Exhibit 10.6

 

COHU, INC. 

 

2005 EQUITY INCENTIVE PLAN 

 

STOCK OPTION AGREEMENT 

 

THIS STOCK OPTION AGREEMENT (“Agreement”), is made pursuant to a Notice of Grant
of Stock Option (the “Notice”) attached hereto or incorporated into this
Agreement by this reference, made as of the effective date as set forth in the
Notice, between Cohu, Inc., a Delaware corporation (the “Company”) and the
option holder (“Participant”) whose identity is set forth in the Notice. The
grant of stock options pursuant to this Agreement and the Notice is made
pursuant to the Cohu, Inc. 2005 Equity Incentive Plan (the “Plan”). Any
discrepancy between the language of the Plan, the Agreement, and the Notice
shall be resolved in that order of priority. Capitalized words in this Agreement
have the same meaning as those in the Plan.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows:

 

1. Grant of Option. The Company hereby grants to Participant as a matter of
separate inducement and agreement in connection with Participant’s Service, and
not in lieu of any salary or other compensation for services, the right and
option to purchase, in accordance with the Plan and Notice and on the terms and
conditions hereinafter set forth, all or any part of an aggregate of such number
of authorized but unissued shares indicated in the Notice.

 

In the event dividends are payable in Stock of the Company or in the event that
there are splits, subdivisions, or combination of shares of Stock, the number of
shares subject to the Option shall be increased or decreased proportionately, as
the case may be, without change in the total price of all shares initially
available under the Option.

 

Except as provided in this Agreement, the Option may not be exercised at any
time unless Participant shall have been in the continuous Service of the Company
or any of its Parent or Subsidiary or participating corporations from the date
of grant to the date of exercise of the Option. Service shall be defined in
accordance with the Plan.

 

This Agreement and the Option shall terminate on the expiration date indicated
in the Notice unless terminated at an earlier date in accordance with the
provisions hereof and of the Plan.

 

2. Method of Exercise and Payment. Each exercise of the Option shall be by means
of a written notice of exercise delivered to the Secretary of the Company (or
such other officer as designated by the Committee) and specifying the number of
whole shares with respect to which the Option is being exercised, together with
tender to the Company of the full purchase price attributable to the shares to
be purchased.

 

Except as otherwise provided for in the Plan and subject to limits that may
apply to an “incentive stock option,” as that term is defined in Section 422(b)
of the Internal Revenue Code as amended, payment of the exercise price for the
number of shares being purchased pursuant to any Option shall be made (i) in
cash, by check or cash equivalent, (ii) by tender to the Company, or attestation
to the ownership, of shares of Stock owned by the Participant having a Fair
Market Value of not less than the exercise price, (iii) by delivery of a
properly executed notice of exercise together with irrevocable instructions to a
broker providing for the assignment to the Company of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System ( a “Cashless Exercise”), (iv) by
delivery of a properly executed notice of exercise electing a Net-Exercise,
(v) by such other consideration as may be approved by the Company’s Board of
Directors from time to time to the extent permitted by applicable law, or
(vi) by any combination thereof.

 

 
 

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Prior to exercising the Option, Participant shall review the Company’s most
recent financial statements, reports and other information available to the
Company’s stockholders, such that Participant becomes familiar, to Participant’s
full satisfaction, with the Company’s affairs, status, prospects and risks. In
the event that the Option is to be exercised by any person other than
Participant, notice of exercise shall be accompanied by appropriate proof of the
right of such person to exercise the Option.

 

3. Termination of Option. Any Option which has not been exercised by the
expiration date as stated in the Notice, shall automatically terminate and be
cancelled. If the Service of Participant terminates prior to the expiration
date, the Option will terminate thirty (30) days after Service terminates and
will be exercisable to the extent such Option was exercisable on the date of
termination; if termination is due to Disability of the Participant, Participant
or his or her legal representatives will have six (6) months from the date of
Disability to exercise the Option, to the extent such Option was exercisable on
the date of such Disability; if termination is due to death of the Participant,
his or her legal representatives will have six (6) months from the date of death
to exercise the Option, to the extent such Option was exercisable on the date of
such death. If Section 14.1of the Plan (Compliance with Applicable Law) prevents
the Participant from exercising the Option to the extent permitted under this
Section, Participant or his or her legal representatives will have until the
later of (a) the time otherwise specified under this Section and (b) one month
after the date on which Section 14.1 of the Plan no longer prevents Participant
from exercising the Option.

