as to which the waiver applies. Such waiver may
be effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all
unvested shares of Common Stock at the time outstanding under the Stock
Issuance Program shall immediately vest in full, except to the extent the Plan
Administrator imposes limitations in the Issuance Agreement which preclude such
accelerated vesting in whole or in part.
B. The Plan Administrator shall have the discretionary
authority, exercisable either in advance of any actually- anticipated Change in
Control or at the time of an actual Change in Control, to provide for the
immediate and automatic vesting of one or more unvested shares outstanding
under the Stock Issuance Program at the time of such Change in Control. The
Plan Administrator shall also have full power and authority to condition any
such accelerated vesting upon the subsequent termination of the Participant's
Service within a specified period following the Change in Control.
III . TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrator's
discretion, be held in escrow by the Corporation until the Participant's
interest in such shares vests or may be issued directly to the Participant with
restrictive legends on the certificates evidencing such unvested shares. To
the extent an escrow arrangement is utilized, the unvested shares and any
securities or other assets issued with respect to such shares (other than
regular cash dividends) shall be delivered in escrow to the Corporation to be
held until the Participant's interest in such shares (or other securities or
assets) vests. Alternatively, if the unvested shares are issued directly to
the Participant, the restrictive legend on the certificates for such shares
shall read substantially as follows:
25.
<PAGE> 26
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II)
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S
SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF
SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE
AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) DATED _____________, 199__, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION."
B. The Participant shall have no right to transfer any
unvested shares of Common Stock issued to him or her under the Stock Issuance
Program. For purposes of this restriction, the term "transfer" shall include
(without limitation) any sale, pledge, assignment, encumbrance, gift, or other
disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled, and
neither the Participant nor the proposed transferee shall have any rights with
respect to those shares. However, the Participant shall have the right to make
a gift of unvested shares acquired under the Stock Issuance Program to his or
her spouse or issue, including adopted children, or to a trust established for
such spouse or issue, provided the donee of such shares delivers to the
Corporation a written agreement to be bound by all the provisions of the Stock
Issuance Program and the Issuance Agreement applicable to the gifted shares.
26.
<PAGE> 27
ARTICLE FIVE
MISCELLANEOUS
I . LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist
any Optionee or Participant (including an Optionee or Participant who is an
officer of the Corporation) in the exercise of one or more options granted to
such Optionee under the Discretionary Option Grant Program or the purchase of
one or more shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal and State income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan from
the Corporation to such Optionee or Participant or (ii) permitting the Optionee
or Participant to pay the option price or purchase price for the purchased
Common Stock in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) shall be upon such terms as the Plan Administrator specifies in the
applicable option or issuance agreement or otherwise deems appropriate under
the circumstances. Loans or installment payments may be authorized with or
without security or collateral. However, the maximum credit available to the
Optionee or Participant may not exceed the option or purchase price of the
acquired shares (less the par value of such shares) plus any Federal and State
income and employment tax liability incurred by the Optionee or Participant in
connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute
discretion, determine that one or more loans extended under this financial
assistance program shall be subject to forgiveness by the Corporation in whole
or in part upon such terms and conditions as the Plan Administrator may deem
appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and
authority to amend or modify the Plan (or any component thereof) in any or all
respects whatsoever. However, no such amendment or modification shall
adversely affect rights and obligations with respect to options at the time
outstanding under the Plan, nor adversely affect the rights of any Participant
with respect to Common Stock issued under the Stock Issuance Program prior to
such action, unless the Optionee or Participant consents to such amendment. In
addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.
B. (i) Options to purchase shares of Common Stock may be
granted under the Discretionary Option Grant Program and (ii) shares of Common
Stock may be issued under the Stock Issuance Program, which are in both
instances in excess of the number of
27.
<PAGE> 28
shares then available for issuance under the Plan, provided any excess shares
actually issued under the Discretionary Option Grant Program or the Stock
Issuance Program are held in escrow until stockholder approval is obtained for
a sufficient increase in the number of shares available for issuance under the
Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess option grants or excess share issuances
are made, then (I) any unexercised excess options shall terminate and cease to
be exercisable and (II) the Corporation shall promptly refund the purchase
price paid for any excess shares actually issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow.
III . TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options for such shares or the vesting of such
shares under the Plan shall be subject to the satisfaction of all applicable
Federal, State and local income tax and employment tax withholding
requirements.
The Plan Administrator may, in its discretion and in
accordance with the provisions of this Section III of Article Five and such
supplemental rules as the Plan Administrator may from time to time adopt
(including the applicable safe-harbor provisions of SEC Rule 16b-3), provide
any or all holders of non-statutory options (other than the automatic grants
made pursuant to Article Three of the Plan) or unvested shares under the Plan
with the right to use shares of Common Stock in satisfaction of all or part of
the Federal, State and local income and employment tax liabilities incurred by
such holders in connection with the exercise of their options or the vesting of
their shares (the "Taxes"). Such right may be provided to any such holder in
either or both of the following formats:
(a) Stock Withholding: The holder of the non-statutory
option or unvested shares may be provided with the election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such non-statutory option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the applicable Taxes (not to exceed one hundred percent (100%))
designated by the holder.
(b) Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option or the unvested
shares with the election to deliver to the Corporation, at the time the
non-statutory option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than in connection
with the option exercise or share vesting triggering the Taxes) with an
aggregate Fair Market Value equal to the percentage of the Taxes incurred in
connection with such option exercise or share vesting (not to exceed one
hundred percent (100%)) designated by the holder.
28.
<PAGE> 29
IV. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was adopted by the Board on July 23, 1993,
and was approved by the stockholders on the same date. The Plan became
effective on September 29, 1993, the date on which the shares of the
Corporation's Common Stock were first registered under the 1934 Act. No
further option grants or stock issuances shall be made under the Predecessor
Plans from and after the Effective Date.
B. Each stock option grant outstanding under the
Predecessor Plans immediately prior to the Effective Date of the Discretionary
Option Grant Program shall be incorporated into this Plan and treated as an
outstanding option under this Plan, but each such option shall continue to be
governed solely by the terms and conditions of the instrument evidencing such
grant, and nothing in this Plan shall be deemed to affect or otherwise modify
the rights or obligations of the holders of such options with respect to their
acquisition of shares of Common Stock thereunder. Each unvested share of
Common Stock outstanding under the Predecessor Plans on the Effective Date of
the Stock Issuance Program shall continue to be governed solely by the terms
and conditions of the instrument evidencing such share issuance, and nothing in
this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holder of such unvested shares.
C. The option/vesting acceleration provisions of Section
III of Article Two and Section II of Article Four relating to Corporate
Transactions and Changes in Control may, in the Plan Administrator's
discretion, be extended to one or more stock options or unvested share
issuances which are outstanding under the Predecessor Plans on the Effective
Date of the Discretionary Option Grant and Stock Issuance Programs but which do
not otherwise provide for such acceleration.
D. On March 16, 1995, the Board adopted an amendment to
the Plan which (i) increased the number of shares of Common Stock available for
issuance under the Plan by an additional 600,000 shares (as adjusted for the
May 1995 stock split), (ii) provided for an automatic annual increase to the
existing share reserve on the first trading day in each of the next five (5)
fiscal years, beginning with the 1996 fiscal year and continuing through fiscal
year 2000, equal to 1.4% of the total number of shares of Common Stock
outstanding on the last trading day of the fiscal year immediately preceding
the fiscal year of each such share increase and (iii) imposed certain
limitations required under applicable Federal tax laws with respect to
Incentive Option grants. The amendment was approved by the stockholders at the
1995 Annual Meeting on May 17, 1995.
E. On March 21, 1996, the Board adopted an amendment to
the Plan which (i) increased the number of shares of Common Stock available for
issuance under the Plan by an additional 600,000 shares, (ii) increased the
limit on the maximum number of shares of Common Stock issuable under the 1993
Plan prior to the required cessation of further Incentive Option grants to
3,780,000 shares plus an additional increase of 277,000 shares per fiscal year
over each of the next four (4) fiscal years, beginning with the 1997
29.
