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EXHIBIT 10.1
AMENDED
THROUGH
11/16/92
TENCOR INSTRUMENTS
SECOND AMENDED AND RESTATED
1984 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The purposes of this Second Amended and Restated 1984 Stock Option Plan
(the "Plan") of Tencor Instruments (the "Company") are to:
(a) encourage selected officers, directors, and consultants to
improve operations and increase profits of the Company;
(b) encourage selected officers to accept or continue
employment with the Company or its Affiliates; and
(c) increase the interest of selected officers, directors, and
consultants in the Company's welfare through participation in the growth in
value of the Company's no par value common stock of the Company (the "Common
Stock").
Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonqualified
options" ("NQOs").
2. ELIGIBLE PERSONS
Every person who at the date of grant of an Option is a key employee of
the Company or of any Affiliate (as defined below) (including employees who are
also officers or directors of the Company or of any Affiliate) is eligible to
receive NQOs or ISOs under this Plan. The term "Affiliate" as used in the Plan
means a parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. Every person who
is a director of or consultant to the Company or any Affiliate at the date of
grant of an Option is eligible to receive NQOs under this Plan.
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3. STOCK SUBJECT TO THIS PLAN
Subject to the provisions of Section 6.1.1 of the Plan, the maximum
aggregate number of shares of stock which may be granted pursuant to this Plan
is 1,550,352(1) shares of Common Stock. The shares covered by the portion of any
grant under the Plan which expires unexercised shall become available again for
grants under the Plan.
4. ADMINISTRATION
4.1 Option Committee. This Plan shall be administered by the
Board of Directors of the Company (the "Board") or by a committee of at least
two Board members to which administration of the plan is delegated (in either
case, the "Option Committee"). No member of this Option Committee shall be
liable for any decision, action or omission respecting the Plan, any options or
any option shares.
4.2 Disinterested Administration. From and after such time as
the Company registers a class of equity securities under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Plan
shall be administered in accordance with the disinterested administration
requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission ("Rule 16b-3"), or any successor rule thereto.
4.3 Authority of the Option Committee. Subject to the other
provisions of this Plan, the Option Committee shall have the authority, in its
discretion: (i) to grant Options; (ii) to determine the fair market value of the
Common Stock subject to Options; (iii) to determine the exercise price of
Options granted; (iv) to determine the persons to whom, and the time or times at
which, Options shall be granted, and the number of shares subject to each
Option; (v) to interpret this Plan; (vi) to prescribe, amend and rescind rules
and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the optionee, to modify or amend any Option; (ix) to defer
(with the consent of the optionee) or accelerate the exercise date or vesting of
any Option; (x) to authorize any person to execute on behalf of the Company any
instrument evidencing the grant of an Option; and (xi) to make all other
determinations deemed necessary or advisable for the administration of this
Plan. The Option
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(1) The number of shares initially authorized to be issued under the Plan
was 77,856. On 7 May 1984, the Company effected a "three-for-one" stock split
which, pursuant to Section 11 of the Plan (as it appeared prior to this
Amendment and Restatement), automatically increased the number of shares under
the Plan to 233,568. On 2 May 1986, the Company's shareholders approved an
amendment adopted by the Board of Directors on 27 March 1986 increasing the
number of shares by 300,000. On 4 May 1990, the Company's shareholders approved
an amendment adopted by the Board of Directors on 13 March 1990 increasing the
number of shares by 500,000. On 26 March 1992, the Company effected a
"three-for-two stock split which, pursuant to Section 6.1.1 of the Plan,
automatically increased the number of shares under the Plan to 1,550,352.
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Committee may delegate nondiscretionary administrative duties to such employees
of the Company as it deems proper.
4.4 Determinations Final. All questions of interpretation,
implementation, and application of this Plan shall be determined by the Option
Committee. Such determinations shall be final and binding on all persons.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
5.1 Ten-Year Term. No Options shall be granted under this Plan
after ten years from the date of adoption of this Plan by the Board.
5.2 Option Agreement. Each Option shall be evidenced by a
written stock option agreement, in form satisfactory to the Company, executed by
the Company and the person to whom such Option is granted; provided, however,
that the failure by the Company, the optionee, or both to execute such an
agreement shall not invalidate the granting of any Option granted after February
10, 1992.
5.3 Designation as ISO or NQO. The agreement shall specify
whether each Option it evidences is a NQO or an ISO.