 

4. Change in Control. Notwithstanding any other provision of the Plan to the
contrary, the Board, in its sole discretion, in the event of a Change in
Control,1 may take such actions as it deems appropriate to provide for the
acceleration of the exercisability and vesting in connection with such Change in
Control of any or all outstanding options and shares acquired upon the exercise
of such options upon such conditions and to such extent as the Board shall
determine.

 

If a Change in Control occurs, the surviving, continuing, successor or
purchasing corporation or parent corporation thereof may either assume the
Option or substitute new stock options having an equivalent value. In the event
of a Change in Control and the outstanding Options are not assumed or replaced,
then all unexercisable, unvested or unpaid portions of such outstanding Options
will become immediately exercisable, vested and payable in full immediately
prior to the date, but contingent upon the consummation, of the Change in
Control, and the Participant will be permitted to exercise and receive full
payment for the Options. Any Option not assumed, replaced or exercised prior to
the Change in Control will terminate.

 

5. Transferability of Options. During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or, while the Participant is under
legal disability, the Participant’s guardian or legal representative. Prior to
the issuance of shares of Stock upon the exercise of an Option, the Option shall
not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution.

 

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6. Participant Not a Stockholder. Participant shall have no rights as a
stockholder of the Company with respect to the shares covered by the Option
until the date of issuance of shares for which the Option has been exercised (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment will be made for
dividends or other rights for which the record date is prior to the date on
which shares are issued.

 

7. Notices. Any notice to be given under the terms hereof shall be hand
delivered to the Secretary of the Company (or such other officer as designated
by the Committee) or sent by certified mail, return receipt requested, to Cohu,
Inc., 12367 Crosthwaite Circle, Poway, California 92064, and any notice to be
given to the Participant shall be addressed to the Participant at the address
given beneath the Participant’s signature hereto, or at such other address as a
party may hereafter designate in writing to the other party (including, but not
limited to, an e-mail address). Notice shall have been deemed duly given when
enclosed in a properly sealed envelope, addressed as aforesaid, certified mail,
and deposited (postage prepaid) in a post office or branch post office regularly
maintained by the United States Government or, if notice is not given through
the mail, when such notice is actually received by the person to whom notice is
being given.

 

The Plan documents, which may consist of any or all of the following: the Plan,
the Notice, this Agreement, the prospectus for the Plan prepared in connection
with the registration with the Securities and Exchange Commission of shares
issuable pursuant to the Option (the “Plan Prospectus”), and any reports of the
Company provided generally to the Company’s stockholders, may be delivered to
the Participant electronically. In addition, if permitted by the Company, the
Participant may deliver electronically the Notice and the notice of exercise
required under Section 2 to the Company or to such third party involved in
administering the Plan as the Company may designate from time to time. Such
means of electronic delivery may include, among other things, the delivery of a
link to a Company intranet or the Internet site of a third party involved in
administering the Plan, the delivery of the document via e-mail, or such other
means of electronic delivery specified by the Company.

 

The Participant acknowledges that the Participant has read this Section and
consents to the electronic delivery of the Plan documents and, if permitted by
the Company, the delivery of the Notice and the notice of exercise required
under Section 2. The Participant further acknowledges that the Company will
provide a paper copy of any documents delivered electronically at no cost to the
Participant if the Participant requests by contacting the Company by telephone
or in writing. The Participant also acknowledges that the Participant will be
provided with a paper copy of any documents if the attempted electronic delivery
of such documents fails. Similarly, the Participant understands that the
Participant must provide the Company or any designated third-party administrator
with a paper copy of any documents if the attempted electronic delivery of such
documents fails. The Participant may revoke the consent to the electronic
delivery of documents described in this Section or may change the e-mail address
to which such documents are to be delivered (if the Participant has provided an
e-mail) at any time by notifying the Company of such revoked consent or revised
e-mail address by telephone, postal service or e-mail. Finally, the Participant
understands that there is no requirement to consent to electronic delivery of
documents described in this Section.