<PAGE> 30
fiscal year, (iii) revised the Automatic Option Grant Program to eliminate the
special one-time option grant for 28,800 shares of Common Stock to each
newly-elected or newly-appointed non-employee Board member and implement a new
option grant program pursuant to which all eligible non- employee Board members
will receive a series of automatic option grants over their period of continued
Board service. The amendment was approved by the stockholders at the 1996
Annual Meeting.
F. On March 18, 1997, the Board adopted a series of
amendments to the Plan which (i) increased the number of shares of Common Stock
reserved for issuance over the term of the Plan by an additional 450,000
shares, (ii) rendered all non-employee Board members eligible to receive option
grants and direct stock issuances under the Discretionary Option Grant and
Stock Issuance Programs, (iii) allowed unvested shares issued under the Plan
and subsequently repurchased by the Corporation at the option exercise price or
direct issue price paid per share to be reissued under the Plan, (iv)
eliminated the plan limitation which precluded the grant of additional
Incentive Options once the number of shares of Common Stock issued under the
Plan, whether as vested or unvested shares, exceeded a certain level, (v)
removed certain restrictions on the eligibility of non-employee Board members
to serve as Plan Administrator, and (vi) effected a series of additional
changes to the provisions of the Plan (including the stockholder approval
requirements) in order to take advantage of the recent amendments to Rule 16b-3
of the 1934 Act which exempts certain officer and director transactions under
the Plan from the short-swing liability provisions of the federal securities
laws. The March 18, 1997 amendments are subject to stockholder approval at the
1997 Annual Meeting. Should stockholder approval of the 1997 amendments not be
obtained, then any options granted on the basis of the 450,000-share increase
shall terminate and cease to remain outstanding without ever becoming
exercisable for those shares, and no further option grants shall be made on the
basis of such increase. However, the provisions of the Plan as in effect
immediately prior to the March 18, 1997 amendments shall automatically be
reinstated, and option grants and share issuances may thereafter continue to be
made pursuant to the reinstated provisions of the Plan.
G. The Plan shall terminate upon the earlier of (i) June
30, 2003 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Plan or the issuance of shares
(whether vested or unvested) under the Stock Issuance Program. If the date of
the plan termination is determined under clause (i) above, then all option
grants and unvested share issuances outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the
instruments evidencing such grants or issuances.
V . USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be
used for general corporate purposes.
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VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any
option under the Plan, the issuance of any shares under the Stock Issuance
Program, and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be
issued or delivered under this Plan unless and until there shall have been
compliance with all applicable requirements of Federal and State securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any securities exchange (or the Nasdaq
National Market, if applicable) on which shares of the Common Stock are then
listed for trading.
VII . NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the
right to remain in the employ or service of the Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the
Corporation (or any parent or subsidiary corporation retaining the services of
such individual) may terminate such individual's employment or service at any
time and for any reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets
under the Plan may not be assigned, encumbered or otherwise transferred by any
Optionee or Participant.
B. The provisions of the Plan relating to the exercise
of options and the vesting of shares shall be governed by the laws of the State
of California, as such laws are applied to contracts entered into and performed
in such State.
C. The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Corporation and its successors or assigns, whether
by Corporate Transaction or otherwise, and the Participants and Optionees and
the legal representatives, heirs or legatees of their respective estates.
31.
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EXHIBIT 99.7
INITIAL OPTION GRANT
ULTRATECH STEPPER, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION
Notice is hereby given of the following stock option (the
"Option") to purchase shares of the common stock of Ultratech Stepper, Inc.
(the "Corporation") which has been granted pursuant to the automatic grant
program in effect under the Corporation's 1993 Stock Option/Stock Issuance Plan
(the "Plan"):
OPTIONEE: ___________________________________________________
GRANT DATE: ___________________________________________
TYPE OF OPTION: Non-Statutory Stock Option
OPTION PRICE: $________ per share
NUMBER OF OPTION SHARES: 12,000 shares
EXPIRATION DATE: ____________________________________________
EXERCISE SCHEDULE: The option is immediately
exercisable for all the Option Shares.
