Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 41 173K
2: EX-10.B Material Contract 7 37K
3: EX-11 Statement re: Computation of Earnings Per Share 1 7K
4: EX-13 Annual or Quarterly Report to Security Holders 1 6K
5: EX-21 Subsidiaries of the Registrant 1 6K
6: EX-23 Consent of Experts or Counsel 1 5K
7: EX-27 Financial Data Schedule (Pre-XBRL) 2 6K
EX-10.B — Material Contract
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EXHIBIT 10-B
ELECTRO SCIENTIFIC INDUSTRIES, INC.
1989 STOCK OPTION PLAN
(as amended as of September 22, 1995)
PURPOSE. The purpose of this 1989 Stock Option Plan (the "Plan") is
to enable Electro Scientific Industries, Inc. (the "Company") to attract and
retain people of training, experience, and ability, and to provide additional
incentive to employees and non-employee directors by giving them an opportunity
to participate in the ownership of the Company, thereby stimulating their
efforts on the Company's behalf and strengthening their desire to remain with
the Company.
SHARES SUBJECT TO THE PLAN. Except as provided in Paragraph 15, the
total number of shares of the Company's Common Stock, without par value ("Common
Stock"), covered by all options granted under the Plan shall not exceed
1,300,000 authorized but unissued or reacquired shares. In the event any option
under the Plan expires or is cancelled or terminated and is unexercised in whole
or in part, the shares allocable to the unexercised portion shall again become
available for options under the Plan.
DURATION OF THE PLAN. The Plan shall continue in effect until options
have been granted and exercised with respect to all of the shares available for
the Plan under paragraph 2 (subject to any adjustments under paragraph 15),
unless sooner terminated by action of the Board of Directors of the Company (the
"Board of Directors"). The Board of Directors shall have the right to suspend
or terminate the Plan at any time except with respect to options then
outstanding under the Plan.
ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to time
the employees to whom options shall be granted and the number of shares, the
option price, the period of each option, and the time or times at which options
may be exercised. Subject to the provisions of the Plan, the Board of Directors
may from time to time adopt rules and regulations relating to administration of
the Plan, and the interpretation and construction of the provisions of the Plan
by the Board of Directors shall be final and conclusive. No director who holds
or is eligible to hold an option under the Plan, other than an option under
Paragraph 16, shall vote upon any action taken by the Board of Directors
involving such matter. The Board of Directors, if it so determines, may
delegate to a committee of the Board of Directors, or specified officers of the
Company, or both (the "Committee") any or all authority for administration of
the Plan. If authority is delegated to a Committee, all references to the Board
of Directors in the Plan shall mean and relate to the Committee except (i) as
otherwise provided by the Board of Directors, and (ii) that only the Board of
Directors may terminate or amend the Plan as provided in paragraphs 3 and 19.
GRANTS.
(a) Options granted under the Plan may be Incentive Stock Options, as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or Non-Statutory Stock Options. For the purpose of the Plan, a
Non-Statutory Stock Option means an option other than an Incentive Stock Option.
The Board of Directors or Committee, as the case may be, has the sole discretion
to determine which options shall be Incentive Stock Options and which options
shall be Non-Statutory Stock Options, and shall specifically designate each
option granted under the Plan as an Incentive Stock Option or Non-Statutory
Stock Option. No Incentive Stock Option may be granted under the Plan on or
after the tenth anniversary of the last action by the Board of Directors
approving an increase in the number of shares available for issuance under the
Plan, which action was subsequently approved within 12 months by the
shareholders.
(b) No employee may be granted Incentive Stock Options under the Plan
such that the aggregate fair market value, on the date of grant, of the stock
with respect to which Incentive Stock Options are exercisable for the first time
by the employee during any calendar year under the Plan and under any other
incentive stock option plan (within the meaning of Section 422 of the Code) of
the Company or any parent or subsidiary of the Company exceeds $100,000.
(c) No employee may be granted options under the Plan for more than
250,000 shares of Common Stock in any fiscal year.
ELIGIBILITY. Incentive Stock Options and Non-Statutory Stock Options
may be granted under the Plan to employees of the Company or any parent or
subsidiary of the Company (including employees who are directors). Directors
who are not employees shall only be eligible to receive options granted pursuant
to paragraph 16.