(i) Notwithstanding designation of any Option granted
after February 10, 1992 as an ISO or a NQO, if the aggregate fair market value
of the shares under Options designated as ISOs would become exercisable for the
first time by any Optionee at a rate in excess of $100,000 in any calendar year
(under all plans of the Company), then unless otherwise provided in the stock
option agreement or by the Option Committee, such Options shall be NQOs to the
extent of the excess above $100,000. For purposes of this Section 5.3, Options
shall be taken into account in the order in which they were granted, and the
fair market value of the shares shall be determined as of the time the Option
with respect to such shares is granted.
(ii) Options granted after 1986 and on or before February
10, 1992 are subject to the provisions of Section 6.1.3(b).
5.4 Grant to Prospective Employees. The Option Committee may
approve the grant of Options under this Plan to persons who are expected to
become employees of the Company, but are not employees at the date of approval.
In such cases, the Option shall be deemed granted, without further approval, on
the date the optionee is first treated as an employee for payroll purposes.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be designated as a NQO or an
ISO. Each Option shall be subject to the terms and conditions set forth in
Section 6.1. NQOs shall be also
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subject to the terms and conditions set forth in Section 6.2, but not those set
forth in Section 6.3. ISOs shall also be subject to the terms and conditions set
forth in Section 6.3, but not those set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are Subject. All
Options granted under this Plan shall be subject to the following terms and
conditions:
6.1.1 Changes in Capital Structure. The existence of
outstanding Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any of other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company's or any
other corporation's assets or business or any other corporate act whether
similar to the events described above or otherwise. Subject to Section 6.1.2, if
the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, recapitalization, or other event, or converted into or
exchanged for other securities as a result of a merger, consolidation,
reorganization, or other event, appropriate adjustments shall be made in (a) the
number and class of shares of stock subject to this Plan and each Option
outstanding under this Plan, and (b) the exercise price of each outstanding
Option; provided, however, that the Company shall not be required to issue
fractional shares as a result of any such adjustments. Each such adjustment
shall be subject to approval by the Option Committee in its sole discretion, and
may be made without regard to any resulting tax consequences to the optionee.
6.1.2 Corporate Transactions. In connection with (i) any
merger, consolidation, acquisition, separation, or reorganization under which
more than 50 percent of the shares of the Company outstanding immediately before
such event are converted into cash or into another security, (ii) any
dissolution or liquidation of the Company or any partial liquidation involving
50 percent or more of the assets of the Company, (iii) any sale of more than 50
percent of the Company's assets, or (iv) any like occurrence in which the
Company is involved, the Option Committee may, in its absolute discretion, do
one or more of the following upon 10 days' prior written notice to optionees:
(a) accelerate any vesting schedule to which an Option is subject (subject to
the limitation on exercisability of ISOs granted after 1986 and before February
10, 1992 provided in Section 6.1.3(b) of this Plan); (b) cancel Options upon
payment to each optionee in cash, with respect to each Option to the extent then
exercisable, of any amount which, in the absolute discretion of the Option
Committee, is determined to be equivalent to any excess of the market value (at
the effective time of such event) of the consideration that such optionee would
have received if the Option had been exercised before the effective time over
the exercise price of the Option; (c) shorten the period during which such
Options are exercisable (provided they remain exercisable, to the extent
otherwise exercisable, for at least 10 days after the date the notice is given);
or (d) arrange that new option rights be substituted for the option rights
granted under this Plan, or that the Company's obligations as to Options
outstanding under this Plan be assumed, by an employer corporation other than
the Company or by a parent or subsidiary of such employer corporation. The
actions described in this Section 6.1.2 may be taken without regard to any
resulting tax consequences to the optionee.
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6.1.3 Time of Option Exercise.
(a) Options Granted After February 10, 1992. Except as
necessary to satisfy the requirements of Section 422 of the Code and subject to
Section 5, Options granted under this Plan after February 10, 1992, shall be
exercisable (a) immediately as of the effective date of the stock option
agreement granting the Option, or (b) at such other times as are specified in
the written stock option agreement relating to such Option; provided, however,
that so long as the optionee is a director or officer, as those terms are used
in Section 16 of the Exchange Act, such Option may not be exercisable, in whole
or in part, at any time prior to the six-month anniversary of the date of Option
grant, unless the Option Committee determines that the foregoing provision is
not necessary to comply with the provisions of Rule 16b-3 or that Rule 16b-3 is
not applicable to the Plan. No Option granted after February 10, 1992, shall be
exercisable, however, until a written stock option agreement in form
satisfactory to the Company is executed by the Company and the optionee.