VESTING SCHEDULE: The Option Shares shall initially be
unvested and subject to repurchase by the Corporation, at the
Option Price paid per share, upon the Optionee's cessation of
service as a member of the Corporation's Board of Directors
(the "Board"). Optionee shall acquire a vested interest in,
and the Corporation's repurchase right shall lapse with
respect to, the Option Shares as follows: fifty percent (50%)
of the Option Shares shall vest upon Optionee's completion of
one (1) year of Board service measured from the Grant Date,
and the balance of the Option Shares shall vest in a series of
three (3) successive equal annual installments upon Optionee's
completion of each additional year of Board service over the
three (3)-year period measured from the first anniversary of
the Grant Date. In no event shall any additional Option
Shares vest following Optionee's cessation of Board service.
<PAGE> 2
Optionee understands and agrees that the Option is granted
subject to and in accordance with the express terms of the automatic option
grant program in effect under the Plan. Optionee further agrees to be bound by
the terms of the Plan and the terms of the Option as set forth in the
Non-Employee Director Automatic Stock Option Agreement attached hereto as
Exhibit A. Optionee hereby acknowledges receipt of a copy of the official Plan
Summary and Prospectus attached hereto as Exhibit B. A copy of the Plan is
also available upon request made to the Corporate Secretary at the Corporate
Offices at 3050 Zanker Road, San Jose, CA 95134.
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE
NON-TRANSFERRABLE AND SUBJECT TO REPURCHASE BY THE CORPORATION, AT THE OPTION
PRICE PAID PER SHARE, UPON OPTIONEE'S CESSATION OF BOARD SERVICE PRIOR TO
VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT
SHALL BE SET FORTH IN A STOCK PURCHASE AGREEMENT,IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No provision of this Notice of Grant or in the attached Stock
Option Agreement or the Plan shall in any way be construed or interpreted so as
to affect adversely or otherwise impair the right of the Corporation or the
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
DATED: ___________________, 199___
ULTRATECH STEPPER, INC.
By: ____________________________________
Title: ____________________________________
____________________________________
OPTIONEE
Address:____________________________________
____________________________________
Attachments:
Exhibit A: Non-Employee Automatic Stock Option Agreement
Exhibit B: Plan Summary & Prospectus for Non-Employee Board Members
2.
<PAGE> 3
EXHIBIT A
NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION AGREEMENT
<PAGE> 4
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
FOR NON-EMPLOYEE BOARD MEMBERS
<PAGE> 5
ANNUAL OPTION GRANT
ULTRATECH STEPPER, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION
Notice is hereby given of the following stock option (the
"Option") to purchase shares of the common stock of Ultratech Stepper, Inc.
(the "Corporation") which has been granted pursuant to the automatic grant
program in effect under the Corporation's 1993 Stock Option/Stock Issuance Plan
(the "Plan"):
OPTIONEE: __________________________________________________
GRANT DATE: ________________________________________________
TYPE OF OPTION: Non-Statutory Stock Option
OPTION PRICE: $_______ per share
NUMBER OF OPTION SHARES: 4,000 shares
EXPIRATION DATE: ___________________________________________
EXERCISE SCHEDULE: The option is immediately
exercisable for all the Option Shares.
VESTING SCHEDULE: The Option Shares shall initially be
unvested and subject to repurchase by the Corporation, at the
Option Price paid per share, upon the Optionee's cessation of
service as a member of the Corporation's Board of Directors
(the "Board"). Optionee shall acquire a vested interest in,
and the Corporation's repurchase right shall lapse with
respect to, all the Option Shares upon Optionee's completion
of one (1) year of Board service measured from the Grant Date.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the express terms of the automatic option
grant program in effect under the Plan. Optionee further agrees to be bound by
the terms of the Plan and the terms of the Option as set forth in the
Non-Employee Director Automatic Stock Option Agreement attached hereto as
Exhibit A. Optionee hereby acknowledges receipt of a copy of the official Plan
Summary and Prospectus attached hereto as Exhibit B. A copy of the Plan is
also available upon request made to the Corporate Secretary at the Corporate
Offices at 3050 Zanker Road, San Jose, CA 95134.
