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EXHIBIT 4.02
AG ASSOCIATES, INC.
1993 STOCK OPTION PLAN
As Adopted January 29, 1993
and Amended Through June 10, 1998
1. PURPOSE. This 1993 Stock Option Plan ("Plan") is established as a
compensatory plan to attract, retain and provide equity incentives to selected
persons to promote the financial success of AG Associates, Inc., a California
corporation (the "Company"). Capitalized terms not previously defined herein are
defined in Section 17 of this Plan.
2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Revenue
Code"), or (b) nonqualified stock options ("NQSOs"), as designated at the time
of grant. The shares of stock that may be purchased upon exercise of Options
granted under this Plan (the "Shares") are shares of the common stock of the
Company.
3. NUMBER OF SHARES. The aggregate number of Shares that may be issued
pursuant to Options granted under this Plan is 1,900,000 Shares (post 1-for-4
reverse stock split), subject to adjustment as provided in this Plan. If any
Option expires or is terminated without being exercised in whole or in part, the
unexercised or released Shares from such Option shall be available for future
grant and purchase under this Plan. At all times during the term of this Plan,
the Company shall reserve and keep available such number of Shares as shall be
required to satisfy the requirements of outstanding Options under this Plan.
4. ELIGIBILITY. Options may be granted to employees, officers, directors,
consultants, and advisers (provided such consultants and advisers render bona
fide services not in connection with the offer and sale of securities in a
capital-raising transaction) of the Company or any Parent, Subsidiary or
Affiliate of the Company. ISOs may be granted only to employees (including
officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company. The Committee (as defined in Section 14) in its sole
discretion shall select the recipients of Options ("Optionees"). No Optionee
shall be eligible to receive more than 500,000 Shares (post 1-for-4 reverse
stock split) at any time during the term of this Plan pursuant to the grant of
Options hereunder. An Optionee may be granted more than one Option under this
Plan. The Company may also, from time to time, assume outstanding options
granted by another company, whether in connection with an acquisition of such
other company or otherwise, by either (a) granting an Option under this Plan in
replacement of the option assumed by the Company, or (b) treating the assumed
option as if it had been granted under this Plan if the terms of such assumed
option could be applied to an Option granted under this Plan. Such assumption
shall be permissible if the holder of the assumed option would have been
eligible to be granted an Option hereunder if the other company had applied the
rules of this Plan to such grant.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine whether
each Option is to be an ISO or an NQSO, the number of Shares subject to the
Option, the exercise price of the Option, the period during which the Option may
be exercised, and all other terms and conditions of the Option, subject to the
following:
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5.1 Form of Option Grant. Each Option granted under this Plan shall
be evidenced by a written Stock Option Grant (the "Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option shall be the date
on which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee. The Grant representing the Option will be
delivered to Optionee with a copy of this Plan within a reasonable time after
the granting of the Option.
5.3 Exercise Price. The exercise price of an Option shall be not less
than 100% of the Fair Market Value of the Shares on the date the Option is
granted. The exercise price of any Option granted to a person owning more than
l0% of the total combined voting power of all classes of stock of the Company or
any Parent or Subsidiary of the Company ("Ten Percent Shareholder") shall not be
less than 110% of the Fair Market Value of the Shares on the date the Option is
granted.
5.4 Exercise Period. Options shall be exercisable within the times or
upon the events determined by the Committee as set forth in the Grant; provided,
however, that no Option shall be exercisable after the expiration of ten (10)
years from the date the Option is granted, and provided further that no ISO
granted to a Ten Percent Shareholder shall be exercisable after the expiration
of five (5) years from the date the Option is granted.
5.5 Limitations on ISOs. The aggregate Fair Market Value (determined
as of the time an Option is granted) of stock with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Parent or Subsidiary of the Company) shall not exceed $100,000. If the Fair
Market Value of Shares with respect to which ISOs are exercisable for the first
time by an Optionee during any calendar year exceeds $100,000, the Options for
the first $100,000 worth of Shares to become exercisable in such year shall be
ISOs and the Options for the amount in excess of $100,000 that becomes
exercisable in that year shall be NQSOs. In the event that the Revenue Code or
the regulations promulgated thereunder are amended after the effective date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit shall be incorporated
herein and shall apply to any Options granted after the effective date of such
amendment.
