SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CYMER, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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CYMER, INC.
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1998
TO THE STOCKHOLDERS OF CYMER, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of CYMER, INC., a Nevada corporation (the "Company"), will be held at
10:00 a.m., local time, on May 15, 1998, at the Company's corporate offices,
16750 Via Del Campo Court, San Diego, California 92127, for the following
purposes:
1. To elect five (5) directors to serve for the ensuing year and until
their successors are elected.
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the shares reserved for issuance thereunder by 1,250,000 shares.
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the year ending December 31, 1998.
4. To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 3, 1998 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person; however, to ensure your representation at the Annual Meeting you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope enclosed for that purpose. YOU MAY
REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT
ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A
PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
William A. Angus, III, Secretary
San Diego, California
April 14, 1998
CYMER, INC.
PROXY STATEMENT FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
________________
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of CYMER, INC. (the "Company")
for use at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held on Friday, May 15, 1998, at 10:00 a.m., local time, or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at the Company's corporate offices, 16750 Via Del Campo
Court, San Diego, California 92127. The telephone number at that location
is (619) 451-7300. When proxies are properly dated, executed and returned,
the shares they represent will be voted at the Annual Meeting in accordance
with the instructions of the stockholder. If no specific instructions are
given, the shares will be voted for the election of the nominees for
directors set forth herein, for the ratification of the appointment of
Deloitte & Touche LLP as independent auditors as set forth herein and at the
discretion of the proxy holders upon such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended December 31, 1997, including financial statements, were first
mailed on or about April 14, 1998, to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on April 3, 1998 are
entitled to notice of and to vote at the Annual Meeting. At the record date,
28,805,945 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company at or before the taking of the vote at the
Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Cymer, Inc. at 16750 Via Del Campo
Court, San Diego, California 92127, Attention: Secretary, or hand-delivered to
the Secretary of the Company at or before the taking of the vote at the Annual
Meeting.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. In addition, proxies may be solicited by
directors, officers and employees of the Company in person or by telephone,
telegram or other means of communication. No additional compensation will be
paid for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on a matter are
treated as being present at the Annual Meeting for purposes of establishing a
quorum and are also treated as shares "represented and voting" at the Annual
Meeting (the "Votes Cast") with respect to such matter.
While there is no definitive statutory authority in Nevada as to the
proper treatment of abstentions and broker non-votes, the Company believes
that abstentions should be counted for purposes of determining both (i) the
presence or absence of a quorum for the transaction of business and (ii) the
total number of Votes Cast with respect to a proposal (other than the
election of directors). In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions in this manner.
Accordingly, abstentions will have the same effect as a vote against the
proposal.
Broker non-votes will be counted for purposes of determining the presence
or absence of a quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to the
proposal on which the broker has expressly not voted. Thus, a broker non-vote
will not affect the outcome of the voting on a proposal.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company currently intends to hold its 1999 Annual Meeting of
Stockholders in May 1999 and to mail Proxy Statements relating to such meeting
in April 1999. The date by which stockholder proposals must be received by the
Company for inclusion in the Proxy Statement and form of proxy for its 1999
Annual Meeting of Stockholders, is December 14, 1998. Such stockholder
proposals should be submitted to Cymer, Inc. at 16750 Via Del Campo Court, San
Diego, California 92127, Attention: Secretary.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEES
A board of five (5) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the five (5) nominees named below, all of whom are presently directors
of the Company. In the event that any nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for a
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner as will assure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. The Company is not aware of any nominee who
will be unable or will decline to serve as a director. The term of office for
each person elected as a director will continue until the next annual meeting of
the stockholders or until such director's successor has been duly elected and
qualified.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
LISTED BELOW.
