FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT (EMPLOYEES)
FORM
OF NON-QUALIFIED STOCK OPTION AGREEMENT (EMPLOYEES)
THIS
AGREEMENT, dated __________, is made by and between Tegal Corporation, a
Delaware corporation hereinafter referred to as “Company,” and ________, an
employee of the Company or a Subsidiary of the Company, hereinafter referred
to
as “Employee”:
WHEREAS,
the Company wishes to afford the Employee the opportunity to purchase shares
of
its $0.01 par value Common Stock; and
WHEREAS,
the Company wishes to carry out The Seventh Amended and Restated 1998 Equity
Participation Plan of Tegal Corporation (as so amended, the “Plan”) (the terms
of which are hereby incorporated by reference and made a part of this
Agreement); and
WHEREAS,
the Committee, appointed to administer the Plan, has determined that it would
be
to the advantage and best interest of the Company and its shareholders to grant
the
Non-Qualified Stock
Option provided for herein to the Employee as an inducement to enter into or
remain in the service of the Company or its Subsidiaries and as an incentive
for
increased efforts during such service, and has advised the Company thereof
and
instructed the undersigned officers to issue said Option;
NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE
I.
DEFINITIONS
Whenever
the following terms are used in this Agreement, they shall have the meaning
specified below unless the context clearly indicates to the contrary. The
masculine pronoun shall include the feminine and neuter, and the singular the
plural, where the context so indicates. All capitalized terms used herein
without definition shall have the meanings ascribed to such terms in the
Plan.
Section
1.1 Officer
“Officer”
shall mean an officer of the Company, as defined in Rule 16a-1(f) under the
Exchange Act, as such Rule may be amended in the future.
Section
1.2 Option
“Option”
shall mean the non-qualified stock option to purchase Common Stock of the
Company granted under this Agreement.
Section
1.3 Plan
“Plan”
shall mean The Seventh Amended and Restated 1998 Equity Participation Plan
of
Tegal Corporation.
Section
1.4 Secretary
“Secretary”
shall mean the Secretary of the Company.
ARTICLE
II.
GRANT
OF OPTION
Section
2.1 Grant
of
Option
In
consideration of the Employee’s agreement to remain in the employ of the Company
or its Subsidiaries and for other good and valuable consideration, on the date
hereof the Company irrevocably grants to the Employee the option to purchase
any
part or all of an aggregate of __________
shares
of its
$0.01 par value Common Stock upon the terms and conditions set forth in this
Agreement.
Section
2.2 Purchase
Price
The
purchase price of the shares of stock covered by the Option shall be
$______
per share
without
commission or other charge.
Section
2.3 Consideration
to Company
In
consideration of the granting of this Option by the Company, the Employee agrees
to render faithful and efficient services to the Company or a Subsidiary, with
such duties and responsibilities as the Company shall from time to time
prescribe, for a period of at least one (1) year from the date this Option
is
granted. Nothing in this Agreement or in the Plan shall confer upon any Optionee
any right to continue in the employ of the Company or any Subsidiary, or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Optionee
at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written employment agreement between the
Optionee and the Company and any Subsidiary.
Section
2.4 Adjustments
in Option
The
Committee shall make adjustments with respect to the Option in accordance with
the provisions of Section 10.3 of the Plan.
ARTICLE
III.
PERIOD
OF EXERCISABILITY
Section
3.1 Commencement
of Exercisability
(a) The
Option shall become exercisable as follows:
(i) The
first
installment shall consist of fifty percent (50%) of the shares covered by the
Option and shall become exercisable on the first anniversary of the date the
Option is granted.
(ii)
The
second installment shall consist of fifty (50%) of the shares covered by the
Option and shall become exercisable on the second anniversary of the date the
Option is granted.
(b) No
portion of the Option which is unexercisable at Termination of Employment shall
thereafter become exercisable.
Section
3.2 Duration
of Exercisability
The
installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section
3.3 Expiration
of Option
The
Option may not be exercised to any extent by anyone after the first to occur
of
the following events:
(a) The
expiration of the Option; or
(b) The
expiration of three (3) years from the date of the Employee’s Termination of
Employment by reason of his retirement, death or disability (within the meaning
of Section 22(e)(3) of the Code); or
(c) The
expiration of one (1) year from the date of the Employee’s Termination of
Employment by reason of his being discharged not for good cause; or
(d) The
expiration of three (3) months from the date of the Employee’s Termination of
Employment by reason of his resignation or by reason of his being discharged
for
good cause; or
(e) In
the
event of a Change of Control, unless the Committee waives this provision in
connection with such transaction. At least ten (10) days prior to the
effective date of such merger, consolidation, acquisition, liquidation or
dissolution, the Committee shall give the Employee notice of such event if
the
Option has then neither been fully exercised nor become unexercisable under
this
Section 3.3.