OPTION PRICE. The option price per share under each option granted
under the Plan shall be determined by the Board of Directors at the time of
grant. Except as provided in paragraph 9, the option price shall be not less
than 100 percent of the fair market value of the shares covered by the option on
the date the option is granted. The fair market value of shares covered by an
option shall be deemed to be the last price for the Common Stock as reported to
NASDAQ and published in the Wall Street Journal for the day preceding the date
of grant, or such other value of the Common Stock as shall be determined by the
Board of Directors of the Company.
DURATION OF OPTIONS. Subject to paragraphs 9 and 13, each option
granted under the Plan shall continue in effect for the period fixed by the
Board of Directors, except that no Incentive Stock Option shall be exercisable
after ten years from the date it is granted and no Non-Statutory Stock Option
shall be exercisable after the expiration of 10 years plus seven days from the
date it is granted.
LIMITATIONS ON GRANTS TO 10 PERCENT SHAREHOLDERS. An Incentive Stock
Option may be granted under the Plan to an employee possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value of the stock subject to the
option on the date it is granted, as described in paragraph 7, and the Incentive
Stock Option by its terms is not exercisable after the expiration of five years
from the date it is granted.
EXERCISE OF OPTIONS. Options granted under the Plan may be exercised
from time to time over the period stated in each option in such amounts and at
such times as shall be prescribed by the Board of Directors. If the optionee
does not exercise an option in any one year with respect to the full number of
shares to which the optionee is entitled in that year, the optionee's rights
shall be cumulative and the optionee may purchase those shares in any subsequent
year during the term of the option.
LIMITATION ON RIGHTS TO EXERCISE. Except as provided in paragraph 13
or as otherwise approved by the Board of Directors, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed by or a director of the
Company or any parent or subsidiary of the Company and shall have been so
employed or engaged continuously since the date such option was granted.
Absence on leave or on account of illness or disability under rules established
by the Board of Directors shall not, however, be deemed an interruption of
employment for this purpose.
NONASSIGNABILITY. Each option granted under the Plan by its terms
shall be nonassignable and nontransferable by the optionee except by will or by
the laws of descent and distribution of the state or country of the optionee's
domicile at the time of death, and each such option by its terms shall be
exercisable during the optionee's domicile at the time of death, and each such
option by its terms shall be exercisable during the optionee's lifetime only by
the optionee.
1. TERMINATION OF EMPLOYMENT.
(a) In the event the employment of an optionee by the Company or by
any parent or subsidiary of the Company is terminated by retirement or for any
reason, voluntarily or involuntarily with or without cause, other than in the
circumstances specified in subsection (b) or (c) below, any option held by such
optionee may be exercised at any time prior to its expiration date or the
expiration of three months after the date of such termination of employment,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option on the date of such termination.
(b) In the event an optionee's employment by the Company or by any
parent or subsidiary of the Company is terminated because of death or physical
disability (within the meaning of Section 22(e)(3) of the Code), any option held
by such optionee may be exercised with respect to all remaining shares subject
thereto, free of any limitation on the number of shares with respect to which
the option may be exercised in any one year, at any time prior to its expiration
date or the expiration of one year after the date of such termination, whichever
is the shorter period. If an optionee's employment is terminated by death, any
option held by the optionee shall be exercisable only by the person or persons
to whom such optionee's rights under such option shall pass by the optionee's
will or by the laws of descent and distribution of the state or country of the
optionee's domicile at the time of death.
(c) In the event an optionee's employment by the Company or by any
parent or subsidiary of the Company terminates within one year after a change in
control of the Company for any reason other than retirement, death, or physical
disability (within the meaning of Section 22(e)(3) of the Code), any option held
by such optionee may be exercised with respect to all remaining shares subject
thereto, free of any limitation on the number of shares with respect to which
the option may be exercised in any one year, at any time prior to its expiration
date or the expiration of three months after the date of such termination of
employment, whichever is the shorter period. A "change in control of the
Company" shall mean a change in control of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred if (1) any "person" (as such term is used in Sections 13(d) or 14(d)(2)
of the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 20 percent or more of the combined
voting power of the Company's then outstanding securities; or (2) during any
period of two consecutive years, individuals who at the beginning such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by the Company's shareholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period. A change in control of the
Company shall not include any change in control pursuant to a written agreement
between the Company and another person, which agreement is approved and adopted
by the Board of Directors of the Company or pursuant to any tender offer or
exchange offer which the Board of Directors has in any manner recommended
acceptance of to the shareholders of the Company.
(d) Unless otherwise approved by the Board of Directors, to the
extent an option held by any deceased optionee or by any optionee whose
employment is terminated shall not have been exercised within the limited
periods provided above, all further rights to purchase shares pursuant to such
option shall cease and terminate at the expiration of such periods.