<PAGE> 6
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE
NON-TRANSFERRABLE AND SUBJECT TO REPURCHASE BY THE CORPORATION, AT THE OPTION
PRICE PAID PER SHARE, UPON OPTIONEE'S CESSATION OF BOARD SERVICE PRIOR TO
VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT
SHALL BE SET FORTH IN A STOCK PURCHASE AGREEMENT,IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION
EXERCISE.
No provision of this Notice of Grant or in the attached Stock
Option Agreement or the Plan shall in any way be construed or interpreted so as
to affect adversely or otherwise impair the right of the Corporation or the
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
DATED: ___________________, 199___
ULTRATECH STEPPER, INC.
By: ____________________________________
Title: ____________________________________
____________________________________
OPTIONEE
Address:____________________________________
____________________________________
Attachments:
Exhibit A: Non-Employee Automatic Stock Option Agreement
Exhibit B: Plan Summary & Prospectus for Non-Employee Board Members
2.
<PAGE> 7
EXHIBIT A
NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION AGREEMENT
<PAGE> 8
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
FOR NON-EMPLOYEE BOARD MEMBERS
<PAGE> 9
ULTRATECH STEPPER, INC.
NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has approved an automatic option
grant program under the 1993 Stock Option/Stock Issuance Plan (the "Plan")
pursuant to which eligible non-employee members of the Corporation's Board will
automatically receive special option grants at designated intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as a member of the Board.
B. Optionee is an eligible non-employee Board member and
this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the automatic grant of a stock option
to purchase shares of the Corporation's common stock ("Common Stock") under the
Plan.
C. The granted option is intended to be a non-statutory
option which does not meet the requirements of Section 422 of the Internal
Revenue Code and is designed to provide Optionee with a meaningful incentive to
continue to serve as a member of the Board.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to Optionee, as
of the date of grant (the "Grant Date") specified in the accompanying Notice of
Grant of Non-Employee Director Automatic Stock Option (the "Grant Notice"), a
stock option to purchase up to that number of shares of Common Stock (the
"Option Shares") as is specified in the Grant Notice. The Option Shares shall
be purchasable from time to time during the option term at the price per share
(the "Option Price") specified in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term
of ten (10) years measured from the Grant Date and shall expire at the close of
business on the Expiration Date specified in the Grant Notice, unless sooner
terminated under Paragraph 5, 7 or 8.
3. LIMITED TRANSFERABILITY. This option may, in
connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment. Should
Optionee die while
<PAGE> 10
holding this option, then the option shall be transferred in accordance with
Optionee's will or the laws of inheritance.
4. EXERCISABILITY. This option shall be immediately
exercisable for any or all of the Option Shares, whether or not the Option
Shares are vested in accordance with the Vesting Schedule set forth in the
Grant Notice, and shall remain so exercisable until the expiration or sooner
termination of the option term. In no event, however, shall any additional
Option Shares vest following Optionee's cessation of service as a Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's
service as a Board member cease while this option remains outstanding, then the
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date in accordance with the
following provisions:
(i) Should Optionee cease to serve as a
Board member for any reason (other than death or permanent disability)
while holding this option, then the period for exercising this option
shall be reduced to a six (6)-month period commencing with the date
of such cessation of Board service, but in no event shall this option
be exercisable at any time after the Expiration Date. During such
limited period of exercisability, this option may not be exercised for
more than the number of Option Shares (if any) in which the Optionee
is vested on the date Optionee ceases service as a Board member. Upon
the earlier of (i) the expiration of such six (6)-month period or
(ii) the specified Expiration Date, the option shall terminate and
cease to be exercisable with respect to any vested Option Shares for
which the option has not been exercised.
(ii) Should Optionee die during the six
(6)-month period following his or her cessation of Board service, then
the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will
or in accordance with the laws of descent and distribution shall have
the right to exercise this option for any or all of the Option Shares
in which the Optionee is vested at the time of Optionee's cessation of
Board service (less any Option Shares purchased by Optionee after such
cessation of Board service but prior to death). Such right of
exercise shall terminate, and this option shall accordingly cease to
be exercisable for such vested Option Shares, upon the earlierof (A)
the expiration of the twelve (12)-month period measured from the date
of Optionee's death or (B) the specified Expiration Date of the option
term.