Section
3.4 Acceleration
of Exercisability
(a) Notwithstanding
any other provision of the Plan, in the event of a Change in Control, the Option
shall, immediately prior to the effective date of the Change in Control,
automatically become fully exercisable for all of the shares of Common Stock
at
the time subject to the Option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock, notwithstanding that this Option
may not yet have become fully exercisable under Section 3.1(a); provided,
however, that this acceleration of exercisability shall not take place if this
Option becomes unexercisable under Section 3.3 prior to said effective
date.
The
Committee may make such determinations and adopt such rules and conditions
as
it, in its absolute discretion, deems appropriate in connection with such
acceleration of exercisability, including, but not by way of limitation,
provisions to ensure that any such acceleration and resulting exercise shall
be
conditioned upon the consummation of the contemplated corporate
transaction.
ARTICLE
IV.
EXERCISE
OF OPTION
Section
4.1 Person
Eligible to Exercise
Unless
the Option has been transferred in accordance with Section 5.2, during
the
lifetime of the Employee, only he may exercise the Option or any portion
thereof. After the death of the Employee, any exercisable portion of the
Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by his personal representative or by any person
empowered to do so under the deceased Employee’s will or under the then
applicable laws of descent and distribution, and subject to the consent of
the
Committee pursuant to a DRO or by a Permitted Transferee.
Section
4.2 Partial
Exercise
Any
exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the
time
when the Option or portion thereof becomes unexercisable under Section
3.3.
Section
4.3 Manner
of
Exercise
The
Option, or any exercisable portion thereof, may be exercised solely by delivery
to the Secretary or his office of all of the following prior to the time when
the Option or such portion becomes unexercisable under Section 3.3:
(a) A
written
notice complying with the applicable rules established by the Committee stating
that the Option, or a portion thereof, is exercised. The notice shall be signed
by the Employee or other person then entitled to exercise the Option or such
portion; and
(b)
(i) Full
cash
payment to the Secretary of the Company for the shares with respect to which
such Option or portion is exercised; or
(ii) With
the
consent of the Committee, (A) shares of the Company’s Common Stock owned for at
least six months by the Employee, duly endorsed for transfer to the Company,
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof, or (B) shares of the Company’s
Common Stock issuable to the Employee upon exercise of the Option, with a Fair
Market Value on the date of delivery equal to the aggregate exercise price
of
the Option or exercised portion thereof; or
(iii) With
the
consent of the Committee, a full recourse promissory note bearing interest
(at
no less than a market rate of
interest which then
precludes the imputation of interest under the Code or successor provision)
and
payable upon such terms as may be prescribed by the Committee. The Committee
may
also prescribe the form of such note and the security to be given for such
note.
The Option may not be exercised, however, by delivery of a promissory note
or by
a loan from the Company when or where such loan or other extension of credit
is
prohibited by law; or
(iv) With
the
consent of the Committee, property of any kind which constitutes good and
valuable consideration; or
(v) With
the
consent of the Committee, a notice that the Employee has placed a market sell
order with a broker with respect to shares of the Company’s Common Stock then
issuable upon exercise of the Option, and that the broker has been directed
to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or
(vi) With
the
consent of the Committee, any combination of the consideration provided in
the
foregoing subparagraphs (i), (ii), (iii), (iv) and (v); and
(c) Full
payment to the Company (or other employer corporation) of all amounts which,
under federal, state or local tax law, it is required to withhold upon exercise
of the Option; with the consent of the Committee, (i) shares of the Company’s
Common Stock owned by the Employee for at least six months, duly endorsed for
transfer, with a Fair Market Value equal to the sums required to be withheld,
or
(ii) shares of the Company’s Common Stock issuable to the Employee upon exercise
of the Option with a Fair Market Value equal to the sums required to be
withheld, may be used to make all or part of such payment; and
(d) In
the
event the Option or portion thereof shall be exercised pursuant to Section
4.1
by any person or persons other than the Employee, appropriate proof of the
right
of such person or persons to exercise the Option.
