EXHIBIT 10.4
MKS INSTRUMENTS, INC.
SECOND AMENDED AND RESTATED 1997 DIRECTOR STOCK OPTION PLAN
(as of May 13, 2004)
1. Purpose.
The purpose of this Amended and Restated 1997 Director Stock Option Plan
(the "Plan") of MKS Instruments, Inc., a Massachusetts corporation (the
"Company"), is to encourage ownership in the Company by non-employee directors
of the Company whose continued services are considered essential to the
Company's future progress and to provide them with a further incentive to remain
as directors of the Company.
2. Administration.
The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.
3. Participation in the Plan.
Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
4. Stock subject to the Plan.
(a) Definition of Common Stock. "Common Stock" means (i) prior to the
closing of the Company's initial public offering of common stock pursuant to an
effective registration statement under the Securities Act of 1933 ("IPO"), the
Class B Common Stock, no par value per share, of the Company, and (ii) from and
after the closing of the IPO, the Common Stock, no par value per share, of the
Company.
(b) The maximum number of shares of the Company's Common Stock which may
be issued under the Plan shall be 750,000 shares, subject to adjustment as
provided in Section 7. All share amounts set forth in this Plan reflect all
stock splits effected prior to April 16, 2003 (the "Restatement Date").
(c) If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(d) All options granted under the Plan shall be nonstatutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended to date and as it may be amended from time to time (the
"Code").
5. Terms, Conditions and Form of Options.
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Dates. Options shall automatically be granted to all
eligible outside directors as follows:
(i) each person who first becomes an eligible outside director after
the Restatement Date shall be granted an option to purchase 20,000 shares of
Common Stock on the date of his or her initial election to the Board of
Directors; and
(ii) each eligible outside director then in office on the date of
each annual meeting of stockholders of the Company shall be granted an
additional option to purchase 12,000 shares of Common Stock on the date of each
such annual meeting of stockholders, provided that he or she was elected to
serve as a director of the Company at least six months prior to the date of such
meeting.
(b) Option Exercise Price. The option exercise price per share for each
option granted under the Plan shall equal (i) the last reported sales price per
share of the Company's Common Stock on the Nasdaq National Market (or, if the
Common Stock is traded on a national securities exchange on the date of grant,
the reported closing sales price per share of the Common Stock on such exchange)
on the date of grant (or if no such price is reported on such date such price as
reported on the nearest preceding day), (ii) if the Common Stock is not traded
on the Nasdaq National Market or a national securities exchange, the fair market
value per share on the date of grant as determined by the Board of Directors or
(iii) the average of the closing bid and asked prices in the over-the-counter
market.
(c) Transferability of Options. Except as the Board of Directors of the
Company may otherwise determine or provide in a written agreement entered into
in connection with the grant of an option under the Plan, options shall not be
sold, assigned, transferred, pledged or otherwise encumbered by the Optionee,
either voluntarily or by operation of law except by will or the laws of descent
and distribution, and during the life of the optionee and shall be exercisable
only by him. Reference to an optionee, to the extent relevant in the context,
shall include references to authorized transferees.
(d) Vesting Period. Except as the Board may otherwise determine or provide
in a written agreement entered into in connection with the grant of an option
under the Plan, each option granted pursuant to paragraph (a)(i) of this Section
5 shall become exercisable in twelve (12) equal quarterly installments following
the date of grant. Each option granted pursuant to paragraph (a)(ii) of this
Section 5 shall become fully exercisable on the day prior to the first annual
meeting of stockholders of the Company following the date of grant (or if no
such meeting is held within thirteen (13) months after the date of grant, on the
thirteen-month anniversary of the date of grant).