 

8. Plan. This Option is granted pursuant to the Plan and the defined terms of
the Plan and all other terms and conditions of the Plan are hereby incorporated
into this Agreement. Participant acknowledges receiving a copy of the Plan and
the Plan Prospectus.

 

 
 

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9. Tax Withholding. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable upon the exercise of an Option, or to
accept from the Participant the tender of, a number of whole shares of Stock
having a Fair Market Value, as determined by the Company, equal to all or any
part of the federal, state, local and foreign taxes, if any, required by law to
be withheld by the Company with respect to such Option or the shares acquired
upon the exercise thereof. Alternatively or in addition, in its discretion, the
Company shall have the right to require the Participant, through payroll
withholding, cash payment or otherwise, including by means of a Cashless
Exercise, to make adequate provision for any such tax withholding obligations of
the Company arising in connection with the Option or the shares acquired upon
the exercise thereof. The Fair Market Value of any shares of Stock or cash
payment withheld or tendered to satisfy any such tax withholding obligations
shall not exceed the amount permitted to maintain the classification of the
Option as an equity award for financial accounting purposes. The Company shall
have no obligation to deliver shares of Stock or to release shares of Stock from
an escrow established pursuant to this Agreement until the Company’s tax
withholding obligations have been satisfied by the Participant.

 

10. Continuance of Employment. Nothing contained in this Agreement or in the
Plan shall confer upon Participant any right with respect to continued
employment or Service by the Company or its Parent or Subsidiary Corporations,
if any, or interfere in any way with the right of the Company (or other entity)
at any time to terminate such employment or Service or to increase or decrease
the compensation received by Participant, but nothing contained herein shall
affect any otherwise existing contractual rights of Participant.

 

11. Laws Applicable to Construction. The interpretation, performance and
enforcement of the Option and this Agreement shall be governed by the laws of
the State of California, without regard to its conflict-of-law rules, except to
the extent U.S. federal law applies.

 

12. Acknowledgment. If the Option is intended to be an “incentive stock option,”
as that term is defined in Section 422(b) of the Internal Revenue Code as
amended, certain conditions may be imposed in order for the Option to so qualify
and to continue to so qualify. Participant agrees and acknowledges that neither
the Company nor anyone acting on its behalf in connection with the
administration of the Plan shall be liable to Participant or any
successor-in-interest of Participant for any loss or damage suffered as a result
of the Option failing to be an incentive stock option under the Code.
Participant further agrees and acknowledges that in the event that the aggregate
Fair Market Value (determined as of the effective date of grant and as defined
by the Plan) of stock with respect to which incentive stock options are
exercisable for the first time by Participant during any calendar year (under
all plans of the Company and its parent or subsidiary corporations) exceeds
$100,000, the portion of the latest granted incentive stock option(s) equal to
such excess shall be treated as a nonstatutory stock option rather than an
incentive stock option. In addition, Participant acknowledges that the
disposition of shares purchased pursuant to an incentive stock option occurring
within (i) two years from the date of grant or (ii) one year from the date of
exercise of the Option will result in any gain recognized on the disposition
being treated as taxable compensation income in the year of the disposition.
Participant further acknowledges that the difference between the aggregate price
and the Fair Market Value of the shares on the date of exercise of the Option
may be an item of tax preference for purposes of the alternative minimum tax to
the extent required by applicable law.

 

13. Notice of Disposition; Proof of Continued Ownership. In the event the Option
is intended to be an incentive stock option, Participant agrees to notify the
Company of any disposition of shares acquired pursuant to the Option occurring
within (i) two years from the date of grant or (ii) one year from the date of
exercise of the Option. In addition, Participant agrees to provide such proof of
continued ownership of shares as the Company may reasonably require to assess
properly any tax deductions associated with the disposition of shares acquired
through exercise of the Option.

