EXHIBIT 10.2
AS AMENDED
PRI AUTOMATION, INC.
1997 NON-INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE
This 1997 Non-Incentive Stock Option Plan (the "Plan") of PRI Automation,
Inc., a Massachusetts corporation (the "Company"), is designed to provide
additional incentive to executives and other key employees of the Company and
its subsidiaries and for certain other individuals providing services to or
acting as directors of the Company and its subsidiaries. The Company intends
that this purpose will be effected by the granting of nonqualified stock options
("Options") under the Plan which afford such executives and key employees an
opportunity to acquire or increase their proprietary interest in the Company
through the acquisition of shares of its Common Stock.
SECTION 2. Administration
2.1 THE COMMITTEE. The Plan shall be administered by a Committee (the
"Committee") consisting of the "Outside Directors" who are also members of the
Compensation Committee. As used herein, the term "Outside Director" means any
director who (i) is not an employee of the Company or of any "affiliated group,"
as such term is defined in Section 1504(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), which includes the Company (an "Affiliate"), (ii) is
not a former employee of the Company or any Affiliate who is receiving
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the Company's or any Affiliate's taxable year, (iii) has
not been an officer of the Company or any Affiliate and (iv) does not receive
remuneration from the Company or any Affiliate, either directly or indirectly,
in any capacity other than as a director. It is the intention of the Company
that the Plan shall be administered by "Non-Employee Directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, but the
authority and validity of any act taken or not taken by the Committee shall not
be affected if any person administering the Plan is not a Non-Employee Director.
Except as specifically reserved to the Company's Board of Directors (the
"Board") under the terms of the Plan, the Committee shall have full and final
authority to operate, manage and administer the Plan on behalf of the Company.
Action by the Committee shall require the affirmative vote of a majority of all
members thereof.
2.2 POWERS OF THE COMMITTEE. Subject to the terms and conditions of the
Plan, the Committee shall have the power:
(a) To determine from time to time the persons eligible to receive
options and the options to be granted to such persons under the Plan and to
prescribe the terms, conditions, restrictions, if any, and provisions
(which need not be identical) of each option granted under the Plan to such
persons;
(b) To construe and interpret the Plan and options granted thereunder
and to establish, amend, and revoke rules and regulations for
administration of the Plan. In this connection, the Committee may correct
any defect or supply any omission, or reconcile
any inconsistency in the Plan, or in any option agreement, in the manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective. All decisions and determinations by the Committee in the
exercise of this power shall be final and binding upon the Company and
optionees;
(c) To make, in its sole discretion, changes to any outstanding option
granted under the Plan, including: (i) to reduce the exercise price, (ii)
to accelerate the vesting schedule or (iii) to extend the expiration date;
and
(d) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company
with respect to the Plan.
SECTION 3. STOCK
3.1 STOCK TO BE ISSUED. The stock subject to the options granted under the
Plan shall be shares of the Company's authorized but unissued common stock, $.01
par value (the "Common Stock"), or shares of the Company's Common Stock held in
treasury. The total number of shares that may be issued pursuant to options
granted under the Plan shall not exceed an aggregate of 1,400,000 shares of
Common Stock; provided, however, that the class and aggregate number of shares
which may be subject to options granted under the Plan shall be subject to
adjustment as provided in Section 8 hereof.
3.2 EXPIRATION, CANCELLATION OR TERMINATION OF OPTION. Whenever any
outstanding option under the Plan expires, is canceled or is otherwise
terminated (other than by exercise), the shares of Common Stock allocable to the
unexercised portion of such option may again be the subject of options under the
Plan.
3.3 LIMITATION ON GRANTS. In no event may any Plan participant be granted
options with respect to more than 150,000 shares of Common Stock in any calendar
year. The number of shares of Common Stock issuable pursuant to an option
granted to a Plan participant in a calendar year that is subsequently forfeited,
canceled or otherwise terminated shall continue to count toward the foregoing
limitation in such calendar year. In addition, if the exercise price of an
option is subsequently reduced, the transaction shall be deemed a cancellation
of the original option and the grant of a new one so that both transactions
shall count toward the maximum shares issuable in the calendar year of each
respective transaction.
SECTION 4. ELIGIBILITY
Options may be granted to officers or other employees of the Company or its
subsidiaries, and to members of the Board and consultants or other persons who
render services to the Company (regardless of whether they are also employees).