(e) Termination. Upon termination of an optionee's service as a director
of the Company, each option held by him may be exercised during the one-year
period following such termination of service, as to the exercisable portion of
such option as of the date of termination, provided that (i) no option may be
exercised more than ten (10) years after the date of grant and (ii) in the event
an optionee ceases to serve as a director due to his death or disability (within
the meaning of Section 22(e)(3) of the Code or any successor provision), each
option may be exercised, within the one-year period following the date the
optionee ceases to serve as a director, by the optionee or by the person to whom
the option is transferred by will, by the laws of descent and distribution, or
by written notice, as to the portion of the option that is exercisable on the
date of death or disability and as to the additional portion that would have
become exercisable on the next anniversary date of the date of grant of such
option.
(f) Exercise Procedure. Options may be exercised only by written notice to
the Company at its principal office accompanied by (i) payment in cash of the
full consideration for the shares as to which they are exercised or (ii) an
irrevocable undertaking, in form and substance satisfactory to the Company, by a
broker to deliver promptly to the Company sufficient funds to pay the exercise
price or delivery of
-2-
irrevocable instructions, in form and substance satisfactory to the Company, to
a broker to deliver promptly to the Company cash or a check sufficient to pay
the exercise price.
(g) Exercise by Representative Following Death of Director. An optionee,
by written notice to the Company, may designate one or more persons (and from
time to time change such designation), including his or her legal
representative, who, by reason of the director's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the term of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the Plan.
6. Limitation of Rights.
(a) No Right to Continue as a Director. Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding, express or implied, that the
Company will retain the optionee as a director for any period of time.
(b) No Stockholders' Rights for Options. An optionee shall have no rights
as a stockholder with respect to the shares covered by his options until the
date of the issuance to him of a stock certificate therefor, and no adjustment
will be made for dividends or other rights (except as provided in Section 7) for
which the record date is prior to the date such certificate is issued.
7. Changes in Common Stock.
(a) If, at any time after the Restatement Date, the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities, or if additional shares or new or different
shares or other securities are distributed with respect to such shares of Common
Stock or other securities, through merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock, or
other securities, an appropriate and proportionate adjustment will be made in
(i) the maximum number and kind of shares reserved for issuance under the Plan,
(ii) the number and kind of shares or other securities issuable pursuant to
Sections 5(a)(i) and 5(a)(ii) above, (iii) the number and kind of shares or
other securities subject to then outstanding options under the Plan and (iv) the
price for each share subject to any then outstanding options under the Plan,
without changing the aggregate purchase price as to which such options remain
exercisable. No fractional shares will be issued under the Plan on account of
any such adjustments.
(b) In the event of (i) a consolidation, merger or other reorganization in
which all of the outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity
or (ii) any sale of all or substantially all of the Company's assets (in either
event, an "Acquisition"), all options outstanding under the Plan immediately
prior to the effective date of such Acquisition shall become automatically
exercisable in full upon the effective date of such Acquisition.
8. Amendment of the Plan.
The Board of Directors may suspend or discontinue the Plan or revise
or amend it in any respect whatsoever; provided, however, that without approval
of the stockholders of the Company no revision or amendment shall change the
number of shares subject to the Plan (except as provided in Section 7).
9. Notice.
Any written notice to the Company required by any of the provisions
of the Plan shall be addressed to the Chief Financial Officer of the Company and
shall become effective when it is received.
-3-
10. Governing Law.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of The Commonwealth of Massachusetts.
Adopted by the Board of Directors
on December 31, 1997 and approved by the
stockholders on January 9, 1998; Amendments
and restatement approved by the Board of
Directors on April 16, 2003; Amendment
approved by the Board of Directors on March
4, 2004, and by the stockholders on May 13,
2004.
-4-
MKS INSTRUMENTS, INC.
Nonstatutory Stock Option Agreement
Granted Under Amended and Restated 1997 Director Stock Option Plan
1. Grant of Option.
This agreement evidences the grant by MKS Instruments, Inc., a
Massachusetts corporation (the "Company"), on <Stock_Date> (the "Grant Date")
to <First> <Last> a director of the Company (the "Participant"), of an
option to purchase, in whole or in part, on the terms provided herein and in the
Company's Amended and Restated 1997 Director Stock Option Plan (the "Plan"), a
total of 12,000 shares (the "Shares") of common stock, no par value per share,
of the Company ("Common Stock") at $<Price> per Share. Unless earlier
terminated, this option shall expire on <Expire> the ("Final Exercise Date").