5.6 Options Non-Transferable. Options granted under this Plan, and
any interest therein, shall not be transferable or assignable by Optionee, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder, and shall be
exercisable during the lifetime of Optionee only by Optionee; provided, however,
that NQSOs held by an Optionee who is not an officer or director of the Company
or other person (in each case, an "Insider") whose transactions in the Company's
common stock are subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), may be transferred to such family
members, trusts and charitable institutions as the Committee, in its sole
discretion, shall approve at the time of the grant of such Option.
5.7 Assumed Options. In the event the Company assumes an option
granted by another company, the terms and conditions of such option shall remain
unchanged (except the exercise price and the number and nature of shares
issuable upon exercise, which will be adjusted appropriately pursuant to
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Section 424(a) of the Revenue Code). In the event the Company elects to grant a
new option rather than assuming an existing option (as specified in Section 4),
such new option need not be granted at Fair Market Value on the date of grant
and may instead be granted with a similarly adjusted exercise price.
6. EXERCISE OF OPTIONS.
6.1 Notice. Options may be exercised only by delivery to the Company
of a written stock option exercise agreement (the "Exercise Agreement") in a
form approved by the Committee (which need not be the same for each Optionee),
stating the number of Shares being purchased, the restrictions imposed on the
Shares, if any, and such representations and agreements regarding Optionee's
investment intent and access to information, if any, as may be required by the
Company to comply with applicable securities laws, together with payment in full
of the exercise price for the number of Shares being purchased.
6.2 Payment. Payment for the Shares may be made in cash (by check)
or, where permitted by law and where approved by the Committee in its sole
discretion at the time of grant: (a) by cancellation of indebtedness of the
Company to the Optionee; (b) by surrender of shares of common stock of the
Company having a Fair Market Value equal to the applicable exercise price of the
Options, that have been owned by Optionee for more than six (6) months (and
which have been paid for within the meaning of the Securities and Exchange
Commission ("SEC") Rule 144 and, if such Shares were purchased from the Company
by use of a promissory note, such note has been fully paid with respect to such
shares), or were obtained by Optionee in the open public market; (c) by waiver
of compensation due or accrued to Optionee for services rendered; (d) provided
that a public market for the Company's stock exists, through a "same day sale"
commitment from Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby Optionee
irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased to pay for the exercise price and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the exercise price directly to
the Company; (e) provided that a public market for the Company's stock exists,
through a "margin" commitment from Optionee and an NASD Dealer whereby Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; or (f) by any combination of the foregoing.
6.3 Withholding Taxes. Prior to issuance of the Shares upon exercise
of an Option, Optionee shall pay or make adequate provision for any federal or
state withholding obligations of the Company, if applicable. Where approved by
the Committee in its sole discretion, Optionee may provide for payment of
withholding taxes upon exercise of the Option by requesting that the Company
retain Shares with a Fair Market Value equal to the minimum amount of taxes
required to be withheld. In such case, the Company shall issue the net number of
Shares to Optionee by deducting the Shares retained from the Shares exercised.
The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined in accordance
with Section 83 of the Revenue Code (the "Tax Date"). All elections by Optionees
to have Shares withheld for this purpose shall be made in writing in a form
acceptable to the Committee and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
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(b) once made, the election shall be irrevocable as to the particular
Shares as to which the election is made; and
(c) all elections shall be subject to the consent or disapproval of
the Committee.