The names of the nominees and certain information about them as of April 3,
1998 are set forth below:
Director
Name of Nominee Age Position(s) With the Company Since
- --------------- --- ---------------------------- --------
Robert P. Akins 46 Chairman of the Board of Directors, Chief 1986
Executive Officer and President
Richard P. Abraham(1) 66 Director 1987
Kenneth M. Deemer(1) 46 Director 1988
Peter J. Simone(2) 50 Director 1993
F. Duwaine Townsen(2) 64 Director 1987
__________________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
ROBERT P. AKINS, a co-founder of the Company, has served as its President,
Chief Executive Officer and Chairman of the Board since its inception in January
1986. From 1980 to 1985, Mr. Akins was a Senior Program Manager for HLX, Inc.,
a manufacturer of laser and defense systems, where he was responsible for
managing the development of a compact excimer laser for military communications
applications and an excimer laser trigger for the particle beam fusion
accelerator at Sandia National Laboratories. Mr. Akins received a B.S. in
Physics and a B.A. in Literature in 1974, and a Ph.D. in Applied Physics in
1983, from the University of California, San Diego.
RICHARD P. ABRAHAM has served as a Director of the Company since October
1987. From October 1994 to the present, Mr. Abraham has served as Chairman and
President of BTR, Inc., which licenses various technologies to the semiconductor
industry. From October 1993 to the present, he has served as Chairman and
President of Advantage Logic, Inc., which also licenses various technologies to
the semiconductor industry. From
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1987 to 1997, Mr. Abraham served as a general partner of Weeden Capital
Partners. From 1980 to 1997, Mr. Abraham served as President of Pacific
Associates, a consulting firm for the semiconductor industry. From 1988 to
the present, Mr. Abraham has served as a director of Rainbow Technology, a
maker of software protection devices for the computer industry and encryption
chips for the satellite communications industry. Mr. Abraham received a B.S.
in Electrical Engineering in 1951, and an M.S. in Electrical Engineering in
1954, from Stanford University.
KENNETH M. DEEMER has served as a Director of the Company since June 1988.
Since 1985, Mr. Deemer has been a Vice President of InterVen Partners, Inc., a
venture capital firm and an affiliate of InterVen II, L.P., and InterVen
Ventures 1987. From January 1982 to June 1985, Mr. Deemer served as a Vice
President at First Interstate Capital, a venture capital firm. Mr. Deemer
received a B.S. in Physics and a B.S. in Electrical Engineering in 1975 from
Massachusetts Institute of Technology and an M.B.A. from Carnegie Mellon
University in 1979.
PETER J. SIMONE has served as a Director of the Company since July 1993.
From April 1997 to the present, Mr. Simone has served as President and Chief
Executive Officer of Xionics Document Technologies, Inc., a provider of embedded
software solutions for printer and copier OEMs. From December 1992 to November
1996, he served as Group Vice President of Simplex Time Recorder Company, a
manufacturer of time, attendance, building life safety and security systems.
From May 1987 to December 1992, he was President and a director of GCA
Corporation, a manufacturer of wafer stepper photolithography equipment.
Mr. Simone received a B.S. in Accounting from Bentley College in 1970 and an
M.B.A. from Babson College in 1974.
F. DUWAINE TOWNSEN has served as a Director of the Company since October
1987. Since June 1983, he has been a managing partner of Ventana Growth Fund,
L.P., a venture capital firm and investor in the Company. Mr. Townsen received
a B.S. in Business Administration and Accounting from San Diego State University
in 1962.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
1997. No director attended fewer than 75% of the total number of meetings of
the Board of Directors or committees of the Board of Directors held in 1997
during the period in which such directors were members of the Board of
Directors. The Board of Directors has a Compensation Committee and an Audit
Committee.
The Audit Committee currently consists of Messrs. Simone and Townsen and
met three times during 1997. This committee is primarily responsible for
approving the services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee currently consists of Messrs. Abraham and Deemer
and met two times during 1997. This committee reviews and approves the
Company's executive compensation policy and options plans.
BOARD OF DIRECTORS COMPENSATION
Directors receive $2,000 per meeting for their services as members of the
Board of Directors and $1,000 per committee meeting attended, and they are
reimbursed for their expenses in attending out-of-town meetings. The Company's
Director Option Plan (the "Director Option Plan"), which was dissolved by the
Board of Directors in October 1997, had reserved 200,000 shares of Common Stock
(as adjusted to reflect the Company's 2-for-1 stock split effective August 21,
1997) for issuance to non-employee directors of the Company pursuant to
nonstatutory
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stock options. Under the Director Option Plan, each director who was elected
or appointed to the Board of Directors and who was not an employee of the
Company would automatically receive a nonstatutory option to purchase 20,000
shares of Common Stock of the Company on the date such person became a
director. In addition, each non-employee director received an option to
acquire 5,000 shares of the Company's Common Stock upon such director's
reelection at each Annual Meeting of Stockholders, provided that on such date
such director had served on the Board of Directors for at least six months.