PURCHASE OF SHARES. Shares may be purchased or acquired pursuant to
an option granted under the Plan only upon receipt by the Company of notice in
writing from the optionee of the optionee's intention to exercise, specifying
the number of shares as to which the optionee desires to exercise the option and
the date on which the optionee desires to complete the transaction, which shall
not be more than 30 days after receipt of the notice, and, unless in the opinion
of counsel for the Company such a representation is not required in order to
comply with the Securities Act of 1933, as amended, containing a representation
that it is the optionee's present intention to acquire the shares for investment
and not with a view to distribution. On or before the date specified for
completion of the purchase of shares pursuant to an option, the optionee must
have paid the Company the full purchase price of such shares in cash (including
cash which may be the proceeds of a loan from the Company), in shares of Common
Stock of the Company previously acquired and held for not less than one year by
the optionee, valued at fair market value as defined in paragraph 7, or in any
combination of cash and shares of Common Stock of the Company. No shares shall
be issued until full payment therefor has been made, and an optionee shall have
none of the rights of a shareholder until a certificate for shares is issued to
such optionee. Each optionee who has exercised an option shall, upon
notification of the amount due, if any, and prior to or concurrently with
delivery of the certificates representing the shares with respect to which the
option was exercised, pay to the Company amounts necessary to satisfy any
applicable federal, state and local withholding tax requirements. If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the optionee shall pay such amount to the Company on demand.
1. CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding
shares of Common Stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or another corporation, by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividend payable in shares, appropriate
adjustment shall be made by the Board of Directors in the number and kind of
shares for the purchase of which options may be granted under the Plan. In
addition, the Board of Directors shall make appropriate adjustment in the number
and kind of shares as to which outstanding options, or portions thereof then
unexercised, shall be exercisable, to the end that each optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of any option and with a
corresponding adjustment in the option price per share. Any such adjustment
made by the Board of Directors shall be conclusive. In the event of dissolution
or liquidation of the Company or a merger or consolidation in which the Company
is not the surviving corporation, in lieu of providing for options as provided
for above in this paragraph 15, the Board of Directors may, in its sole
discretion, provide a 30-day period immediately prior to such event during which
optionees shall have the right to exercise options in whole or in part without
any limitation on exercisability.
OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) ANNUAL GRANTS. Each Non-Employee Director shall be automatically
granted an option to purchase 1,000 shares of Common Stock on July 31 of each
year, provided the Non-Employee Director is a director on such date. A
"Non-Employee Director" is a director who is not a full-time employee of the
Company or any of its subsidiaries and has not been a full-time employee of the
Company or any of its subsidiaries within one year of any date as of which a
determination of eligibility is made. Options automatically granted under this
paragraph 16 as of July 31, 1995 shall be subject to and conditioned upon
approval by the shareholders at the 1995 annual meeting of shareholders of the
amendment adding this paragraph 16 to the Plan.
(b) EXERCISE PRICE. The exercise price of the options granted
pursuant to this paragraph 16 shall be equal to 100 percent of the fair market
value of the Common Stock determined pursuant to paragraph 7.
(c) TERM OF OPTION. The term of each option granted pursuant to this
paragraph 16 shall be 10 years from the date of grant.
(d) EXERCISABILITY. Until an option expires or is terminated and
except as provided in paragraphs 16(e) and 15, an option granted under this
paragraph 16 shall be exercisable according to the following schedule:
PERIOD OF NON-EMPLOYEE
DIRECTORS' CONTINUOUS SERVICE
AS A DIRECTOR OF THE
COMPANY FROM THE DATE PORTION OF TOTAL OPTION
THE OPTION IS GRANTED WHICH IS EXERCISABLE
--------------------- --------------------
Less than 1 year 0%
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
(e) TERMINATION AS A DIRECTOR. If an optionee ceases to be a
director of the Company for any reason, other than death or physical disability
(within the meaning of Section 22(e)(3) of the Code), the option may be
exercised at any time prior to the expiration date of the option or the
expiration of three months after the last day the optionee served as a director,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option as of the last day the optionee served as a
director. If an optionee ceases to be a director of the Company as a result of
death or physical disability (within the meaning of Section 22(e)(3) of the
Code), the option may be exercised with respect to all remaining shares subject
thereto, free of any limitation on the number of shares with respect to which
the option may be exercised in any one year, at any time prior to the expiration
date of the option or the expiration of one year after the last day the optionee
served as a director, whichever is the shorter period.