In addition, if Optionee is an Insider, and if the Company is subject to Section
16(b) of the Exchange Act, the following shall apply:
(d) the election may not be made within six (6) months of the date of
grant of the Option; provided, however, that this limitation shall not apply in
the event that death or Disability of Optionee occurs prior to the expiration of
the six (6) month period;
(e) the election must be made either six (6) months prior to the Tax
Date or in the 10-day period beginning on the third day following the public
release of the Company's quarterly or annual summary statement of operations;
and
(f) if the Tax Date is deferred until six months after exercise of
the Option because no election is filed under Section 83(b) of the Revenue Code,
Optionee shall receive the full number of Shares with respect to which the
Option is exercised, but Optionee shall be unconditionally obligated to tender
back to the Company the proper number of Shares on the Tax Date.
6.4 Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following:
6.4.1 If Optionee ceases to be employed by the Company or any
Parent, Subsidiary or Affiliate of the Company for any reason except death or
Disability, Optionee may exercise such Optionee's Option to the extent (and only
to the extent) that it would have been exercisable upon the date of termination,
within ninety (90) days after the date of termination (or such shorter or longer
time period not exceeding five years as may be determined by the Committee, with
any such exercise beyond ninety (90) days after termination of employment deemed
to be as an NQSO), but in any event not later than the expiration date of the
Option;
6.4.2 If Optionee is an Insider and the Company is subject to
Section 16(b) of the Exchange Act, Optionee's Option will remain exercisable
until the end of the thirty (30) day period commencing on the first date on
which Optionee may exercise without having a matching purchase and sale under
Section 16(b), with any such exercise beyond ninety (90) days after termination
of employment deemed to be as an NQSO, and provided further that in no event may
an Option be exercisable later than the expiration date of the Option;
6.4.3 If Optionee's employment with the Company or any Parent,
Subsidiary or Affiliate of the Company is terminated because of the death or
Disability of Optionee, Optionee's Option may be exercised to the extent (and
only to the extent) that it would have been exercisable by Optionee on the date
of termination, by Optionee (or Optionee's legal representative), within twelve
(12) months after the date of termination (or such shorter time period of no
less than six (6) months or such longer time period not exceeding five years as
may be determined by the Committee, with any such exercise beyond ninety (90)
days after termination of employment for any reason other than the death or
disability, as defined in Revenue Code Section 22(e)(3), of Optionee deemed to
be as an NQSO) but in any event no later than the expiration date of the Option.
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6.4.4 The Committee shall have discretion to determine whether
Optionee has ceased to be employed by the Company or any Parent, Subsidiary or
Affiliate of the Company, whether or not such cessation was due to Disability
and the effective date on which such employment terminated.
6.4.5 In the case of an Optionee who is a director, consultant or
adviser, the Committee will have the discretion to determine whether Optionee is
"employed by the Company or any Parent, Subsidiary or Affiliate of the Company"
pursuant to the foregoing Sections.
6.4.6 The Committee may specify a reasonable minimum number of
Shares that may be purchased on any exercise of an Option, provided that such
minimum number will not prevent Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
6.4.7 An Option shall not be exercisable unless such exercise is
in compliance with the Securities Act of 1933, as amended (the "Securities
Act"), all applicable state securities laws and the requirements of any stock
exchange or national market system upon which the Shares may then be listed, as
they are in effect on the date of exercise. The Company shall be under no
obligation to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or national market system, and the Company shall have no
liability for any inability or failure to do so.
7. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of
first refusal to purchase all Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party and/or (b) a right to
repurchase a portion of or all Shares held by an Optionee upon Optionee's
termination of employment or service with the Company or a Parent, Subsidiary or
Affiliate of the Company, for any reason within a specified time as determined
by the Committee at the time of grant at (i) Optionee's original purchase price,
(ii) the Fair Market Value of such Shares or (iii) a price determined by a
formula or other provision set forth in the Grant.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Committee shall
have the power to modify, extend or renew outstanding Options and to authorize
the grant of new Options in substitution therefor, provided that any such action
may not, without the written consent of Optionee, impair any rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Revenue Code. The Committee shall have the power to reduce the exercise
price of outstanding Options without the consent of Optionees by a written
notice to the Optionees affected; provided, however, that the exercise price per
Share may not be reduced below the minimum exercise price that would be
permitted under Section 5.3 of this Plan for Options granted on the date the
action is taken to reduce the exercise price.