(b) Options Granted After 1986 and Before February 10, 1992.
Subject to the provisions of this Plan, Options granted under this Plan after
1986 and before February 10, 1992 are exercisable in their entirety upon the
optionee's execution of the written stock option agreement evidencing the
Option or at such times and in such amounts as are specified in the written
stock option agreement. However, no portion of any ISO granted after 1986 and
before February 10, 1992 shall become exercisable for the first time if, and
to the extent that, such vesting would, taken together with vesting of
all other ISOs granted to the optionee after 1986 under all option plans of the
Company and any Affiliate, occur at a rate in excess of $100,000 worth of stock
(measured on the grant date) in any calender year. If, by their terms, such
ISOs taken together would vest at a faster rate, and unless otherwise provided
by the Option Committee, the vesting limitation described above shall be
applied by deferring the exercisability of those ISOs or portions thereof which
have the highest per share exercise prices. The ISOs or portions thereof, the
exercisability of which is so deferred, shall become exercisable on the first
day of the first subsequent calendar year during which they may be exercised by
their terms (without regard to this limitation), as determined by applying
these same principles and all other provisions of this Plan, including those
relating to the expiration and termination of Options. In no event, however,
will the operation of this Section 6.1.3(b) cause an ISO to vest before its
terms or, having vested, cease to be vested.
(c) Options Granted Before 1987. Subject to the other
provisions of this Plan, Options granted before 1987 shall be exercisable in
their entirety upon the Optionee's execution of the written stock option
agreement evidencing the Option or at such times and in such amounts as are
specified in the written stock option agreement. ISOs granted before 1987 shall
not be exercisable while the optionee holds a previously granted outstanding ISO
to purchase stock in the Company, a company which at the time of grant was a
parent or subsidiary of the Company, or a company which is a predecessor
corporation of any of the foregoing. For these purposes, an option shall be
considered outstanding until it is exercised in full or expires by reason of
lapse of time within the meaning of Section 422A(c)(7) of the Internal Revenue
Code of 1954, an in effect before the enactment of the Tax Reform Act of 1986.
(d) All Options. The Option Committee, in its absolute
discretion, may later waive any limitations respecting the time at which an
Option or any portion of an Option first becomes exercisable.
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6.1.4 Option Grant Date. Except as provided in Section 5.4 or as
otherwise specified by the Option Committee, the date of grant of an Option
under this Plan shall be the date as of which the Option Committee approves the
grant.
6.1.5 Nonassignability of Option Rights. No ISO granted under this
Plan or NQO granted on or before February 10, 1992, shall be assignable or
otherwise transferable by the optionee except by will or by the laws of descent
and distribution. No NQO granted after February 10, 1992, shall be assignable or
otherwise transferable by the optionee except by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code. During the life of the optionee, an Option shall be exercisable
only by the optionee.
6.1.6 Payment.
(a) All Options. Except as provided below, payment in full
shall be made for all stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. Payment may be made in cash, by delivery to the
Company of shares of Common Stock owned by the optionee (duly endorsed in favor
of the Company or accompanied by a duly endorsed stock power), or by a
combination of cash and stock. Any shares delivered shall be valued as of the
date of exercise of the Option in the manner set forth in Section 6.1.12.
Optionees may not exercise Options by delivery of shares more frequently than at
six-month intervals. Notwithstanding the foregoing, in the event that an
optionee's termination of employment with the Company or an Affiliate occurs
less than six months after a previous exercise of Options by the optionee by
delivery of shares, as described above, the optionee shall be permitted to
exercise Options granted on or after November 16, 1992, to the extent they were
exercisable on the date of the termination, by delivery of shares.
(b) Options Granted to Officers After May 3, 1991. The
Option Committee, in its discretion, may accept as payment for all or part of
the Option price of Options granted to an officer of the Company after May 3,
1991, the optionee's full recourse promissory note, having such terms as
determined by the Option Committee. In the case of Options granted after
February 10, 1992, a promissory note delivered in payment of the purchase price
may in no event bear interest at less than the minimum interest rate specified
under the Code at which no additional interest on debt instruments of such type
would be imputed, and may be either secured or unsecured in such manner as the
Option Committee shall approve (including, without limitation, by a security
interest in the shares of the Company).
(c) Options Granted After February 10, 1992. In the case of
Options granted after February 10, 1992, the Option Committee may accept as
payment any other consideration and method of payment to the extent permitted
under the California Corporations Code.
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6.1.7 Termination of Employment.