(iii) Should Optionee die or become
permanently disabled while serving as a Board member, then all the
Option Shares subject to this option at the time of such cessation of
Board service shall immediately vest and Optionee, or the personal
representative of Optionee's estate or the
2.
<PAGE> 11
person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of descent and
distribution, shall have the right to exercise this option for any or
all of those vested Option Shares. Such right of exercise shall
terminate, and this option shall accordingly cease to be outstanding
with respect to the Option Shares, upon the earlier of (A) the
expiration of the twelve (12)-month period measured from the date on
which Optionee dies or becomes permanently disabled or (B) the
specified Expiration Date of the option term.
(iv) Upon Optionee's cessation of Board
service for any reason other than death or permanent disability, this
option shall immediately terminate and cease to be outstanding with
respect to any and all Option Shares in which the Optionee is not
otherwise at that time vested in accordance with the normal Vesting
Schedule set forth in the Grant Notice or the special vesting
acceleration provisions of Paragraph 7 or 8.
(v) Optionee shall be deemed to be
PERMANENTLY DISABLED if Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death
or which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months.
6. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Common Stock issuable under the Plan by reason of any stock split,
stock dividend, combination of shares, exchange of shares or other change
affecting such Common Stock as a class without the Corporation's receipt of
consideration, then the number and class of securities purchasable under this
option and the Option Price payable per share shall be appropriately adjusted
to prevent the dilution or enlargement of Optionee's rights hereunder;
provided, however, the aggregate Option Price shall remain the same.
7. CORPORATE TRANSACTION. In the event of any of the
following stockholder-approved transactions to which the Corporation is a party
(a "Corporate Transaction"):
(i) a merger or consolidation in which
the Corporation is not the surviving entity, except for a transaction
the principal purpose of which is to change the State in which the
Corporation is incorporated,
(ii) the sale, transfer or other
disposition of all or substantially all of the assets of the
Corporation in liquidation or dissolution of the Corporation, or
3.
<PAGE> 12
(iii) any reverse merger in which the
Corporation is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to person or
persons different from those who held such securities immediately
prior to such merger,
all Option Shares at the time subject to this option
but not otherwise vested shall automatically vest so that this option shall,
immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Option Shares at the time
subject to this option and may be exercised for all or any portion of those
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, this option shall terminate and
cease to be outstanding.
8. CHANGE IN CONTROL/HOSTILE TAKEOVER.
(a) All Option Shares subject to this option at the time
of a Change in Control (as defined below) but not otherwise vested shall
automatically vest so that this option shall, immediately prior to the
effective date of such Change in Control, become fully exercisable for all of
the Option Shares at the time subject to this option and may be exercised for
all or any portion of those shares as fully-vested shares. This option shall
remain exercisable for such fully-vested Option Shares until the earliest to
occur of (i) the specified Expiration Date of the option term, (ii) the sooner
termination of this option in accordance with Paragraph 5 or 7 or (iii) the
surrender of this option under Paragraph 8(b).
(b) During the thirty (30)-day period immediately
following the consummation of a Hostile Take-Over (as defined below), Optionee
shall have the unconditional right to surrender this option to the Corporation
in exchange for a cash distribution from the Corporation in an amount equal to
the excess of (I) the Take-Over Price of the Option Shares at the time subject
to the surrendered option (whether or not those Option Shares are at the time
vested) over (II) the aggregate Option Price payable for such shares.
To exercise this limited stock appreciation right, Optionee
must, during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the Option is being
surrendered. Such notice must be accompanied with the return of Optionee's
copy of this Agreement, together with any written amendments to such Agreement.
The cash distribution shall be paid to Optionee within five (5) days following
such delivery date, and neither the approval of the Plan Administrator nor the
consent of the Board shall be required in connection with such option surrender
and cash distribution. Upon receipt of such cash distribution, this option
shall be cancelled with respect to the shares subject to the surrendered option
(or the surrendered portion), and Optionee shall cease to have any further
right to acquire those Option Shares under this Agreement. The option shall,
however, remain outstanding for the balance of the Option Shares (if any) in
4.