9. STOCK OWNERSHIP; FINANCIAL STATEMENTS. No Optionee shall have any of
the rights of a shareholder with respect to any Shares subject to an Option
until such Option is properly exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
such date, except as provided in this Plan. However, the Company shall provide
to each Optionee, during the period for which he has one or more Options
outstanding, copies of the financial statements of the Company, consisting of,
at a minimum, a balance sheet and an income statement, at such time after the
close of each fiscal year of the Company as such statements are released by the
Company to its
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shareholders. The Company shall not be required to provide such information to
key employees whose duties in connection with the Company assume their access to
equivalent information.
10. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option granted
under this Plan shall confer on any Optionee any right to continue in the employ
of, or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Optionee's
employment or other relationship at any time, with or without cause.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of common stock of the Company is changed by a stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company
without consideration, or if a substantial portion of the assets of the Company
are distributed, without consideration in a spin-off or similar transaction, to
the shareholders of the Company, the number of Shares available under this Plan
and the number of Shares subject to outstanding Options and the exercise price
per Share of such Options shall be proportionately adjusted, subject to any
required action by the Board of Directors (the "Board") or shareholders of the
Company and compliance with applicable securities laws; provided, however, that
a fractional share shall not be issued upon exercise of any Option and any
fractions of a Share that would have resulted shall either be cashed out at Fair
Market Value or the number of Shares issuable under the Option shall be rounded
up to the nearest whole number, as determined by the Committee; and provided
further that the exercise price may not be decreased to below the par value, if
any, for the Shares.
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.
12.1 Assumption or Substitution. In the event of (a) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a reincorporation, or
other transaction in which there is no substantial change in the shareholders of
the corporation and the Options granted under this Plan are assumed by the
successor corporation, which assumption shall be binding on all Optionees), (b)
a dissolution or liquidation of the Company, (c) the sale of substantially all
of the assets of the Company, or (d) any other transaction which qualifies as a
"corporate transaction" under Section 424(a) of the Revenue Code wherein the
shareholders of the Company give up all of their equity interest in the Company
(except for the acquisition of all or substantially all of the outstanding
shares of the Company), any or all outstanding Options may be assumed by the
successor corporation, which assumption shall be binding on all Optionees. In
the alternative, the successor corporation may substitute an equivalent option
or provide substantially similar consideration to Optionees as was provided to
shareholders (after taking into account the existing provisions of Optionee's
options, such as the exercise price and the vesting schedule). The successor
corporation may also issue, in place of outstanding shares of the Company held
by Optionee as a result of the exercise of an Option that is subject to
repurchase, substantially similar shares or other property subject to similar
repurchase restrictions no less favorable to Optionee.
12.2 Expiration. In the event such successor corporation, if any,
refuses to assume or substitute Options, as provided above, pursuant to a
transaction described in Subsections 12.1 above, or there is no successor
corporation, and if the Company is ceasing to exist as a separate corporate
entity, the Options shall, notwithstanding any contrary terms in the Grant,
expire on (and, in the case of a transaction described in Subsection 12.1(a)
above, if the Company has reserved to itself a right to repurchase Shares issued
on exercise of Options at the original purchase price of such Shares, such right
shall
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terminate on), a date at least 20 days after the Board gives written notice to
Optionees specifying the terms and conditions of such termination.
12.3 Additional Provisions. Subject to the foregoing provisions of
this Section 12, in the event of the occurrence of any transaction described in
Section 12.1, any outstanding Option shall be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
sale of assets or other "corporate transaction".