SECTION 5. Termination of Employment or Death of Optionee
5.1 TERMINATION OF EMPLOYMENT. Except as otherwise expressly provided
herein, an Option shall terminate on the earliest of:
(a) the date of expiration thereof;
(b) the date of cancellation thereof pursuant to Section 8.3;
2
(c) the date on which the optionee's employment with, or directorship
or other services to, the Company and all Affiliates is terminated by the
Company or any Affiliate for Cause;
(d) the date of expiration thereof in the event of the retirement of
the optionee in good standing from the employ of the Company for reasons of
age under the then established rules of the Company ("Good-Standing
Retirement"); provided, however, the Option shall terminate immediately
upon a determination by the Committee in its sole discretion that the
optionee is or has engaged in a business enterprise in competition with the
Company subsequent to said Good-Standing Retirement. In the event of such
Good- Standing Retirement, said Option shall continue to vest in accordance
with its terms as if the optionee were still in the employ of the Company
until its termination either by its expiration or by the aforementioned
determination by the Committee; and
(e) thirty days after the date on which the optionee's employment
with, or directorship or other services to, the Company and all Affiliates
terminates other than for Cause (as determined by the Company) or
Good-Standing Retirement;
PROVIDED, HOWEVER, that Options granted to persons who are not employees of
the Company need not, unless the Committee determines otherwise, be subject
to the provisions set forth in clauses (c), (d) and (e) above nor to
Section 5.2 below. Whether authorized leave of absence, or absence on
military or government service, shall constitute termination of an
employment relationship between the Company and the optionee shall be
determined by the Committee at the commencement thereof, and the Committee
shall promptly notify the optionee of such determination. Options shall not
be affected by any optionee's change of employment within the Company and
any Affiliate or change in the identity of the Company or any Affiliate to
whom directorship or other services are provided, so long as the optionee
continues to be an employee of, or to provide such services to, the Company
or any Affiliate.
As used herein, "cause" shall mean (i) any material breach by the
optionee of any agreement to which the optionee and the Company are both
parties, (ii) any act or omission to act by the optionee which may have a
material and adverse effect on the Company's business or on the optionee's
ability to perform services for the Company, including, without limitation,
the commission of any crime (other than ordinary traffic violations), or
(iii) any material misconduct or material neglect of duties by the optionee
in connection with the business or affairs of the Company or any affiliate
of the Company.
5.2 DEATH OR PERMANENT DISABILITY OF OPTIONEE. In the event of the death or
permanent and total disability of the holder of an option that is subject to
clause (b) or (c) of Section 5.1 above prior to termination of the optionee's
employment with or services to the Company and before the date of expiration of
such option, such option shall terminate on the earlier of such date of
expiration or one year following the date of such death or disability. After the
death of the optionee, his/her executors, administrators or any person or
persons to whom his/her option may be transferred by will or by the laws of
descent and distribution, shall have the right, at any time prior to such
termination, to exercise the option to the extent the optionee
3
was entitled to exercise such option immediately prior to his/her death. An
optionee is permanently and totally disabled if he/she is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to last for a continuous
period of not less than 12 months; permanent and total disability shall be
determined in accordance with Section 22(e)(3) of the Code and the regulations
issued thereunder.
SECTION 6. Terms of the Option Agreements
Each option agreement shall be in writing and shall contain such terms,
conditions, restrictions, if any, and provisions as the Committee shall from
time to time deem appropriate. Such provisions or conditions may include without
limitation restrictions on transfer, repurchase rights, or such other provisions
as shall be determined by the Committee; provided that such additional
provisions shall not be inconsistent with any other term or condition of the
Plan. The shares of stock issuable upon exercise of an option by any executive
officer, director or beneficial owner of more than ten percent of the Common
Stock of the Company may not be sold or transferred (except that such shares may
be issued upon exercise of such option) by such officer, director or beneficial
owner for a period of six months following the grant of such option.
Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following
provisions:
6.1 EXPIRATION OF OPTION. Notwithstanding any other provision of the Plan
or of any option agreement, each option shall expire on the date specified in
the option agreement or as specified in Section 5 of this Plan.
