EXHIBIT 10.4
NANOMETRICS INCORPORATED
1991 DIRECTOR OPTION PLAN
As Amended April 1994
1. Purpose of the Plan. The purpose of this 1991 Director Option Plan is
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to attract and retain the best available personnel to serve as Outside Directors
of the Company.
All options granted hereunder shall be "non-statutory stock options".
2. Definitions. As used herein, the following definitions shall apply:
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(a) "Board" means the Board of Directors of the Company.
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(b) "Code" means the Internal Revenue Code of 1986, as amended.
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(c) "Common Stock" means the Common Stock of the Company.
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(d) "Company" means Nanometrics Incorporated, a California
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corporation.
(e) "Continuous Status as a Director" means the absence of any
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interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
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(g) "Employee" means any person, including officers and Directors,
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employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
(i) "Fair Market Value" means, as of any date, the value of Common
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Stock determined as follows:
(i) If the Common Stock 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, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
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 exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the last market trading day prior to the day of determination, as reported in
the Wall Street Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Option" means a stock option granted pursuant to the Plan.
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(k) "Optioned Stock" means the Common Stock subject to an Option.
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(l) "Optionee" means an Outside Director who receives an Option.
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(m) "Outside Director" means a Director who is not an Employee, or
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who is not the beneficial owner of more than 50% of the Company's outstanding
stock.
(n) "Parent" means a "parent corporation", whether now or hereafter
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existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1991 Director Option Plan.
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(p) "Share" means a share of the Common Stock, as adjusted in
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accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation", whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
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the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is three hundred thousand (300,000) Shares (the "Pool") of Common
Stock. The Shares may be authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. Administration of and Grants of Options under the Plan.
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(a) Administrator. Except as otherwise required herein, the Plan
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shall be administered by the Board.
(b) Provisions for Grants. The provisions set forth in this Section
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4(b) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. All grants of options to Outside Directors
under this Plan shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
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(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of shares to be
covered by Options granted to Outside Directors; provided, however, that nothing
in this Plan shall be construed to prevent an Outside Director from declining to
receive an Option under this Plan.
(ii) Nathaniel Brenner, Norman Coates and Robert H. Yarbrough
shall be automatically granted an Option to purchase five thousand (5,000)
Shares upon the effective date of this amendment to this Plan which grants shall
be conditioned upon subsequently receiving shareholder approval;
(iii) Each additional Outside Director shall be automatically
granted an Option to purchase ten thousand (10,000) Shares on the date on which
such person first becomes a Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy;
(iv) On January 1 of each year during the term of this Plan,
each Outside Director shall automatically receive an Option to purchase ten
thousand (10,000) Shares, provided that he or she has been an Outside Director
for at least six (6) months on such date;
(v) The terms of an Option granted pursuant to this Section
4(b) shall be as follows:
(A) the term of the Option shall be five (5) years;
(B) except as provided in Section 10 of this Plan, the
Option shall be exercisable only while the Outside Director remains a director;
(C) the exercise price per share of Common Stock shall be
100% of the Fair Market Value on the date of grant of the Option;
(D) the Option shall become exercisable in installments
cumulatively with respect to thirty-three and one-third (33-1/3%) of the
Optioned Stock one year after the date of grant and as to an additional thirty-
three and one-third (33-1/3%) of the Optioned Stock each year thereafter, so
that one hundred percent (100%) of the Optioned Stock shall be exercisable three
years after the date of grant; provided, however, that in no event shall any
Option be exercisable prior to obtaining shareholder approval of the Plan.
(vi) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased upon exercise of Options to exceed the Pool, then
each such automatic grant shall be for that number of Shares determined by
dividing the total number of Shares remaining available for grant by the number
of Outside Directors on the automatic grant date. No further grants shall be
made until such time, if any, as additional Shares become available for grant
under the Plan through action of the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.
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(c) Powers of the Board. Subject to the provisions and restrictions
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of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
2(i) of the Plan, the Fair Market Value of the Common Stock; (ii) to interpret
the Plan; (iii) to prescribe, amend and rescind rules and regulations relating
to the Plan; (iv) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option previously granted
hereunder; and (v) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) Effect of Board's Decision. All decisions, determinations and
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interpretations of the Board shall be final.
5. Eligibility. Options may be granted only to Outside Directors. All
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Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
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occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Exercise Price and Consideration.
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(a) Exercise Price. The per Share exercise price for Optioned Stock
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shall be 100% of the Fair Market Value per Share on the date of grant of the
Option.
(b) Form of Consideration. The consideration to be paid for the
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Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and may consist entirely of (i) cash, (ii)
check, (iii) promissory note, (iv) other shares which have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised and which, in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than twelve (12) months on the date of surrender, (v) delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds required to
pay the exercise price, (vi) delivery of an irrevocable subscription agreement
for the Shares which irrevocably obligates the Optionee to take and pay for the
Shares not more than twelve (12) months after the date of delivery of the
subscription agreement, (vii) any combination of the foregoing methods of
payment, or (viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted under applicable law.
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8. Exercise of Option.
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(a) Procedure for Exercise; Rights as a Shareholder. Any Option
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granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) "Termination of Continuous Status as a Director. In the event an
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Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within three (3) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its five (5) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's Continuous Status
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as a Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her
Option, but only within twelve (12) months from the date of such termination,
and only to the extent that the Optionee was entitled to exercise it at the date
of such termination (but in no event later than the expiration of its five (5)
year term). To the extent that the Optionee was not entitled to exercise an
Option at the date of termination, or if he or she does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
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(d) Death of Optionee. In the event of an Optionee's death, the
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Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it at the date of death (but in no event later than the
expiration of its five (5) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
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assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments.
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(a) Changes in Capitalization. In the event that the stock of the
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Company is changed by reason of any stock split, reverse stock split,
recapitalization, or other change in the capital structure of the Company, or
converted into or exchanged for other securities as a result of any merger,
consolidation or reorganization, or in the event that the outstanding number of
shares of stock of the Company is increased through payment of a stock dividend,
appropriate proportionate adjustments shall be made in the number and class of
shares of stock subject to the Plan, the number and class of shares subject to
the Plan, the number and class of share subject to any Option outstanding under
the Plan, and the exercise price of any such outstanding Option; provided,
however, that the Company shall not be required to issue fractional shares as a
result of any such adjustment. Any such adjustment shall be made upon approval
by the Board, whose determination shall be conclusive. If there is any other
change in the number or type of the outstanding shares of stock of the Company,
or of any other security into which such stock shall have been changed or for
which it shall have been exchanged, and if the Board in its sole discretion
determines that such change equitably requires an adjustment in the Options then
outstanding under the Plan, such adjustment shall be made in accordance with the
determination of the Board. No adjustments shall be required by reason of the
issuance or sale by the Company for cash or other consideration of additional
shares of its stock or securities convertible into or exchangeable for shares of
its stock.
(b) Corporate Transactions. New Options (substantially equivalent to
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the Options) may be substituted for the Options granted under the plan, or the
Company's duties as to Options outstanding under the Plan may be assumed, by an
employer corporation other than the Company or by a parent or subsidiary of such
employer corporation, in connection with any merger, consolidation, acquisition
of assets or stock, separation, reorganization, liquidation or like occurrence
in which the Company is involved, provided, however, in the event such employer
corporation or parent or subsidiary of such employer corporation does not assume
the Options granted hereunder or substitute for such Options substantially
equivalent options, or if the Board determines, in its sole discretion, that
Options outstanding under the Plan should not then continue to be outstanding,
the Options granted hereunder shall terminate and thereupon become null and void
(i) upon dissolution or liquidation of the Company, acquisition, separation, or
similar occurrence, or (ii) upon any merger, consolidation, or similar
occurrence, where the Company will not be a
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surviving corporation; provided, however, that each Optionee shall be given
notice of such dissolution, liquidation, merger, consolidation, acquisition,
separation or similar occurrence and shall have the right, at any time prior to,
but contingent upon the consummation of such transaction, to exercise (x) any
unexpired Options granted hereunder to the extent they are then exercisable, and
(y) in the case of a merger, consolidation, or similar occurrence where the
Company is not the surviving corporation, those Options which are not then
otherwise exercisable; provided, further, that such exercise right shall not in
any event expire less than thirty (30) days after the date notice of such
transaction is sent to the Optionee.
11. Amendment and Termination of the Plan.
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(a) Amendment and Termination. The Board may at any time amend,
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alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
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termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
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all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
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pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
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14. Reservation of Shares. The Company, during the term of this Plan, will
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at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
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agreements in such form as the Board shall approve.
16. Shareholder Approval. Continuance of the Plan shall be subject to
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approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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