Options to purchase a total of 80,000 shares of Common Stock remain
outstanding under the Director Option Plan. There are no family
relationships between directors and executive officers of the Company.
-5-
PROPOSAL NO. 2 - APPROVAL OF A 1,250,000 SHARE INCREASE
IN SHARES ISSUABLE UNDER THE 1996 STOCK OPTION PLAN
The Company is seeking stockholder approval of an amendment to the
Company's 1996 Stock Option Plan (the "Stock Option Plan") which would increase
the number of shares issuable under the Stock Option Plan by 1,250,000 shares.
A summary of the Stock Option Plan (which assumes the adoption of the proposed
amendment) is included as APPENDIX A.
The Stock Option Plan was approved by the Board of Directors and by the
stockholders in July 1996. A total of 3,000,000 shares of Common Stock (as
adjusted to reflect the Company's 2-for-1 stock split effective August 21, 1997)
were initially reserved for issuance under the Stock Option Plan.
As of April 3, 1998, options to purchase 2,852,724 shares of Common Stock
were outstanding under the Stock Option Plan, 53,455 shares had been issued by
the Company upon exercise of options under the Stock Option Plan and 93,821
shares remained available for future option grants under the Stock Option Plan.
For the reasons set forth below, in February 1998 the Board of Directors
approved a further increase of 1,250,000 shares to the Stock Option Plan. The
stockholders are being requested to approve this amendment.
The Board believes that the proposed increase is in the best interests of
the Company for several reasons. First, the increase will provide an adequate
reserve of shares for issuance under the Stock Option Plan, which is an integral
part of the Company's overall compensation program. Second, the Board of
Directors believes the proposed increase is essential for the Company to compete
successfully against other companies in attracting and retaining key employees,
thereby facilitating the future potential growth of the Company. Third, the
Board of Directors believes the Stock Option Plan is an important contributor to
the alignment of employee and stockholder interests.
Pascal Didier, the Company's Senior Vice President, Worldwide Customer
Operations, was granted an option under the Stock Option Plan on July 23,
1997 for 150,000 shares of the Common Stock at an exercise price of $33.75
per share. Mr. Didier was also granted an option under the Stock Option Plan
on October 1, 1997 for 50,000 shares of the Company's Common Stock at an
exercise price of $27.38 per share. Except for these grants to Mr. Didier,
there were no other option grants made to any of the executive officers, or
to any of the non-employee directors, under the Stock Option Plan during the
fiscal year ended December 31, 1997. Options to purchase a total of
1,557,772 shares of Common Stock were issued to non-executive-officer
employees as a group under the Stock Option Plan during fiscal 1997. All
stock options granted under the Stock Option Plan during 1997 were issued at
exercise prices ranging from $17.31 to $33.75 per share (which exercise
prices represented the closing prices of the Company's Common Stock on The
Nasdaq National Market on the dates immediately prior to the dates of grant).
REQUIRED VOTE
The amendment of the Stock Option Plan to increase the number of shares
issuable thereunder by 1,250,000 shares requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock represented in
person or by proxy and entitled to vote on the proposal, which shares voting
affirmatively must also constitute a majority of the required quorum. See
"Voting and Solicitation" above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
THE 1996 STOCK OPTION PLAN.