<PAGE> 13
accordance with the terms and provisions of this Agreement, and the Corporation
shall accordingly issue a new stock option agreement (substantially in the same
form as this Agreement) for those remaining Option Shares.
This limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
(c) Definitions: For purposes of this Agreement, the
following definitional provisions shall be in effect:
A CHANGE IN CONTROL shall be deemed to occur in the event:
(i) any person or related group of
persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934 (the "1934 Act")) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders; or
(ii) there is a change in the composition
of the Board over a period of thirty-six (36) consecutive months or
less such that a majority of the Board members ceases, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A)
who were still in office at the time such election or nomination was
approved by the Board.
A HOSTILE TAKE-OVER shall be deemed to occur
in the event any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept.
5.
<PAGE> 14
The TAKE-OVER PRICE per share shall be deemed
to be equal to the greater of (a) the Fair Market Value per share of
Common Stock on the option surrender date, as determined in accordance
with the valuation provisions of Paragraph 9(b), or (b) the highest
reported price per share of Common Stock paid by the tender offeror in
effecting the Hostile Take- Over.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option for all or any part
of the Option Shares for which the option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) To the extent the option is
exercised for vested Option Shares, the Secretary of the Corporation
shall be provided with written notice of the option exercise (the
"Exercise Notice"), in substantially the form of Exhibit I attached
hereto, in which there is specified the number of vested Option Shares
which are to be purchased under the exercised option. To the extent
the option is exercised for one or more unvested Option Shares, the
Optionee (or other person exercising the option) shall deliver to the
Secretary of the Corporation a stock purchase agreement (in form and
substance satisfactory to the Corporation) which grants the
Corporation the right to repurchase, at the Option Price, any and all
unvested Option Shares held by the Optionee at the time of his or her
cessation of Board service and which precludes the sale, transfer or
other disposition of any purchased Option Shares subject to such
repurchase right ("the Purchase Agreement").
(ii) The aggregate Option Price for the
purchased shares shall be paid in one of the following alternative
forms:
1. full payment in cash or check made
payable to the Corporation's order; or
2. full payment in shares of Common
Stock held by Optionee for the requisite period necessary to avoid a
charge to the Corporation's reported earnings and valued at Fair
Market Value on the Exercise Date; or
3. full payment in a combination of
shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date and cash
or check made payable to the Corporation's order; or
6.
<PAGE> 15
4. to the extent the option is
exercised for vested Option Shares, full payment effected through a
broker-dealer sale and remittance procedure pursuant to which Optionee
shall provide irrevocable instructions (A) to a Corporation-designated
brokerage firm to effect the immediate sale of the vested shares
purchased under the option and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate Option Price payable for those shares and (B) to
the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
(iii) Appropriate documentation evidencing
the right to exercise this option shall be furnished the Corporation
if the person or persons exercising the option is other than the
Optionee.
(b) For purposes of subparagraph 9(a) above and for all
other valuation purposes under this Agreement, the Fair Market Value per share
of Common Stock on any relevant date shall be the determined in accordance with
the following provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national stock exchange but is traded on
the Nasdaq National Market, the Fair Market Value shall be the closing
selling price per share on the date inquestion, as such price is
reported on the Nasdaq National Market or any successor system. If
there is no reported closing selling price for the Common Stock on the
date in question, then the closing selling price on the last preceding
date for which such quotation exists shall be determinative of Fair
Market Value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the Fair
Market Value shall be the closing selling price per share on the date
in question on the exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the date
in question, then the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for which such
quotation exists.
(c) The Exercise Date shall be the date on which the
Exercise Notice is delivered to the Secretary of the Corporation, together with
the appropriate Purchase Agreement for any unvested shares acquired under the
option. Except to the extent the sale and remittance procedure specified above
is utilized in connection with the exercise of the option for vested shares,
payment of the Option Price for the purchased shares must accompany such
notice.
7.
<PAGE> 16
(d) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or other person or persons
exercising this option) a certificate or certificates representing the
purchased Option Shares. To the extent any such Option Shares are unvested,
the certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Company until such shares vest.
(e) In no event may this option be exercised for any
fractional share.