(a) Options Granted After February 10, 1992. Unless
determined otherwise by the Option Committee in its absolute discretion, to the
extent not already expired or exercised, an Option granted after February 10,
1992 shall terminate at the earlier of (a) the Expiration Date (as defined in
Section 6.1.13) or (b) three months after termination of employment with the
Company or any Affiliate; provided, that an Option shall be exercisable after
the date of termination of employment only to the extent exercisable on the date
of termination; and provided further, that if termination of employment is due
to the optionee's death or "disability" (as determined in accordance with
Section 22(e)(3) of the Code), the optionee, or the optionee's personal
representative (or any other person who acquires the Option from the optionee by
will or the applicable laws of descent and distribution), may at any time within
18 months after the termination of employment (or such lesser period as is
specified in the option agreement but in no event after the Expiration Date of
the Option), exercise the rights to the extent they were exercisable on the date
of the termination.
(b) Options Granted on or Before February 10, 1992. An
Option granted on or before February 10, 1992 shall terminate on the earlier of
(i) the Expiration Date and (ii) three months after termination of employment
with the Company or any Affiliate; provided, that an Option shall be exercisable
after the date of termination of employment only to the extent exercisable on
the date or termination; and provided further, that if the optionee dies while
employed by the Company or any Affiliate or within the period that the Option
remains exercisable after termination of employment, the optionee's personal
representative (or any other person who acquires the Option from the optionee by
will or the applicable laws of descent and distribution) may at any time within
12 months after the optionee's death or any lesser period specified in the
option agreement (but in no event after the Expiration Date), exercise the
rights to the extent they were exercisable on the date of the optionee's death.
(c) All Options. A transfer of an optionee from the Company
to an Affiliate or vice versa, or from one Affiliate to another, or a leave of
absence due to sickness, military service, or other cause duly approved by the
Company, shall not be deemed a termination of employment for purposes of this
Plan. For the purpose of this Section 6.1.7, "employment" means engagement with
the Company or any subsidiary of the Company either as an employee, as a
director, or as a consultant.
6.1.8 Repurchase of Stock. In addition to the right of first
refusal set forth in Section 6.1.9, at the time it grants Options under this
Plan, the Company may retain, for itself or others, rights to purchase the
shares acquired under the Option or impose other restrictions on the shares. The
terms and conditions of any such rights or other restrictions shall be set forth
in the option agreement evidencing the Option.
6.1.9 Company's Right of First Refusal.
(a) Company's Right; Notice. Stock delivered pursuant to the
exercise of any Option granted under this Plan, shall be subject to a right of
first refusal by the Company in the event that the holder of such shares
proposes to sell, pledge or otherwise transfer
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such shares or any interest in such shares to any person or entity. Any holder
of shares purchased under this Plan pursuant to such an Option desiring to
transfer such shares or any interest in such shares shall give a written notice
(the "Offer Notice") to the Company describing the proposed transfer, including
the number of shares proposed to be transferred, the proposed transfer price and
terms and the name and address of the proposed transferee. The Company shall
have the right within 20 days after receipt of the Offer Notice to purchase the
shares proposed to be transferred, on the same terms (including, without
limitation, price terms) offered by the proposed transferee. The Company's
rights under this Section 6.1.9 shall be freely assignable.
(b) Exercise. Except as provided under any repurchase right
imposed under Section 6.1.8, if the Company fails to exercise its right of first
refusal within 20 days from the date on which the company receives the Offer
Notice, the shareholder may, within the next 90 days, conclude a transfer to the
proposed transferee of the exact number of shares covered by that notice on
terms not more favorable to the transferee than those described in the notice.
Any subsequent proposed transfer shall again be subject to the Company's right
of first refusal. If the Company exercises its right of first refusal, the
shareholder shall endorse and deliver to the Company the stock certificates
representing the shares being repurchased. The Company shall pay the shareholder
the total repurchase price for the shares no later than the later of (i) 60 days
after receipt of the Offer Notice and (ii) the end of such period for payment
offered by the bona fide third party transferor. The holder of the shares being
repurchased shall cease to have any rights with respect to such shares
immediately upon receipt of the repurchase price.
(c) Exceptions. Notwithstanding the foregoing, no notice of
a proposed transfer shall be required and no right of first refusal shall exist
with respect to transfers, including sales, to an optionee's children,
grandchildren, or parents or to trusts, estates, or custodianships of or for the
account of an optionee or an optionee's children, grandchildren, or parents.