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PROPOSAL NO. 3 - RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1998 and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Deloitte & Touche LLP has audited the Company's financial statements since
1986. Its representatives are expected to be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned in each of the last
three fiscal years by the Chief Executive Officer and the executive officers who
earned over $100,000 in salary and bonus for services rendered in all capacities
to the Company during 1997 (the "Named Executive Officers"):
Long-Term
Annual Compensation Compensation
----------------------------- ----------------------------------
Securities
Underlying All Other
Name and Principal Position Year Salary($) Bonus($)(1) Options (#) Compensation($)(2)
- --------------------------- ---- --------- ----------- ----------- ------------------
Robert P. Akins. . . . . . . . . . . . . . 1997 $248,654 $150,000 -- $ 3,685
Chairman of the Board of Directors, 1996 $175,497 $ 87,748 100,000 $ 1,845
Chief Executive Officer and President 1995 $147,611 -- 294,600 $ 1,830
William A. Angus, III. . . . . . . . . . . 1997 $198,654 $ 95,000 -- $ 4,254
Chief Financial Officer, Senior 1996 $128,942 $ 38,683 50,000 $ 3,184
Vice President and Secretary 1995 $105,809 -- 150,000 $ 3,524
G. Scott Scholler. . . . . . . . . . . . . 1997 $198,654 $ 95,000 -- $ 5,525
Senior Vice President of Operations 1996 $121,154 $ 36,346 240,000 $ 3,949
___________________
(1) Bonus amounts earned in fiscal year 1997 were paid in March 1998.
(2) Consists of health insurance premiums paid by the Company.
-8-
OPTION GRANTS
There were no option grants made to any of the Named Executive Officers
during the fiscal year ended December 31, 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides certain information concerning the exercises
of options during the fiscal year ended December 31, 1997, and the unexercised
options held as of December 31, 1997 by each of the Named Executive Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NO. OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#): OPTIONS AT FY-END($)(2):
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
Robert P. Akins. . . . . . . -- -- 227,875 167,225 3,262,719 2,332,631
William A. Angus, III. . . . 20,000 $317,500 75,625 84,375 1,066,250 1,181,250
G. Scott Scholler. . . . . . 36,500 $684,875 68,498 135,002 856,225 1,687,525
____________________
(1) Market value of underlying securities on date of exercise, minus the
exercise price multiplied by the number of shares.
(2) Market value of underlying securities at fiscal year end, minus the
exercise price multiplied by the number of shares.
-9-
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors
regularly reviews and approves all executive officer compensation and develops
recommendations for stock option grants for approval by the Board of Directors.
Executive compensation includes the following elements: base salaries, annual
incentives, stock options and various benefit plans.
The Committee is composed of two independent, outside directors. It is the
Committee's objective that executive compensation be tied directly to the
achievement of the Company's performance objectives. Specifically, the
Company's executive compensation program is designed to reward exceptional
executive performance that results in enhanced corporate and stockholder values.
The Committee retains independent compensation consultants to provide
objective and expert advice in the review of executive compensation plans.
Published industry pay survey data is reviewed and relied upon in the
Committee's assessment of appropriate compensation levels, including the Radford
Management Survey and data from companies in the computer industry of comparable
size, performance and growth rate was supplied by a compensation consultant, The
William M. Mercer Company.
The Committee recognizes that the industry sector in which the Company
operates is both highly competitive and undergoing significant globalization,
with the result that there is substantial demand for qualified, experienced
executive personnel. The Committee considers it crucial that the Company be
assured of retaining and rewarding its top caliber executives who are essential
to the attainment of the Company's ambitious long-term, strategic goals.
For these reasons, the Committee believes the Company's executive
compensation arrangements must remain competitive with those offered by other
companies of similar size, scope, performance levels and complexity of
operations, including some, but not all, of the companies comprising the Nasdaq
- - 100 Index and the Nasdaq Computer Industry & DP Index.
ANNUAL CASH COMPENSATION
The Committee believes that the annual cash compensation paid to executives
should be commensurate with both the executive's and the Company's performance.
For this reason, the Company's executive cash compensation consists of base
compensation (salary) and variable incentive compensation (annual bonus).
Base salaries for executive officers are established considering a number
of factors, including the Company's profitability; the executive's individual
performance and measurable contribution to the Company's success; and pay levels
of similar positions with comparable companies in the industry. The Committee
supports the Company's compensation philosophy of moderation for elements such
as base salary and benefits. Base salary decisions are made as part of the
Company's formal annual review process. Generally, base salaries are maintained
at approximately the 50th percentile of salaries paid by similar size, high
technology companies.