 

 
 

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14. Termination or Amendment. The Committee may terminate or amend the Option at
any time, so long as no such termination or amendment has a materially adverse
effect on the Option or any unexercised portion thereof without the consent of
the Participant, unless such termination or amendment is necessary to comply
with any applicable law or in connection with a Change in Control under Section
4. No amendment to this Agreement is to be effective unless in writing.

 

15. Further Instruments. The parties agree to execute any further instrument and
to act as reasonably necessary to carry out the intent of this Agreement.

 

16. Binding Effect. This Agreement inures to the benefit of the successors and
assigns of the Company and, subject to the restrictions on transfer set forth
herein, is binding on the Participant and the Participant’s heirs, executors,
administrators, successors, and assigns.

 

17. Counterparts. The Notice may be executed in counterparts, each of which is
to be deemed an original, but all of which together constitute one and the same
instrument.

 

 
 

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Exhibit “A”

 

LETTER AGREEMENT FOR PARTICIPANT’S
EXERCISE OF INCENTIVE OR NONSTATUTORY STOCK OPTION

 

Corporate Secretary
Cohu, Inc.
12367 Crosthwaite Circle
Poway, CA 92064

 

To the Corporate Secretary:

 

I am the “Participant” under the Stock Option Agreement (“the Agreement”) with
Cohu, Inc. (the “Company”). Pursuant to the Agreement, I hereby elect to
exercise my Option(s). I understand that this election is irrevocable without
the consent of the Company once it is effective in accordance with the terms of
the underlying plan and the Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control #

 

 

 

 

 

 

Grant #

 

Grant Date

 

(Company use)

 

# Shares Exercised

 

Option Price

 

Total Exercise Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

   

 

$

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

   

 

$

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

   

 

$

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

   

 

$

   

Totals

 

     

 

 

––

 

 

$

   

 

I hereby agree to accept delivery of such shares as provided for in said option;
and have tendered $     (a $25.00 DWAC (Deposit & Withdrawal At Custodian) fee
imposed by Transfer Agent is included, if applicable) for said option. If
payment is by delivery of previously acquired shares, attached are share
certificates or an attestation of ownership of Company Stock duly executed in
accordance with the Agreement.

 

I understand and agree as follows:

 

(i) The determination of the Fair Market Value of the shares issued on the
exercise of my Option shall be made as of the business day this notice of
exercise is properly tendered to the Company along with payment of the exercise
price and compliance with all other terms of exercise. I understand that the
difference between The Fair Market Value of the shares on the date of exercise
and the exercise price may be an item of tax preference for purposes of the
alternative minimum tax.

 

(ii) I understand that a disposition of shares acquired upon exercise of an
Incentive Stock Option prior to two (2) years from the date of grant of the
Option or one (1) year from the date of exercise of the Option may cause gain
recognized on the disposition to be taxable to me as compensation income to
reported on my Form W-2. I will notify you of any disposition of the shares
within these time periods and agree to provide you with such proof of continued
ownership of such shares as you may require. If the options exercised are
nonstatutory stock options, I understand that the Company may be required to
withhold or collect taxes owed on any taxable gain that is recognized on the
exercise date.

 

(iii) I have reviewed or had the opportunity to review the Company’s most recent
financial statements, reports and other information available to stockholders,
such that I am familiar with the Company’s affairs, status, prospects and risks
to my full satisfaction.

 

(iv) I am able to bear the economic risk of holding shares acquired pursuant to
the exercise of the Option for an indefinite period.

 

 
 

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(v) I represent and warrant that I have no knowledge of material information
about the Company and its subsidiaries, if any, or their business or prospects
that has not been made heretofore publicly available.

 

 

 

 

___________________________
Print Name of Participant

 

_________________________________
Participant’s Signature Date

 

 

 

_______________________________
Date Received by the Company

 

__________________________________
Receipt Acknowledged