(d) Termination of Company's Right. The right of first
refusal set forth in this Section 6.1.9 shall terminate upon the consummation of
an underwritten public offering of the Company's Common Stock registered under
the Securities Act of 1933.
(e) No Limitation. Nothing in this Section 6.1.9 shall limit
the rights of the Company under any repurchase right imposed under Section
6.1.8.
6.1.10 Withholding and Employment Taxes. At the time of exercise
of an Option (or at such later time(s) as the Company may prescribe), the
optionee shall remit to the Company in cash all applicable federal and state
withholding and employment taxes. The Option Committee may, in the exercise of
its sole discretion, permit an optionee to pay some or all of such taxes by
means of a promissory note on such terms as the Option Committee deems
appropriate. If authorized by the Option Committee in its sole discretion, and
if the Option has been held for six months or more, an optionee may elect to
have shares of Common Stock which are acquired upon exercise of the Option
withheld by the Company or to tender to the company other shares of Common Stock
or other securities of the Company owned by the optionee on the date of
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determination of the amount of tax to be withheld as a result of the exercise of
such Option (the "Tax Date") to pay the amount of tax that is required by law to
be withheld by the Company as a result of the exercise of such Option, provided
that such election satisfies the following requirements:
(a) such election shall be irrevocable, shall be made at
least six months prior to the Option exercise transaction, and shall be subject
to the disapproval of the Option Committee at any time prior to the consummation
of the Option exercise; or
(b) such election shall be made in advance to take effect in
a subsequent "window period" (as defined below) in which the Option is
exercised, and the Option Committee shall approve such election when it is made
or at any time thereafter up to consummation of the Option exercise; or
(c) such election is made in a window period and the
approval of the Option Committee is given after the election is made and within
the same window period, and the Option exercise is consummated within such
window period; or
(d) shares or other previously owned securities are tendered
(but stock is not withheld) at any time up to the consummation of the Option
exercise (in which event, neither a prior irrevocable election nor window period
timing requirements is required);
provided that clauses (b) and (c) shall not be available until the Company has
been subject to the reporting requirements of the Securities Exchange Act of
1934 for at least one year. A "window period" is the period beginning on the
third business day following the date of release for publication of quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date. Any securities so withheld or tendered shall
be valued by the Company as of the Tax Date.
6.1.11 Other Provisions. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Option Committee, and each ISO granted under
this Plan shall include such provisions and conditions as are necessary to
qualify the Option as an "incentive stock option" within the meaning of Section
422 of the Code.
6.1.12 Determination of Value. For purposes of the Plan, the value
of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the stock of the Company is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers
Automated Quotation System, its fair market value shall be the closing sales
price for such stock or the closing bid if no sales were reported, as quoted on
such system or exchange (or the largest such exchange) for the date the value is
to be determined (or if there are no sales for such date, then for the last
preceding business day on which there were sales), as reported in the Wall
Street Journal.
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(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for the
stock on the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on which
there were quoted prices).
(c) If the stock of the Company is as described in Section
6.1.12(a) or (b), but is restricted by law, contract, market conditions or
otherwise as to salability or transferability, its fair market value shall be as
set forth in Section 6.1.12(a) or (b), as appropriate, less, as determined by
the Option Committee, an appropriate discount, based on the nature and terms of
the restrictions.
(d) In the absence of an established market for the stock,
the fair market value thereof shall be determined by the Option Committee, with
reference to the Company's net worth, prospective earning power, dividend-paying
capacity, and other relevant factors, including the goodwill of the Company, the
economic outlook in the Company's industry, the company's position in the
industry and its management, and the values of stock of other corporations in
the same or a similar line of business.
6.1.13 Option Term. No Option shall be exercisable more than ten
years after the date of grant, or such lesser period of time as is set forth in
the option agreement (the end of the maximum exercise period stated in the
option agreement is referred to in this Plan as the "Expiration Date"). No
Option granted after February 10, 1992, and no ISO granted on or before that
date, to any person who owns, directly or by attribution, stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or of any Affiliate (a "Ten Percent Stockholder") shall be
exercisable more than five years after the date of grant.
6.1.14 Exercise Price. The exercise price of any Option granted to
any Ten Percent Stockholder shall in no event be less than 110 percent of the
fair market value (determined in accordance with Section 6.1.12) of the stock
covered by the Option at the time the Option is granted.