6.2 EXERCISE. Each option may be exercised, so long as it is valid and
outstanding, from time to time in part or as a whole, subject to any limitations
with respect to the number of shares for which the option may be exercised at a
particular time and to such other conditions as the Committee in its discretion
may specify upon granting the option.
6.3 PURCHASE PRICE. The purchase price per share under each option shall be
determined by the Committee at the time the option is granted and shall not be
less than the fair market value of the Common Stock on the date of grant.
6.4 RIGHTS OF OPTIONEES. No optionee shall be deemed for any purpose to be
the owner of any shares of Common Stock subject to any option unless and until
the option shall have been exercised pursuant to the terms thereof, and the
Company shall have issued and delivered the shares to the optionee.
6.5 REPURCHASE RIGHT. The Committee may in its discretion provide upon the
grant of any option hereunder that the Company shall have an option to
repurchase upon such terms and conditions as determined by the Committee all or
any number of shares purchased upon exercise of such option. The repurchase
price per share payable by the Company shall be such amount or be determined by
such formula as is fixed by the Committee at the time the option for the shares
subject to repurchase is granted. In the event the Committee shall grant options
subject to the Company's repurchase option, the certificates representing the
shares purchased pursuant to such option shall carry a legend satisfactory to
counsel for the Company referring to the Company's repurchase option.
4
SECTION 7. Method of Exercise; Payment of Purchase Price
7.1 METHOD OF EXERCISE. Any option granted under the Plan may be exercised
by the optionee by delivering to the Company on any business day a written
notice specifying the number of shares of Common Stock the optionee then desires
to purchase and specifying the address to which the certificates for such shares
are to be mailed (the "Notice"), accompanied by payment for such shares.
7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Common Stock
purchased pursuant to the exercise of an option shall be made either by (i)
cash, certified check, bank draft or postal or express money order equal to the
option price for the number of shares specified in the Notice, or (ii) through
the delivery of shares of Common Stock (which in the case of shares acquired
from the Company, have been outstanding for at least six months) having a fair
market value on the last business day preceding the date of exercise equal to
the purchase price, or (iii) by delivery of an unconditional and irrevocable
undertaking by a broker to deliver promptly to the Company sufficient funds to
pay the exercise price, or (iv) if so permitted by the instrument evidencing the
Option or by the Board on or after grant of the Option, by delivery of a
promissory note of the Option holder to the Company, payable on such terms as
are specified by the Board, or (v) by any combination of the permissible forms
of payment. As promptly as practicable after receipt of the Notice and
accompanying payment, the Company shall deliver to the optionee certificates for
the number of shares with respect to which such option has been so exercised,
issued in the optionee's name; provided, however, that such delivery shall be
deemed effected for all purposes when the Company or a stock transfer agent of
the Company shall have deposited such certificates in the United States mail,
addressed to the optionee, at the address specified in the Notice.
SECTION 8. Changes in Company's Capital Structure
8.1 RIGHTS OF COMPANY. The existence of outstanding options shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize, without limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of Common
Stock, or any issue of bonds, debentures, preferred or prior preference stock or
other capital stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
8.2 RECAPITALIZATION, Stock Splits and Dividends. If the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, or other increase or reduction of the number of
shares of the Common Stock outstanding, in any such case without receiving
compensation therefor in money, services or property, then (i) the number,
class, and price per share of shares of stock subject to outstanding options
hereunder shall be appropriately adjusted in such a manner as to entitle an
optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised his or her option in full immediately prior to such event;
5
(ii) the number and class of shares with respect to which options may be granted
under the Plan; and (iii) the number and class of shares set forth in Section
3.3 shall be adjusted by substituting for the total number of shares of Common
Stock then reserved for issuance under the Plan that number and class of shares
of stock that the owner of an equal number of outstanding shares of Common Stock
would own as the result of the event requiring the adjustment.
8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one or more
corporations into the Company, or after a consolidation of the Company and one
or more corporations in which (i) the Company shall be the surviving
corporation, and (ii) the stockholders of the Company immediately prior to such
merger or consolidation own after such merger or consolidation shares
representing at least fifty percent of the voting power of the Company, each
holder of an outstanding option shall, at no additional cost, be entitled upon
exercise of such option to receive in lieu of the number of shares as to which
such option shall then be so exercisable, the number and class of shares of
stock or other securities to which such holder would have been entitled pursuant
to the terms of the agreement of merger or consolidation if, immediately prior
to such merger or consolidation, such holder had been the holder of record of a
number of shares of Common Stock equal to the number of shares for which such
option was exercisable.