Under the Executive Incentive Plan (EIP), an executive's annual
performance award generally depends on two performance factors: the overall
financial performance of the Company and the performance of the business unit
for which the executive is accountable, along with the executive's individual
performance. The performance objectives of the Company and the business unit
are derived from the Company's Board-approved annual business plan, which
includes specific financial performance targets relating to revenue and
profits for the fiscal year. The
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EIP does not provide for payments until minimum operating income targets and
business unit targets are met. These targets are reviewed annually to meet
the changing nature of the Company's business. The bonus percentage ranges
from 25% to 100% of an executive's base salary. The incentive portion is set
at a higher percentage for more senior officers, with the result that the
more senior executive officers have a higher percentage of their potential
total cash compensation at risk. The Committee annually reviews and approves
specific targets and performance criteria for each executive.
BENEFITS
The Company provides benefits to the named executive officers that are
generally available to all Company employees. The amount of executive level
benefits and perquisites, as determined in accordance with the rules of the
Securities and Exchange Commission relating to executive compensation, did not
exceed 10% of total salary and bonus for fiscal year 1997 for any executive
officer.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. Mr. Akins' base
compensation for fiscal 1997, which was established by the Compensation
Committee in April 1997, was $248,654 and represented an increase of $73,157
over his 1996 base compensation.
The Committee also established Mr. Akins' bonus for fiscal 1997 in
accordance with the EIP described above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Richard P. Abraham and Kenneth M.
Deemer who are non-employee directors with no interlocking relationships as
defined by the Securities and Exchange Commission.
Compensation Committee
Richard P. Abraham
Kenneth M. Deemer
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COMPANY PERFORMANCE
The following line graph compares the cumulative total return to
stockholders of the Company's Common Stock since September 18, 1996 (the date
the Company first became subject to the reporting requirements of the Exchange
Act) to the cumulative total return over such period of (i) the Nasdaq Stock
Market (U.S. Company) Index and (ii) the Morgan Stanley Technology Index. The
information contained in the Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the Commission, nor shall such
information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
The graph assumes that $100 was invested on September 18, 1996 in the
Company's Common Stock at the initial public offering price of $4.75 per share
(as adjusted to reflect the Company's 2-for-1 stock split effective August 21,
1997) and in each index, and that all dividends were reinvested. No dividends
have been declared or paid on the Company's Common Stock. Stockholder returns
over the period indicated should not be considered indicative of future
stockholder returns.
CYMER, INC.
MORGAN STANLEY TECHNOLOGY INDEX
NASDAQ STOCK MARKET - U.S. INDEX
9/18/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
100 186.84 506.58 377.63 513.16 576.32 315.79
100 101.76 107.08 101.33 119.60 139.81 130.24
100 101.24 110.00 101.84 122.41 149.45 128.52
-12-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 3, 1998 (except as noted)
certain information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the executive officers named in the Summary Compensation
Table, and (iv) all directors and executive officers as a group. Except as
indicated in the footnotes to this table, the persons and entities named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community property laws
where applicable.
Shares of Common Stock
Beneficially Owned(1)
----------------------
Percentage
Name and Address of Beneficial Owner Number Ownership
- ------------------------------------ ------ ----------
Robert P. Akins(2) . . . . . . . . 648,563 2.2%
c/o Cymer, Inc.
16750 Via Del Campo Court
San Diego, California 92127
William A. Angus, III(3) . . . . . 121,224 *
c/o Cymer, Inc.
16750 Via Del Campo Court
San Diego, California 92127
G. Scott Scholler(4) . . . . . . . 108,176 *
c/o Cymer, Inc.
16750 Via Del Campo Court
San Diego, California 92127
Richard P. Abraham(5). . . . . . . 140,300 *
Kenneth M. Deemer(6) . . . . . . . 76,032 *
Peter J. Simone(7) . . . . . . . . 6,250 *
F. Duwaine Townsen(8). . . . . . . 41,730 *
All directors and executive officers
as a group (8 persons). . . . . . 1,142,275 3.9%
______________________
* Less than 1%.
(1) Applicable percentage of ownership is based on shares of Common Stock
outstanding as of April 3, 1998 together with applicable options for such
stockholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or exercisable
within 60 days are deemed to be beneficially owned by the person holding
such option or warrant for computing the percentage ownership of such
person, but are not treated as outstanding for computing the percentage of
any other person.
(2) Includes 270,950 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of April 3, 1998.
(3) Includes 95,625 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
(4) Includes 83,498 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
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(5) Includes 33,354 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
(6) Includes 5,000 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
(7) Includes 6,250 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
(8) Includes 5,000 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of April 3, 1998.
-14-
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act of 1934, as amended, and regulations of
the Securities and Exchange Commission (the "SEC") thereunder require the
Company's executive officers and directors, and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
initial ownership and changes in ownership with the SEC. Based solely on its
review of copies of such forms received by the Company, or on written
representations from certain reporting persons that no other reports were
required for such persons, the Company believes that, during or with respect to
the period from January 1, 1997 to December 31, 1997, all of the Section 16(a)
filing requirements applicable to its executive officers, directors and 10%
stockholders were complied with, except that a Form 4 for Mr. Scholler covering
the purchase of 12,000 shares of Common Stock was not timely filed.
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the accompanying proxy to vote the shares
represented as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
By: William A. Angus, III, Secretary
Dated: April 14, 1998
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APPENDIX A
SUMMARY OF 1996 STOCK OPTION PLAN
GENERAL. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's
business. Options granted under the Plan may be either "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonstatutory stock options.
ADMINISTRATION. The Plan may generally be administered by the Board or
the Committee appointed by the Board (as applicable, the "Administrator").
The Administrator may make any determinations deemed necessary or advisable
for the Plan.
ELIGIBILITY. Nonstatutory stock options may be granted under the Plan
to employees, directors and consultants of the Company and any parent or
subsidiary of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees,
directors and consultants to whom options may be granted, the time or times
at which such options and stock purchase rights shall be granted, and the
number of shares subject to each such grant.
LIMITATIONS. Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation paid to certain
executive officers of the Company. In order to preserve the Company's
ability to deduct the compensation income associated with options granted to
such persons, the Plan provides that no employee, director or consultant may
be granted, in any fiscal year of the Company, options to purchase more than
500,000 shares of Common Stock. Notwithstanding this limit, however, in
connection with such individual's initial employment with the Company, he or
she may be granted options to purchase up to an additional 500,000 shares of
Common Stock.
TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) EXERCISE PRICE. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value of
the Common Stock on the date such option is granted; provided, however, the
exercise price of an incentive stock option granted to a 10% stockholder may
not be less than 110% of the fair market value of the Common Stock on the
date such option is granted. The fair market value of the Common Stock is
generally determined with reference to the closing sale price for the Common
Stock (or the closing bid if no sales were reported) on the last market
trading day prior to the date the option is granted.
(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. The means of payment for
shares issued upon exercise of an option is specified in each option
agreement. The Plan permits payment to be made by cash, check, promissory
note, other shares of Common Stock of the Company (with some restrictions),
cashless exercises, a reduction in the amount of any Company liability to the
optionee, any other form of consideration permitted by applicable law, or any
combination thereof.
(c) TERM OF OPTION. The term of an incentive stock option may be no more
than ten (10) years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% stockholder, the term of
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the option may be no more than five (5) years from the date of grant. No
option may be exercised after the expiration of its term.
(d) TERMINATION OF EMPLOYMENT. If an optionee's employment or
consulting relationship terminates for any reason (including death or
disability), then all options held by the optionee under the Plan expire on
the earlier of (i) the date set forth in his or her notice of grant or (ii)
the expiration date of such option. The Plan and the option agreement may
provide for a longer period of time for the option to be exercised after the
optionee's death or disability than for other terminations. To the extent
the option is exercisable at the time of such termination, the optionee (or
the optionee's estate or the person who acquires the right to exercise the
option by bequest or inheritance) may exercise all or part of his or her
option at any time before termination.
(e) NONTRANSFERABILITY OF OPTIONS: Unless otherwise determined by the
Administrator, options granted under the Plan are not transferable other than
by will or the laws of descent and distribution, and may be exercised during
the optionee's lifetime only by the optionee.
(f) OTHER PROVISIONS: The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split,
stock dividend, combination, reclassification or other similar change in the
capital structure of the Company effected without the receipt of
consideration, appropriate adjustments shall be made in the number and class
of shares of stock subject to the Plan, the number and class of shares of
stock subject to any option outstanding under the Plan, and the exercise
price of any such outstanding option.