13. ADOPTION AND SHAREHOLDER APPROVAL. This amendment and restatement of
the Plan shall become effective on the effective date (to occur no later than
December 1, 1995) of the Company's registration statement filed with, and
declared effective by, the SEC under the Securities Act, for the Company's
initial public offering. This Plan shall be approved by the shareholders of the
Company, in any manner permitted by applicable corporate law, within twelve
months before or after the date this Plan is adopted by the Board. Upon the
effective date of the Plan, the Board may grant Options pursuant to this Plan;
provided that, in the event that shareholder approval is not obtained within the
time period provided herein, all Options granted hereunder shall terminate. No
Option that is issued as a result of any increase in the number of shares
authorized to be issued under this Plan shall be exercised prior to the time
such increase has been approved by the shareholders of the Company and all such
Options granted pursuant to such increase shall similarly terminate if such
shareholder approval is not obtained. After the Company becomes subject to
Section 16(b) of the Exchange Act, the Company will comply with the requirements
of Rule 16b-3 with respect to shareholder approval.
14. ADMINISTRATION. This Plan may be administered by the Board or a
committee appointed by the Board (the "Committee"). The Company will take
appropriate steps to comply with the disinterested director requirements of
Section 16(b) of the Exchange Act, which may consist of the appointment by the
Board of a Committee consisting of not less than two members of the Board, each
of whom is a Disinterested Person. As used in this Plan, references to the
"Committee" shall mean either the committee appointed by the Board to administer
this Plan or the Board if no committee has been established. After registration
of the Company under the Exchange Act, Board members who are not Disinterested
Persons may not vote on any matters affecting the administration of this Plan or
on the grant of any Options pursuant to this Plan to Insiders, but any such
member may be counted for determining the existence of a quorum at any meeting
of the Board during which action is taken with respect to Options or
administration of this Plan and may vote on the grant of any Options pursuant to
this Plan otherwise than to Insiders. If, after registration of the Company
under the Exchange Act, two or more members of the Board are Outside Directors,
the Committee shall be comprised of at least two members of the Board all of
whom are Outside Directors and Disinterested Persons. The interpretation by the
Committee of any of the provisions of this Plan or any Option granted under this
Plan shall be final and binding upon the Company and all persons having an
interest in any Option or any Shares purchased pursuant to an Option. The
Committee may delegate to officers of the Company the authority to grant Options
under this Plan to Optionees who are not Insiders of the Company.
15. TERM OF PLAN. Options may be granted pursuant to this Plan from time
to time within a period of ten (10) years after the date on which this Plan is
adopted by the Board.
16. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time
terminate or amend this Plan in any respect including (but not limited to)
amendment of any form of grant, exercise agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Committee shall not, without
the approval of the shareholders of the Company, amend this Plan in any manner
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that requires such shareholder approval pursuant to the Revenue Code or the
regulations promulgated thereunder as such provisions apply to ISO plans or
pursuant to the Exchange Act or Rule 16b-3 (or its successor) promulgated
thereunder.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
17.1 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
17.2 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
17.3 "Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
17.4 "Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) as promulgated by the SEC under Section 16(b) of the Exchange
Act, as such rule is amended from time to time and as interpreted by the SEC.
17.5 "Fair Market Value" shall mean the fair market value of the
Shares as determined by the Committee from time to time in good faith. If a
public market exists for the Shares, the Fair Market Value shall be the average
of the last reported bid and asked prices for common stock of the Company on the
last trading day prior to the date of determination (or the average closing
price over the number of consecutive working days preceding the date of
determination as the Committee shall deem appropriate) or, in the event the
common stock of the Company is listed on a stock exchange or on the Nasdaq
National Market, the Fair Market Value shall be the closing price on such
exchange or quotation system on the last trading day prior to the date of
determination (or the average closing price over the number of consecutive
working days preceding the date of determination as the Committee shall deem
appropriate).
17.6 "Disability" shall mean the inability of an individual to engage
in employment with the Company by reason of any medically determinable physical
or mental impairment.
17.7 "Outside Director" shall mean any director who is not (a) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (b) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan), (c) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company, or
(d) currently receiving compensation for personal services in any capacity,
other than as a director, from the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however that at such time as the term
"Outside Director", as used in Section 162(m) of the Revenue Code is defined in
regulations promulgated thereunder, "Outside
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Director" shall have the meaning set forth in such regulations, as amended from
time to time and as interpreted by the Internal Revenue Service.
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