(f) EXERCISE OF OPTIONS. Options may be exercised upon payment of
cash or shares of Common Stock of the Company in accordance with paragraph 14.
STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the Plan
by the Board of Directors, subject to such rules, terms and conditions as the
Board of Directors may prescribe; provided, however, that stock appreciation
rights may only be granted in connection with an option grant or in connection
with an outstanding option previously granted under the Plan and shall not be
assignable other than in conjunction with assignment of the related option
pursuant to paragraph 12.
(b) EXERCISE.
(i) A stock appreciation right shall be exercisable only at the
time or times established by the Board of Directors and only to the extent and
on the same conditions that the related option could be exercised. Upon
exercise of a stock appreciation right, the option or portion thereof to which
the stock appreciation right relates must be surrendered. No stock appreciation
right may be exercised during the six-month period following the date it is
granted. Option shares with respect to which a stock appreciation right has
been exercised may not again be subjected to options under the Plan.
(ii) The Board of Directors may withdraw any stock appreciation
right granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. Such
rules and regulations may govern the right to exercise stock appreciation rights
prior to the adoption or amendment of such rules and regulations as well as
stock appreciation rights granted thereafter.
(iii) Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an amount equal
in value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over the option price per share to which
the stock appreciation right relates, times the number of shares covered by the
option, or portion thereof, which is surrendered. No stock appreciation right
shall be exercisable at a time that the amount determined under this
subparagraph is negative. Payment upon exercise of a stock appreciation right
by the Company may be made in Common Stock valued at its fair market value, or
in cash, or partly in shares and partly in cash, all as shall be determined by
the Board of Directors.
(iv) The fair market value of the Common Stock shall be
determined as specified in paragraph 7.
(v) Shares issued upon exercise of a stock appreciation right
may consist either in whole or in part of authorized and unissued Common Stock
or issued Common Stock held as treasury shares. No fractional shares shall be
issued upon exercise of a stock appreciation right. In lieu thereof, cash may
be paid in an amount equal to the value of the fraction or, if the Board of
Directors shall determine, the number of shares may be rounded downward to the
next whole share.
(vi) In the event of any adjustment, pursuant to paragraph 15, in
the number of shares of Common Stock subject to an option granted under the
Plan, the stock appreciation rights granted hereunder in connection with such
option shall be proportionately adjusted.
CORPORATE MERGERS, ACQUISITION, ETC. The Board of Directors may also
grant options and stock appreciation rights having terms and provisions which
vary from those specified in this Plan provided that any options and stock
appreciation rights granted pursuant to this section are granted in substitution
for, or in connection with the assumption of, existing options and stock
appreciation rights granted by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or a
subsidiary is a party.
AMENDMENT OF PLAN. The Board of Directors may at any time and from
time to time modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason. Except as provided in paragraph 15, however, no change in an
option already granted to an employee shall be made without the written consent
of such employee. Furthermore, unless approved by the shareholders at an annual
meeting or a special meeting, no amendment or change shall be made in the Plan
(a) increasing the total number of shares which may be purchased under the Plan,
(b) changing the minimum option price specified in the Plan, (c) increasing the
maximum option period, or (d) materially modifying the requirements for
eligibility for participation in the Plan.
APPROVALS. The obligations of the Company under the Plan shall be
subject to the approval of such state or federal authorities or agencies, if
any, as may have jurisdiction in the matter. The Company will use its best
efforts to take such steps as may be required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange in which the Company's shares may
then be listed, in connection with the granting of any option under the Plan,
the issuance or sale of any shares purchased upon exercise of any option under
the Plan, or the listing of such shares on said exchange. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver shares
of Common Stock under the Plan if the Company is advised by the legal counsel
that such issuance or delivery would violate applicable state of federal
securities laws.
EMPLOYMENT RIGHTS. Nothing in the Plan or any option granted pursuant
to the Plan shall confer upon any optionee any right to be continued in the
employment of the Company or any parent or subsidiary of the Company, or to
interfere in any way with the right of the Company or any parent or subsidiary
of the Company by whom such optionee is employed to terminate such optionee's
employment at any time, with or without cause.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
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| |  |
| Filed on: | | 8/13/96 |
| For Period End: | | 5/31/96 |
| | 9/22/95 | | 1 | | | | | DEF 14A |
| | 7/31/95 | | 5 |
| List all Filings |
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