Section
4.4 Conditions
to Issuance of Stock Certificates
The
shares of stock deliverable upon the exercise of the Option, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to
issue or deliver any certificate or certificates for shares of stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of
all
of the following conditions:
(a) The
admission of such shares to listing on all stock exchanges on which such class
of stock is then listed; and
(b) The
completion of any registration or other qualification of such shares under
any
state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the
Committee shall, in its absolute discretion, deem necessary or advisable;
and
(c) The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Committee shall, in its absolute discretion,
determine to be necessary or advisable; and
(d) The
receipt by the Company of full payment for such shares, including payment of
all
amounts which, under federal, state or local tax law, the Company (or other
employer corporation) is required to withhold upon exercise of the Option;
and
(e) The
lapse
of such reasonable period of time following the exercise of the Option as the
Committee may from time to time establish for reasons of administrative
convenience.
Section
4.5 Rights
as
Shareholder
The
holder of the Option shall not be, nor have any of the rights or privileges
of,
a shareholder of the Company in respect of any shares purchasable upon the
exercise of any part of the Option unless and until certificates representing
such shares shall have been issued by the Company to such holder.
ARTICLE
V.
OTHER
PROVISIONS
Section
5.1 Administration
The
Committee shall have the power to interpret the Plan and this Agreement and
to
adopt such rules for the administration, interpretation and application of
the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules and to amend this Agreement provided that the rights or obligations of
the
Employee are not affected adversely. All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
binding upon the Employee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Option.
In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan and
this
Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee.
Section
5.2 Option
Not Transferable
Neither
the Option nor any interest or right therein or part thereof shall be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution and subject to consent of the Committee, pursuant
to
a DRO or to a “Permitted Transferee” (as defined below), unless and until such
Option has been exercised, or the shares underlying such Option have been
issued, and all restrictions applicable to such shares have lapsed. Any transfer
to a “Permitted Transferee” shall be
subject to the following terms and conditions: (i) an Option transferred to
a
Permitted Transferee shall not be assignable or transferable by the Permitted
Transferee other than by DRO or by will or the laws of descent and distribution;
(ii) any Option which is transferred to a Permitted Transferee shall continue
to
be subject to all the terms and considerations of the Option as applicable
to
the original holder (other than the ability to further transfer the Option);
(iii) the Employee and the Permitted Transferee shall execute any and all
documents reasonably requested by the Administrator, including, without
limitation, documents to (a) confirm the status of the transferee as a Permitted
Transferee, (b) satisfy any requirements for an exemption for the transfer
under
applicable federal and state securities laws and (c) provide evidence of the
transfer; (iv) the shares of Common Stock acquired by a Permitted Transferee
through exercise of an Option have not been registered under the Securities
Act,
or any state securities act and may not be transferred, nor will any assignee
or
transferee thereof be recognized as an owner of such shares of Common Stock
for
any purpose, unless a registration statement under the Securities Act and any
applicable state securities act with respect to such shares shall then be in
effect or unless the availability of an exemption from registration with respect
to any proposed transfer or disposition of such shares shall be established
to
the satisfaction of counsel for the Company. As used in this Section 5.2,
“Permitted Transferee” shall mean (i) one or more of the following family
members of an Employee: spouse, former spouse, child (whether natural or
adopted), stepchild, any other lineal descendant of the Employee, (ii) a trust,
partnership or other entity established and existing for the sole benefit of,
or
under the sole control of, one or more of the above family members of the
Employee, or (iii) any other transferee specifically approved by the
Administrator after taking into account any state or federal tax or securities
laws applicable to transferable Options.
Neither
the Option nor any interest or right therein or part thereof shall be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution and subject to consent of the Committee, pursuant
to
a DRO or by a Permitted Transferee, unless and until such Option has been
exercised, or the shares underlying such Option have been issued, and all
restrictions applicable to such shares have lapsed. Neither the Option nor
any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Employee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except
to
the extent that such disposition is permitted by the preceding
sentence.
Section
5.3 Shares
to
Be Reserved
The
Company shall at all times during the term of the Option reserve and keep
available such number of shares of stock as will be sufficient to satisfy the
requirements of this Agreement.
Section
5.4 Notices
Any
notice to be given under the terms of this Agreement to the Company shall be
addressed to the Company in care of its Secretary, and any notice to be given
to
the Employee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either
party may hereafter designate a different address for notices to be given to
him. Any notice which is required to be given to the Employee shall, if
the Employee is then deceased, be given to the Employee’s personal
representative if such representative has previously informed the Company of
his
status and address by written notice under this Section 5.4. Any notice
shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
Section
5.5 Titles
Titles
are provided herein for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement.
Section
5.6 Construction
This
Agreement shall be administered, interpreted and enforced under the internal
laws of the State of Delaware without regard to conflicts of laws
thereof.