It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
This option shall not be exercisable until the earlier of (a) the day
prior to the first Annual Meeting of the Company's stockholders which occurs
after the date hereof or (b) thirteen months after the Grant Date, at which time
it shall become exercisable in full. This option shall expire upon, and will not
be exercisable after, the Final Exercise Date.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share.
(b) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an employee, officer or a director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant
ceased to
Page 1
be an Eligible Participant for any reason, then, except as provided in paragraph
(d) below, the right to exercise this option shall terminate one year after such
cessation (but in no event after the Final Exercise Date), provided that this
option shall be exercisable only to the extent that the Participant was entitled
to exercise this option on the date of such cessation. Notwithstanding any other
provision of this Agreement, if the Participant, prior to the Final Exercise
Date, violates the non-competition or confidentiality provisions of any
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e) (3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant this option
shall be exercisable, within the period of one year following the date of death
or disability of the Participant, by the Participant, provided that this option
shall be exercisable only to the extent that this option was exercisable by the
Participant on the date of his or her death or disability, and further provided
that this option shall not be exercisable after the Final Exercise Date.
4. Withholding.
No shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
MKS Instruments, Inc.
Dated: <<Stock_Date>> By:
------------------------- ------------------------------------
Name:
----------------------------------
Title:
----------------------------------
----------------------------------
Page 2
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's Amended and Restated 1997 Director Stock Option Plan.
<<First>><<Last>>
------------------------------------------
(Director's Signature)
Address: <<Street>>
----------
<<City>>, <<State>> <<Zip_>>
---------------------------------
Page 3
MKS INSTRUMENTS, INC.
Nonstatutory Option Agreement for an Initial Election Option
Granted under the Amended and Restated 1997 Director Stock Option Plan
1. Grant of Option.
This agreement evidences the grant by MKS Instruments, Inc., a
Massachusetts corporation (the "Company"), on <<Stock_Date>> (the "Grant Date")
to <<First>> <<Last>> a director of the Company (the "Participant"), of an
option to purchase, in whole or in part, on the terms provided herein and in the
Company's Amended and Restated 1997 Director Stock Option Plan (the "Plan"), a
total of 20,000 shares (the "Shares") of common stock, no par value per share,
of the Company ("Common Stock") at $<<Price>> per Share. Unless earlier
terminated, this option shall expire on <<Expire>> the ("Final Exercise Date").
It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
This option shall become exercisable in twelve (12) equal quarterly
installments following the date of grant. This option shall expire upon, and
will not be exercisable after, the Final Exercise Date.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share.
(b) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an employee, officer or a director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant ceased
to be an Eligible Participant for any reason, then, except as provided in
paragraph (d)
Page 1
below, the right to exercise this option shall terminate one year after such
cessation (but in no event after the Final Exercise Date), provided that this
option shall be exercisable only to the extent that the Participant was entitled
to exercise this option on the date of such cessation. Notwithstanding any other
provision of this Agreement, if the Participant, prior to the Final Exercise
Date, violates the non-competition or confidentiality provisions of any
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e) (3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant this option
shall be exercisable, within the period of one year following the date of death
or disability of the Participant, by the Participant, provided that this option
shall be exercisable only to the extent that this option was exercisable by the
Participant on the date of his or her death or disability, and further provided
that this option shall not be exercisable after the Final Exercise Date.
4. Withholding.
No shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
MKS Instruments, Inc.
Dated: <<Stock_Date>> By:
--------------------- --------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-----------------------------------
Page 2
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's Amended and Restated 1997 Director Stock Option Plan.
<<First>><<Last>>
---------------------------------------
(Director's Signature)
Address: <<Street>>
----------
<<City>>, <<State>> <<Zip_>>
-----------------------------
Page 3