8.4 SALE OR MERGER WITH CHANGE OF CONTROL. If the Company is merged into or
consolidated with another corporation under circumstances where the Company is
not the surviving corporation, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Company, or if the Company is liquidated, or sells or otherwise disposes
of substantially all of its assets to another corporation while unexercised
options remain outstanding under the Plan, (i) subject to the provisions of
clause (iii) below, after the effective date of such merger, consolidation,
liquidation, sale or disposition, as the case may be, each holder of an
outstanding option shall be entitled, upon exercise of such option, to receive,
in lieu of shares of Common Stock, shares of such stock or other securities,
cash or property as the holders of shares of Common Stock received pursuant to
the terms of the merger, consolidation, liquidation, sale or disposition; (ii)
the Committee may accelerate the time for exercise of all unexercised and
unexpired options to and after a date prior to the effective date of such
merger, consolidation, liquidation, sale or disposition, as the case may be,
specified by the Committee; or (iii) all outstanding options may be canceled by
the Committee as of the effective date of any such merger, consolidation,
liquidation, sale or disposition provided that (x) notice of such cancellation
shall be given to each holder of an option and (y) each holder of an option
shall have the right to exercise such option to the extent that the same is then
exercisable or, if the Committee shall have accelerated the time for exercise of
all unexercised and unexpired options, in full during the 30-day period
preceding the effective date of such merger, consolidation, liquidation, sale or
disposition.
8.5 ADJUSTMENTS TO COMMON STOCK SUBJECT TO OPTIONS. Except as hereinbefore
expressly provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other
6
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
outstanding options.
8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be determined by
the Committee, and such determinations shall be conclusive. No fractional shares
of Common Stock shall be issued under the Plan on account of any adjustment
specified above.
SECTION 9. General Restrictions
9.1 INVESTMENT REPRESENTATIONS. The Company may require any person to whom
an option is granted, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
9.2 COMPLIANCE WITH SECURITIES LAWS. The Company shall not be required to
sell or issue any shares under any option if the issuance of such shares shall
constitute a violation by the optionee or by the Company of any provisions of
any law or regulation of any governmental authority. In addition, in connection
with the Securities Act of 1933, as now in effect or hereafter amended (the
"Act"), upon exercise of any option, the Company shall not be required to issue
such shares unless the Committee has received evidence satisfactory to it to the
effect that the holder of such option will not transfer such shares except
pursuant to a registration statement in effect under such Act or unless an
opinion of counsel satisfactory to the Company has been received by the Company
to the effect that such registration is not required. Any determination in this
connection by the Committee shall be final, binding and conclusive. In the event
the shares issuable on exercise of an option are not registered under the Act,
the Company may imprint upon any certificate representing shares so issued the
following legend or any other legend which counsel for the Company considers
necessary or advisable to comply with the Act and with applicable state
securities laws:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933 or under the securities laws of any State and
may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an
opinion of counsel satisfactory to the Corporation,
in form and substance satisfactory to the
Corporation, that registration is not required for
such sale or transfer.
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act; and in the event any shares are
so registered the Company may remove any legend on certificates representing
such shares. The Company shall not be obligated to take any other affirmative
action in order to cause the exercise of an option or the issuance of shares
pursuant thereto to comply with any law or regulation of any governmental
authority.
7
9.3 EMPLOYMENT OBLIGATION. The granting of any option shall not impose upon
the Company any obligation to employ or continue to employ any optionee; and the
right of the Company to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that an
option has been granted to him or her.
SECTION 10. Amendment or Termination of the Plan
The Board of Directors may modify, revise or terminate this Plan at any
time and from time to time.
SECTION 11. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
SECTION 12. Effective Date and Duration of Plan
The Plan shall become effective upon its adoption by the Board of
Directors. No option may be granted under the Plan after the tenth anniversary
of the effective date. The Plan shall terminate (i) when the total amount of the
Stock with respect to which options may be granted shall have been issued upon
the exercise of options or (ii) by action of the Board of Directors pursuant to
Section 10 hereof, whichever shall first occur.
* * *
8