Section
5.7 Conformity
to Securities Laws
The
Employee acknowledges that the Plan is intended to conform to the extent
necessary with all provisions of the Securities Act and the Exchange Act and
any
and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan
and this Agreement shall be deemed amended to the extent necessary to conform
to
such laws, rules and regulations.
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto.
| TEGAL CORPORATION | ||
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| Vice President & Chief Financial Officer | ||
____________________________
Employee
____________________________
____________________________
Address
Employee’s
Taxpayer
Identification
Number:
____________________________
NON-QUALIFIED
STOCK OPTION AGREEMENT (EMPLOYEES)
EXERCISE
NOTICE
Tegal
Corporation
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1. Exercise
of Option.
Effective as of today, ________________, the undersigned (“Optionee”) hereby
elects to exercise Optionee’s option to purchase _________ shares of the Common
Stock (the “Shares”) of Tegal Corporation, a Delaware corporation (the
“Company”), under and pursuant to The Sixth Amended and Restated 1998 Equity
Participation Plan of Tegal Corporation (the “Plan”) and the Nonstatutory Stock
Option Agreement dated _____________ (the “Option Agreement”).
2. Delivery
of Payment.
Optionee herewith delivers to the Company the full purchase price for the
Shares. I hereby elect to pay the Exercise Price by delivery of cash or check
to
the Secretary of the Company.
In
the
event I have elected to exercise options via the same day exercise and sale
method, you are hereby authorized to instruct __________________ (the “Broker”)
to accept the proceeds deriving from the sale of the Shares, and to take the
following actions: (i) to deduct from the proceeds of the sale any Company
expenses; (ii) to deduct from the proceeds any tax withholding requested by
the
Company and to request in writing from the Company a statement of the tax
amounts to be withheld, if no request has been given by the company; (iii)
to
deliver the above amounts so deducted to the Company ; and (iv) to deliver
the
remaining proceed to me as I shall direct the Broker.
These
instructions shall be construed as authorizing the Broker and the Company to
take any other actions reasonably necessary to effect the purposes hereof and
the Broker and the Company may rely upon any statements and undertakings made
herein by the undersigned, as if said statements and undertakings were made
directly to the Broker and the Company.
I
further
acknowledge that I shall bear sole responsibility for any commissions and fees
relating to the performance of these instructions by the Broker or the Company
and any other banking activities and will, upon demand, indemnify and defend
the
Broker or the Company against any amounts which may be owning in this
regard.
3. Representations
of Optionee.
Optionee acknowledges that Optionee 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 stock certificate evidencing such Shares is 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 Shares, notwithstanding the
exercise of the Option. In the event Optionee has not sold the Shares in a
same
day exercise and sale, the Company shall issue (or cause to be issued) such
stock certificate 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 stock certificate is issued, except as provided in the Plan.
5. Tax
Consultation.
Optionee understands that Optionee may suffer adverse tax consequences as a
result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable
in
connection with the purchase or disposition of the Shares and that Optionee
is
not relying on the Company for any tax advice.
Purchaser
agrees to satisfy all applicable federal, state and local income and employment
tax withholding obligations with respect to the exercise of the Option and,
if
applicable, the sale of the Shares and will, upon demand, indemnify and defend
the Company and if applicable the Broker, against any amounts which may be
owning in this regard.
6. Successors
and Assigns.
The
Company may assign any of its rights under this Agreement to single or multiple
assignees, and this Agreement shall inure to the benefit of the successors
and
assigns of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.
7. Interpretation.
Any
dispute regarding the interpretation of this Agreement shall be submitted by
Optionee or by the Company forthwith to the Company’s Board of Directors or the
committee thereof that administers the Plan, which shall review such dispute
at
its next regular meeting. The resolution of such a dispute by the Board or
committee shall be final and binding on the Company and on
Optionee.
8. Governing
Law; Severability.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California excluding that body of law pertaining to conflicts of law.
Should any provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.
9. Notices.
Any
notice required or permitted hereunder shall be given in writing and shall
be
deemed effectively given upon personal delivery or upon deposit in the United
States mail by certified mail, with postage and fees prepaid, addressed to
the
other party at its address as shown below beneath its signature, or to such
other address as such party may designate in writing from time to time to the
other party.
10. Further
Instruments.
The
parties agree to execute such further instruments and to take such further
action as may be reasonably necessary to carry out the purposes and intent
of
this Agreement.
11. Delivery
of Payment.
Optionee herewith delivers to the Company the full Exercise Price for the
Shares.
12. Entire
Agreement.
The
Plan and Notice of Grant/Option Agreement are incorporated herein by reference.
This Agreement, the Plan and the Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.
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| OPTIONEE: | TEGAL CORPORATION | |
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Address: