APPLIED MATERIALS, INC.
1985 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended to December 8, 1993)
ARTICLE I
GENERAL
1. PURPOSE.
This 1985 Stock Option Plan for Non-Employee Directors
(the "Plan") is intended to attract and retain the services of
experienced and knowledgeable independent directors of Applied
Materials, Inc., a California corporation (the "Company"), for
the benefit of the Company and its shareholders and to provide
additional incentive for such directors to continue to work for
the best interests of the Company and its shareholders.
2. ADMINISTRATION.
The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The Board shall have the
power to construe the Plan, to determine all questions arising
thereunder and to adopt and amend such rules and regulations for
the administration of the Plan as it may deem desirable.
The interpretation and construction by the Board of any
provisions of the Plan or of any option granted under it shall be
final. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any
option granted under it.
3. ELIGIBILITY.
Only directors who are not employees of the Company or
any subsidiary are eligible participants in the Plan. Each such
person who shall have been elected or appointed a director of the
Company shall automatically be granted options to purchase
20,000 shares of the Company's Common Stock (the "Appointment
Grant") (subject to further adjustment as provided in Article III
hereof) on the date that any such person is for the first time
either appointed by the Board of Directors or elected by the
shareholders of the Company to the Board of Directors.
In addition, each such director of the Company shall
automatically be granted options to purchase 6,0001/ shares of the
Company's Common Stock (subject to further adjustment as provided
in Article III hereof) on the last business day of fiscal years
1986 through and including 1994, provided, that such automatic
option grants shall only be made if the recipient director (i) is
not otherwise an employee of the Company or any subsidiary on the
date of grant, (ii) has not been an employee of the Company or
any subsidiary for all or any part of the preceding fiscal year,
and (iii) has served on the Board of Directors for the entire
preceding fiscal year.
The dates on which options are granted hereunder are
referred to herein as the "Grant Date."
In the event that the number of shares of the Company's
Common Stock subject to future grants under the Plan is
insufficient to make all automatic grants required to be made on
the Grant Date, then all non-employee directors entitled to a
grant on such date shall share ratably in the number of options
on shares of the Company's Common Stock available for grant under
the Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be issued under the Plan shall be
authorized and unissued or reacquired shares of the Company's
common stock (the "Common Stock"). The aggregate number of
shares which may be issued under the Plan shall not exceed
800,000 shares of Common Stock, unless an adjustment is
required in accordance with Article III.
5. AMENDMENT OF THE PLAN.
The Board of Directors may, insofar as permitted by
law, from time to time, suspend or discontinue the Plan or revise
or amend it in any respect whatsoever, except that no such
amendment shall alter or impair or diminish any rights or
obligations under any option theretofore granted under the Plan
without the consent of the person to whom such option was
granted. In addition, without further shareholder approval, no
such amendment shall increase the number of shares subject to the
Plan (except as authorized by Article III), increase the number
of shares for which an option may be granted to any optionee
(except as authorized by Article III), change the designation in
Section 3 of Article I of the class of persons eligible to
receive options under the Plan, provide for the grant of options
having an option price per share less than fair market value (as
defined in Section 11 of this Article I) on the date of grant,
extend the term during which options may be exercised, extend the
final date upon which options under the Plan may be granted, or
otherwise amend the Plan in a way that would require shareholder
approval under Rule 16b-3.
The Company's shareholders shall approve amendments by
the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled
to vote at a meeting (with the shares held by the interested
director or directors not being entitled to vote thereon), or any
adjournment thereof, duly held in accordance with the applicable
laws of the state or other jurisdiction in which the Company is
incorporated.
6. APPROVAL OF SHAREHOLDERS.
The Plan is effective September 5, 1985, subject to
approval by the affirmative votes of the holders of a majority of
the securities of the Company present, or represented, and
entitled to vote at the next annual meeting of shareholders (with
the shares held by the interested director or directors not being
entitled to vote thereon), or any adjournment thereof, duly held
in accordance with California law. No option granted hereunder
may become exercisable unless and until such approval is
obtained.
7. TERM OF PLAN.
Options may be granted under the Plan until October 30,
1994, the date of termination of the Plan. Notwithstanding the
foregoing, each option granted under the Plan shall remain in
effect until such option has been satisfied by the issuance of
shares or terminated in accordance with its terms and the terms
of the Plan.
8. RESTRICTIONS.
All options granted under the Plan shall be subject to
the requirement that, if at any time the Board shall determine,
in its discretion, that the listing, registration or
qualification of the shares subject to options granted under the
Plan upon any securities exchange or under any state or federal
law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the issuance, if
any, or purchase of shares in connection therewith, such option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Board.
9. NONASSIGNABILITY.
No option shall be assignable or transferable by the
grantee except by will or by the laws of descent and
distribution. During the lifetime of the optionee, the option
shall be exercisable only by him, and no other person shall
acquire any rights therein.
10. WITHHOLDING TAXES.
Whenever shares of Common Stock are to be issued under
the Plan, the Company shall have the right to require the
optionee to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares.
11. DEFINITION OF "FAIR MARKET VALUE".
For the purposes of this Plan, the term "fair market
value," when used in reference to the date of grant of an option
or the date of surrender of Common Stock in payment for the
purchase of shares pursuant to the exercise of an option, as the
case may be, shall be the last reported sale price in the NASDAQ
National Market System on such date as published in The Wall
Street Journal or, if no report is available for such date, the
next preceding date for which a report is available.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS.
Awards of stock options shall be made under the Plan
under all the terms and conditions contained herein. Each option
granted under the Plan shall be evidenced by an option agreement
duly executed on behalf of the Company and by the director to
whom such option is granted, which option agreements may but need
not be identical and shall comply with and be subject to the
terms and conditions of the Plan. Any option agreement may
contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no
option granted under the Plan shall be exercisable after the
expiration of five years from the date of its grant.
In the event that any outstanding option under the Plan
expires by reason of lapse of time or otherwise is terminated for
any reason, then the shares of Common Stock subject to any such
option which have not been issued pursuant to the exercise of the
option shall again become available in the pool of shares of
Common Stock for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS.
Options granted pursuant to the Plan shall be evidenced
by agreements in such form as the Board shall from time to time
determine, which agreements shall comply with the following terms
and conditions.
A. Number of Shares
Each option agreement shall state the number of
shares to which the option pertains.
B. Option Price
Each option agreement shall state the option price
per share (or the method by which such price shall be computed),
which shall be equal to 100% of the fair market value of a share
of the Common Stock on the date such option is granted.
C. Medium and Time of Payment
The option price shall be payable upon the
exercise of an option in the legal tender of the United States or
in shares of the Common Stock or in a combination of such legal
tender and such shares. Upon receipt of payment, the Company
shall deliver to the optionee (or person entitled to exercise the
option) a certificate or certificates for the shares of Common
Stock to which the option pertains.
D. Exercise of Options
Options granted to directors other than the
Appointment Grant shall become exercisable in installments to the
extent of one-fourth, excluding fractional shares, of the shares
covered by the option on the date one year after the Grant Date,
an additional one-fourth, excluding fractional shares, of the
shares covered by the option on the date two years after the
Grant Date, an additional one-fourth, excluding fractional
shares, of the shares covered by the option on the date three
years after the Grant Date, and the remaining shares covered by
the option on the date four years after the Grant Date.
Options granted pursuant to the Appointment Grant
shall become exercisable with respect to 6,000 shares on the
date one year after the Grant Date; an additional 5,5003/ shares
on the date two years after the Grant Date; an additional 5,0003/
shares on the date three years after the Grant Date; and the
final 3,5003/ shares on the date four years after the Grant Date.
To the extent that an option has become
exercisable and subject to the restrictions and limitations set
forth in this Plan and any option agreement, it may be exercised
in whole or such lesser amount as may be authorized by the option
agreement, provided, however, that no option shall be exercised
for fewer than ten shares. If exercised in part, the unexercised
portion of an option shall continue to be held by the optionee
and may thereafter be exercised as provided herein.