In the event of a liquidation or dissolution, any unexercised options
will terminate. The Administrator may, in its discretion provide that each
optionee shall have the right to exercise all of the optionee's options,
including those not otherwise exercisable, until the date ten (10) days prior
to the consummation of the liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option shall be
assumed or an equivalent option or right substituted by the successor
corporation. If the successor corporation refuses to assume the options or
to substitute substantially equivalent options, the optionee shall have the
right to exercise the option as to all the optioned stock, including shares
not otherwise exercisable. In such event, the Administrator shall notify the
optionee that the option is fully exercisable for fifteen (15) days from the
date of such notice and that the option terminates upon expiration of such
period.
AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter,
suspend or terminate the Plan, or any part thereof, at any time and for any
reason. However, the Company shall obtain stockholder approval for any
amendment to the Plan to the extent necessary and desirable to comply with
applicable law. No such action by the Board or stockholders may alter or
impair any option or stock purchase right previously granted under the Plan
without the written consent of the optionee. Unless terminated earlier, the
Plan shall terminate ten years from the date of its approval by the
stockholders or the Board of the Company, whichever is earlier.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for
alternative minimum tax purposes and may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two
years after grant of the option and one year after exercise of the option,
any gain or loss
A-2
is treated as long-term capital gain or loss. Net capital gains on shares
held between 12 and 18 months may be taxed at a maximum federal rate of 28%,
while net capital gains on shares held for more than 18 months may be taxed
at a maximum federal rate of 20%. Capital losses are allowed in full against
capital gains and up to $3,000 against other income. If these holding
periods are not satisfied, the optionee recognizes ordinary income at the
time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the
option exercise or (ii) the sale price of the shares. Any gain or loss
recognized on such a premature disposition of the shares in excess of the
amount treated as ordinary income is treated as long-term or short-term
capital gain or loss, depending on the holding period. A different rule for
measuring ordinary income upon such a premature disposition may apply if the
optionee is also an officer, director, or 10% stockholder of the Company.
Unless limited by Section 162(m) of the Code, the Company is entitled to a
deduction in the same amount as the ordinary income recognized by the
optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price.
Any taxable income recognized in connection with an option exercise by an
employee of the Company is subject to tax withholding by the Company. Unless
limited by Section 162(m) of the Code, the Company is entitled to a deduction
in the same amount as the ordinary income recognized by the optionee. Upon a
disposition of such shares by the optionee, any difference between the sale
price and the optionee's exercise price, to the extent not recognized as
taxable income as provided above, is treated as long-term or short-term
capital gain or loss, depending on the holding period. Net capital gains on
shares held between 12 and 18 months may be taxed at a maximum federal rate
of 28%, while net capital gains on shares held for more than 18 months may be
taxed at a maximum federal rate of 20%. Capital losses are allowed in full
against capital gains and up to $3,000 against other income.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN
COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
A-3
APPENDIX B
CYMER, INC.
1996 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions
of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or are, or will be, granted
under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Cymer, Inc., a Nevada corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
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 Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is 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 Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
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(p) "NOTICE OF GRANT" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(q) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "OPTION" means a stock option granted pursuant to the Plan.
(s) "OPTION AGREEMENT" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(u) "OPTIONED STOCK" means the Common Stock subject to an Option.
(v) "OPTIONEE" means the holder of an outstanding Option granted
under the Plan.
(w) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 1996 Stock Option Plan.
(y) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(z) "SECTION 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(aa) "SERVICE PROVIDER" means an Employee, Director or Consultant.
(bb) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(cc) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,500,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
-3-
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); PROVIDED,
however, that Shares that have actually been issued under the Plan, whether upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if Shares of
Restricted Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) SECTION 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) RULE 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the Plan shall be
administered by the Board or a Committee of two or more "non-employee directors"
within the meaning of Rule 16b-3.
(iv) OTHER ADMINISTRATION. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and may
be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
-4-
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option subject to Section 14(c)
of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. 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. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or previously
granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.
-5-
6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 500,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12.
(iv) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12), the canceled Option will be counted against the limits
set forth in subsections (i) and (ii) above. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.
7. TERM OF PLAN. Subject to Section 18 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 14 of the
Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the
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Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall not be less than 85% of the Fair Market Value per Share on
the date of grant. In the case of a Nonstatutory Stock Option intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
-7-
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) 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;
(v) consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(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 by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), 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.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter 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.