6.1.15 Compliance with Securities Laws. The Company shall not be
obligated to offer or sell any shares upon exercise of an Option unless the
shares are at that time effectively registered or exempt from registration under
the federal securities laws and the offer and sale of the shares are otherwise
in compliance with all applicable state and local securities laws. The Company
shall have no obligation to register the shares under the federal securities
laws or take whatever other steps may be necessary to enable the shares to be
offered and sold under federal or other securities laws. Upon exercising all or
any portion of an Option, an optionee may be required to furnish representations
or undertakings deemed appropriate by the Company to enable the offer and sale
of the Option shares or subsequent transfers of any interest in the shares to
comply with applicable securities laws. Stock certificates evidencing shares
acquired upon exercise of options shall bear any legend required by, or useful
for purposes of compliance with, applicable securities laws, this Plan or the
option agreement evidencing the Option.
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6.2 Terms and Conditions to Which Only NQOs Are Subject. Options
granted under this Plan which are designated as NQOs shall be subject to the
following terms and conditions:
6.2.1 Exercise Price. Except as set forth in Section 6.1.14, the
exercise price of a NQO shall be not less than 85 percent of the fair market
value (determined in accordance with Section 6.1.12) of the stock subject to the
Option on the date of grant.
6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
6.3.1 Exercise Price. Except as set forth in Section 6.1.14, the
exercise price of an ISO shall be determined in accordance with the applicable
provisions of the Code and shall in no event be less than the fair market value
(determined in accordance with Section 6.1.12) of the stock covered by the
Option at the time the Option is granted.
6.3.2 Disqualifying Dispositions. If stock acquired upon exercise
of an ISO is disposed of in a "disqualifying disposition" within the meaning of
Section 422 of the Code, the holder of the stock immediately before the
disposition shall notify the Company in writing of the date and terms of the
disposition and comply with any other requirements imposed by the Company in
order to enable the Company to secure any related income tax deduction to which
it is entitled.
7. MANNER OF EXERCISE
An optionee wishing to exercise an Option shall give written notice to
the Company at its principal executive office, to the attention of the officer
of the Company designated by the Option Committee, accompanied by payment of the
exercise price as provided in Section 6.1.6. The date the Company receives
written notice of an exercise hereunder accompanied by payment of the exercise
price and, if required, by payment of any federal or state withholding or
employment taxes required to be withheld by virtue of exercise of the Option
will be considered as the date such Option was exercised.
Promptly after receipt of written notice of exercise of an Option, the
Company shall, without stock issue or transfer taxes to the optionee or other
person entitled to exercise the Option, deliver to the optionee or such other
person a certificate or certificates for the requisite number of shares of
stock. Unless the Company specifies otherwise, an optionee or transferee of an
optionee shall not have any privileges as a shareholder with respect to any
stock covered by the Option until the date of issuance of a stock certificate.
Subject to Section 6.1.1 hereof, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date the certificates are
delivered.
8. EMPLOYMENT RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment at any
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time, nor confer upon any optionee any right to continue in the employ of the
Company or any of its Affiliates.
9. AMENDMENTS TO PLAN
The Board may amend this Plan at any time. Without the consent of an
optionee, no amendment may affect outstanding Options except to conform this
Plan and ISOs granted under this Plan to federal or other tax laws relating to
incentive stock options. No amendment shall require shareholder approval unless
shareholder approval is required to preserve incentive stock option treatment
for tax purposes or the Board otherwise concludes that shareholder approval is
advisable.
10. SHAREHOLDER APPROVAL; TERM
The Board of Directors of the Company adopted the 1984 Incentive Stock
Option Plan on February 1, 1984, and the Company's shareholders approved it on
May 5, 1984. The Board amended the Plan on March 27, 1986, and the Company's
shareholders approved such amendment on May 2, 1986. The Board further amended
this Plan on November 20, 1987, and formally adopted the amended and restated
plan incorporating such amendments on May 6, 1988. The Board further amended the
Plan on December 6, 1988, and the Company's shareholders approved such amendment
on May 5, 1989. The Board further amended the Plan on March 13, 1990, and the
Company's shareholders approved such amendment on May 4, 1990. The Board further
amended the Plan on May 3, 1991. The Board further amended this Plan on February
10, 1992, and the shareholders approved such amendment on February 24, 1992. The
Board further amended the Plan on November 16, 1992.
This second amended and restated Plan incorporating amendments adopted
by the Board on November 16, 1992 became effective upon adoption by the Board.
This Plan shall terminate ten years after initial adoption by the Board
unless terminated earlier by the Board. The Board may terminate this Plan at any
time without shareholder approval. No Options shall be granted after termination
of this Plan, but termination shall not affect rights and obligations under then
outstanding options.
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