E. Termination of Directorship Except by Death
In the event that an optionee shall cease to be a
director of the Company for any reason other than his death, his
option shall be exercisable, to the extent it was exercisable at
the date he ceased to be a director, for a period of seven months
after such date, and shall then terminate. Such option may be
exercised at any time within such seven-month period and prior to
the date on which the option expires by its terms.
F. Death of Optionee and Transfer of Option
If an optionee dies while a director of the
Company, or within the seven-month period after termination of
such status during which he is permitted to exercise an option in
accordance with Subsection 3(E) of this Article II, such option
may be exercised at any time within one year after the
optionee's death, but only to the extent the option was
exercisable at the time of death. Such option may be exercised
at any time within such one year period and prior to the date on
which the option expires by its terms. During such period, such
option may be exercised by any person or persons designated by
the optionee on a Beneficiary Designation Form adopted by the
Board for such purpose, or, if there is no effective Beneficiary
Designation Form on file with the Board, by the executors or
administrators of the optionee's estate or by any person or
persons who shall have acquired the option directly from the
optionee by his will or the applicable law of descent and
distribution.
ARTICLE III
RECAPITALIZATIONS AND REORGANIZATIONS
The number of shares of Common Stock covered by the
Plan, the number of shares and price per share of each
outstanding option, and the number of shares subject to each
grant provided for in Article I, Section 3 hereof shall be
proportionately adjusted for any increase or decrease in the
number of issued and outstanding shares of Common Stock resulting
from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without
receipt of consideration by the Company.
If the Company shall be the surviving corporation in
any merger or consolidation, each outstanding option shall
pertain to and apply to the securities to which a holder of the
same number of shares of Common Stock that are subject to that
option would have been entitled. A dissolution or liquidation of
the Company, or a merger or consolidation in which the Company is
not the surviving corporation, shall cause each outstanding
option to terminate, unless the agreement of merger or
consolidation shall otherwise provide; provided that, in the
event such dissolution, liquidation, merger or consolidation will
cause outstanding options to terminate, each optionee shall have
the right immediately prior to such dissolution, liquidation,
merger or consolidation to exercise his option in whole or in
part without regard to any limitations on the exercisability of
such option other than (i) the expiration date of the option,
(ii) the limitation set forth in Section 9 of Article I, and
(iii) the ten share limitation set forth in Section 3(D) of
Article II.
To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be
made by the Board, whose determination in that respect shall be
final, binding and conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or
to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
ARTICLE IV
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A SHAREHOLDER.
An optionee or a transferee of an option shall have no
rights as a shareholder with respect to any shares covered by an
option until the date of the receipt of payment (including any
amounts required by the Company pursuant to Section 10 of
Article I) by the Company. No adjustment shall be made as to any
option for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights
for which the record date is prior to such date, except as
provided in Article III.
2. PURCHASE FOR INVESTMENT.
Unless the shares of Common Stock to be issued upon
exercise of an option granted under the Plan have been
effectively registered under the Securities Act of 1933 as now in
force or hereafter amended, the Company shall be under no
obligation to issue any shares of Common Stock covered by any
option unless the person who exercises such option, in whole or
in part, shall give a written representation and undertaking to
the Company which is satisfactory in form and scope to counsel to
the Company and upon which, in the opinion of such counsel, the
Company may reasonably rely, that he is acquiring the shares of
Common Stock issued to him pursuant to such exercise of the
option for his own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such
shares of Common Stock, and that he will make no transfer of the
same except in compliance with any rules and regulations in force
at the time of such transfer under the Securities Act of 1933, or
any other applicable law, and that if shares of Common Stock are
issued without such registration, a legend to this effect may be
endorsed upon the securities so issued.
3. OTHER PROVISIONS.
The option agreements authorized under the Plan shall
contain such other provisions, including, without limitation,
restrictions upon the exercise of the option or restrictions
required by any applicable securities laws, as the Board shall
deem advisable.
4. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of options will be used for
general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation
upon the optionee to exercise such option.