10. STOCKHOLDER RIGHTS. The holder of this option
shall not have any of the rights of a stockholder with respect to the Option
Shares until such individual shall have exercised this option, paid the Option
Price for the purchased shares and become the record holder of those shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in
any way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time
in accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise
of this option and the issuance of the Option Shares upon such exercise shall
be subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any
stock exchange on which shares of the Common Stock may be listed at the time of
such exercise and issuance.
13. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3 or 7, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the Corporation's
successors and assigns.
14. DISCHARGE OF LIABILITY. The inability of the
Corporation to obtain approval from any regulatory body having authority deemed
by the Corporation to be necessary to the lawful issuance and sale of any
Common Stock pursuant to this option shall relieve the Corporation of any
liability with respect to the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained. However, the Corporation
shall use its best efforts to obtain all such applicable approvals.
15. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation in care of the Corporate Secretary at
the Corporate Offices at 3050 Zanker Road, San Jose, CA 95134. Any notice
required to be given or delivered to Optionee shall
8.
<PAGE> 17
be in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Grant Notice. All notices shall be deemed to
have been given or delivered upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.
16. CONSTRUCTION/GOVERNING LAW. This Agreement and the
option evidenced hereby are made and granted pursuant to the Plan and are in
all respects limited by and subject to the express terms and provisions of the
Plan, including the automatic option grant provisions of Article Three of the
Plan. The interpretation, performance, and enforcement of this Agreement shall
be governed by the laws of the State of California without resort to that
State's conflict-of-laws rules.
9.
<PAGE> 18
EXHIBIT I
NOTICE OF EXERCISE OF
NONSTATUTORY STOCK OPTION
I hereby notify Ultratech Stepper, Inc. (the "Corporation")
that I elect to purchase ________________ shares of Common Stock of the
Corporation (the "Purchased Shares") pursuant to that certain option (the
"Option") granted to me on ______________, 199_ to purchase up to
_________________ shares of the Corporation's Common Stock at an option price
of $______ per share (the "Exercise Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the
Exercise Price for the Purchased Shares in accordance with the provisions of my
agreement with the Corporation evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a condition for
exercise. Alternatively, I may utilize the special broker/dealer sale and
remittance procedure specified in my agreement to effect payment of the
Exercise Price for any Purchased Shares in which I am vested at the time of
exercise.
________________ _________________________________________
Date OPTIONEE
Address: ________________________________
________________________________
Print name in exact manner
it is to appear on the
stock certificate:
_________________________________________
Address to which certificate
is to be sent, if different
from address above:
_________________________________________
_________________________________________
Social Security Number:
_________________________________________
<PAGE> 1
EXHIBIT 99.14
ULTRATECH STEPPER, INC.
EMPLOYEE STOCK PURCHASE PLAN
PLAN AMENDMENT
The Ultratech Stepper, Inc. Employee Stock Purchase Plan, as
amended through February 1, 1996 (the "Purchase Plan"), is hereby amended,
effective as of March 18, 1997, as follows:
1. Paragraph A of Article III is hereby amended to read
as follows:
A. The stock purchasable under the Plan shall be
shares of authorized but unissued or reacquired Common Stock,
including shares of Common Stock purchased on the open market. The
maximum number of shares of Common Stock which may be issued over the
term of the Plan shall not exceed 450,000 1/ shares.
2. Except as modified by this Plan Amendment, all the
terms and provisions of the Purchase Plan (as previously amended) shall
continue in full force and effect.
IN WITNESS WHEREOF, ULTRATECH STEPPER, INC. has caused this
Plan Amendment to be executed on its behalf by its duly-authorized officer as
of the 18th day of March, 1997.
ULTRATECH STEPPER, INC.
By: ____________________________________
Title: _________________________________
___________________________
1/ All figures have been adjusted to reflect the 2:1 stock split the
Corporation effected on May 10, 1995. In addition, such share reserve includes
a 250,000-share increase authorized by the Board on March 18, 1997, subject to
stockholder approval at the 1997 Annual Meeting. No shares shall be issued on
the basis of such increase unless such stockholder approval is obtained.