-8-
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that he or she is
entitled to exercise it on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option at any time within twelve (12) months from the date of
termination, but only to the extent that the Optionee is entitled to exercise it
on the date of termination (and in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee would have been entitled to exercise
the Option on the date of death. If, at the time of death, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. The
Option may be exercised by the executor or administrator of the Optionee's
estate or, if none, by the person(s) entitled to exercise the Option under the
Optionee's will or the laws of descent or distribution. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, 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
-9-
of the Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or
-10-
sale of assets, the option confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. 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.
-11-
16. INABILITY TO OBTAIN AUTHORITY. The 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.
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
-12-
1996 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
VESTING SCHEDULE:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
[25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter, subject to the Optionee continuing to be a Service
Provider on such dates].
TERMINATION PERIOD:
This Option may be exercised for _____ [days/months] after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for such longer period as provided in the Plan. In no
event shall this Option be exercised later than the Term/Expiration Date as
provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the stock option administrator of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
-2-
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) check;
(c) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
(e) with the Administrator's consent, delivery of Optionee's
promissory note (the "Note") in the form attached hereto as Exhibit C, in the
amount of the aggregate Exercise Price of the Exercised Shares together with the
execution and delivery by the Optionee of the Security Agreement attached hereto
as Exhibit B. The Note shall bear interest at the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall be
secured by a pledge of the Shares purchased by the Note pursuant to the Security
Agreement.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONSTATUTORY STOCK OPTION. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is
-3-
an Employee or a former Employee, the Company will be required to withhold from
his or her compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely
-4-
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by the internal substantive laws, but
not the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
-5-
OPTIONEE: CYMER, INC.
- ----------------------------------- --------------------------------------
Signature By
- ----------------------------------- --------------------------------------
Print Name Title
- -----------------------------------
Residence Address
- -----------------------------------
-6-
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
-----------------------------------
Spouse of Optionee
-7-
EXHIBIT A
1996 STOCK OPTION PLAN
EXERCISE NOTICE
Cymer, Inc.
16275 Technology Drive
San Diego, CA 92127-1815
Attention: Corporate Secretary
1. EXERCISE OF OPTION. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Cymer, Inc. (the "Company") under and
pursuant to the 1996 Stock Option Plan (the "Plan") and the Stock Option
Agreement dated ______________, 19___ (the "Option Agreement"). The purchase
price for the Shares shall be $ ___________________, as required by the Option
Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. 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 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. The 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 of issuance, except as provided in Section 12 of the
Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing
signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of California.
Submitted by: Accepted by:
PURCHASER: CYMER, INC.
By:
- ---------------------------------- ----------------------------------
Signature
- ---------------------------------- -------------------------------------
Print Name Its
ADDRESS: ADDRESS:
- ---------------------------------- 16275 Technology Drive
San Diego, CA 92127-1815
- ----------------------------------
-------------------------------------
Date Received
-2-
CYMER, INC.
16750 VIA DEL CAMPO COURT, SAN DIEGO, CALIFORNIA 92127
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert P. Akins and William A. Angus,
III as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Common Stock of Cymer, Inc. held of record by the undersigned on April 3,
1998, at the Annual Meeting of Stockholders to be held on May 15, 1998 or any
adjournment thereof.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark /X/
your votes as
indicated in
this example
FOR all nominees listed below WITHHOLD AUTHORITY
(except as indicated below) to vote for all nominees listed below
1. ELECTION OF DIRECTORS: / / / /
Robert P. Akins, Richard P. Abraham,
Kenneth M. Deemer, Peter J. Simone, F.
Duwaine Townsen
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
________________________________________________
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1996 STOCK OPTION PLAN TO / / / / / /
INCREASE THE SHARES RESERVED FOR ISSUANCE THEREUNDER BY 1,250,000 SHARES.
3. PROPOSAL TO APPROVE THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE / / / / / /
INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION.
4. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS ON
STOCK CERTIFICATE(S). WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING
AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Signature ___________________________________ Signature if held jointly ________________________ Dated: ________, 1998
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
- --------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE