Document:

Exhibit
10.2

 

ELECTRO SCIENTIFIC INDUSTRIES,
INC.

1990 EMPLOYEE STOCK PURCHASE PLAN

As Amended October 29, 2003 and
October 15, 2004

 

1.             Purpose of the Plan. 
Electro Scientific Industries, Inc. (the “Company”) believes that
ownership of shares of its Common Stock by employees of the Company and its
Participating Subsidiaries (hereinafter defined) is desirable as an incentive
to better performance and improvement of profits, and as a means by which
employees may share in the rewards of growth and success.  The purpose of the Company’s 1990 Employee
Stock Purchase Plan (the “Plan”) is to provide a convenient means by which
employees of the Company and Participating Subsidiaries may purchase the
Company’s shares through payroll deductions and a method by which the Company
may assist and encourage such employees to become share owners.

 

2.             Shares Reserved for the Plan.  There are 1,900,000 shares of the Company’s
authorized but unissued or reacquired Common Stock, no par value, reserved for
purposes of the Plan.  The number of
shares reserved for the Plan and other share limits in the Plan are subject to
adjustment in the event of any stock dividend, stock split, combination of
shares, recapitalization or other change in the outstanding Common Stock of the
Company.  The determination of whether an
adjustment shall be made and the manner of any such adjustment shall be made by
the Board of Directors of the Company, which determination shall be conclusive.

 

3.             Administration of the Plan. 
The Plan shall be administered by the Board of Directors.  The Board of Directors may promulgate rules
and regulations for the operation of the Plan, adopt forms for use in
connection with the Plan, and decide any question of interpretation of the Plan
or rights arising thereunder.  The Board
of Directors may consult with counsel for the Company on any matter arising
under the Plan.  All determinations and
decisions of the Board of Directors shall be conclusive.  Notwithstanding the foregoing, the Board of
Directors, if it so desires, may delegate to the Compensation Committee of the
Board the authority for general administration of the Plan.

 

4.             Eligible Employees. 
Except as indicated below, all full-time employees of the Company and
all full-time employees of each of the Company’s subsidiary corporations which
is designated by the Board of Directors of the Company as a participant in the
Plan (such participating subsidiary being hereinafter called a “Participating
Subsidiary”) are eligible to participate in the Plan.  Any employee who would, after a purchase of
shares under the Plan, own or be deemed (under Section 424(d) of the Internal
Revenue Code of 1986, as amended (the “Code”)) to own stock (including stock
subject to any outstanding options held by the employee) possessing 5 percent
or more of the total combined voting power or value of all classes of stock of
the Company or any parent or subsidiary of the Company, shall be ineligible to
participate in the Plan.  A “full-time
employee” is one who is in the active service of the Company or a Participating
Subsidiary excluding, however, any employee whose customary employment is 20
hours or less per week or whose customary employment is for not more than five
months per calendar year.

 

5.             Offerings.

 

(a)           Offerings and Purchase Periods.  The Plan shall be implemented by a series of
overlapping 24-month offerings (the “Offerings”), with a new Offering
commencing on January 15, April 15, July 15 and October 15 of each year
beginning in January 2004.  Accordingly,
up to eight separate Offerings may be in process at any time, but an employee
may only participate in one Offering at a time. 
The first day of each Offering is the “Offering Date” for that Offering
and each Offering shall end on the second anniversary of its OfferingDate.  

 

Each Offering shall be divided into eight three-month
Purchase Periods, one of which shall end on each January 14, April 14, July 14
and October 14 during the term of the Offering. 
The last day of each Purchase Period is a “Purchase Date” for the
applicable Offering. Notwithstanding the foregoing, (1) the Offering that began
on January 8, 2003 and ends on January 7, 2004 shall be governed by the Plan as
amended February 24, 2000, and (2) the Offering that begins in January 2004
shall begin on January 8, 2004 and end on January 14, 2006 and the

 

 

 

first Purchase Date relating to such Offering shall be April 14, 2004.

 

(b)           Grants; Limitations.  On each Offering Date, each eligible employee
shall be granted an option under the Plan to purchase shares of Common Stock on
the Purchase Dates for the Offering for the price determined under paragraph 7
of the Plan exclusively through payroll deductions authorized under paragraph 6
of the Plan; provided, however, that (a) no option shall permit the purchase of
more than 500 shares on any Purchase Date, and (b) no option may be granted
under the Plan that would allow an employee’s right to purchase shares under
all stock purchase plans of the Company and its parents and subsidiaries to
which Section 423 of the Code applies to accrue at a rate that exceeds $25,000
of fair market value of shares (determined at the date of grant) for each
calendar year in which such option is outstanding.

 

(c)           Insufficient Shares.  If there is an insufficient number of
reserved shares of Common Stock to permit the full exercise of all existing
rights to purchase shares, or if the legal obligations of the Company prohibit
the issuance of all shares purchasable upon the full exercise of such rights,
the plan administrator shall make a pro rata allocation of the shares remaining
available in as nearly a uniform and equitable manner as possible, based pro
rata on the aggregate amounts then credited to each participant’s account.  In such event, payroll deductions to be made
shall be reduced accordingly and the plan administrator shall give written
notice of such reduction to each participant affected thereby.  Any amount remaining in a participant’s
account immediately after all available shares have been purchased will be
promptly remitted to such participant. 
Determinations made by the plan administrator in this regard shall be
final, binding and conclusive on all persons. 
No deductions shall be permitted under the Plan after the Company
determines that no shares are available.

 

6.             Participation in the Plan.

 

(a)           Initiating Participation.  An eligible employee may participate in an
Offering under the Plan by filing with the Company no later than 4:00 p.m.,
Pacific time on the Offering Date for the Offering in which the employee
desires to participate, forms furnished by the Company, a subscription and
payroll deduction authorization.  Once
filed, a subscription and payroll deduction authorization shall remain in
effect for Offerings unless amended or terminated.  The payroll deduction authorization will
authorize the employing corporation to make payroll deductions from each of the
participant’s paychecks during an Offering other than a paycheck issued on the
Offering Date.  Payroll deductions from
any paycheck may not be less than 1 percent or more than 15 percent of the
gross amount of base pay plus commissions, if any, payable to the participant
for the period covered by the paycheck. 
If payroll deductions are made by a Participating Subsidiary, that
corporation will promptly remit the amount of the deductions to the Company.

 

(b)           Amending or Terminating Participation.  After a participant has begun participating
in the Plan by initiating payroll deductions, the participant may not amend the
payroll deduction authorization except that (a) a participant may amend payroll
deductions once during each calendar quarter and (b) the participant may
terminate participation in the Plan at any time prior to the tenth day before a
Purchase Date by written notice to the Company. 
A permitted change in payroll deductions shall be effective for any pay
period only if written notice is received by the Company at least three
business days prior to the payroll effective date published by the Company for
that pay period.  Participation in the
Plan shall also terminate when a participant ceases to be an eligible employee
for any reason, including death or retirement. 
A participant may not reinstate participation in the Plan with respect
to a particular Offering after once terminating participation in the Plan with
respect to that Offering.  Upon
termination of a participant’s participation in the Plan, all amounts deducted
from the participant’s pay and not previously used to purchase shares under the
Plan shall be returned to the participant.

 

(c)           Suspension of Payroll Deductions When Limitations
on Participation Are Exceeded. 
As a result of the limitations described above under paragraph 5(b), the
amount of a participant’s payroll deductions during any portion of an Offering
may exceed the maximum amount that can be applied to purchase shares on the
next Purchase Date of that Offering.  If
this occurs, then, as soon as practicable following the participant’s written
request (or earlier in the Company’s discretion), payroll deductions from the
participant shall be suspended and any such excess amounts shall be refunded to
the participant.  Such suspension shall
not result either in termination of the participant’s participation in the
Offering or ineligibility of the participant for enrollment in any new
Offering.  Payroll deductions at the rate
set forth in the participant’s then effective payroll deduction authorization
form shall automatically resume for any period under the Plan during which,
after application of the limitations in paragraph 5(b), the participant is
eligible to purchase any Common Stock under the Plan on the next Purchase Date
unless the

 

 

participant terminates participation in accordance with paragraph 6(b).

 

7.             Option Price.  The
price at which shares shall be purchased on any Purchase Date in an Offering
shall be the lower of (a) 85% of the fair market value of a share of
Common Stock on the Offering Date of the Offering (or the preceding trading day
if the Offering Date is not a trading day) or (b) 85% of the fair market
value of a share of Common Stock on the Purchase Date (or the preceding trading
day if the Purchase Date is not a trading day). 
The fair market value of a share of Common Stock on any date shall be
the closing price of the Common Stock on that trading day as reported by NASDAQ
or, if the Common Stock is not reported on NASDAQ, such other reported value of
the Common Stock as shall be specified by the Board of Directors.

 

8.             Automatic Withdrawal and Re-enrollment.  If the fair market value of a share of Common
Stock on any new Offering Date is less than or equal to the fair market value
of a share of Common Stock on the participant’s current Offering Date, every
participant in that Offering shall automatically (a)be withdrawn from such
Offering after the acquisition of the shares of Common Stock on such Purchase
Date that precedes the new Offering Date and (b) be enrolled in the new
Offering commencing on the day after such Purchase Date.

 

9.             Purchase of Shares. 
All amounts withheld from the pay of a participant shall be credited to
his or her account under the Plan by the Custodian appointed under
paragraph 10.  No interest will be
paid on such accounts, unless otherwise determined by the Board of Directors.
On each Purchase Date, the amount of the account of each participant will be
applied to the purchase of whole shares by such participant from the Company at
the price determined under paragraph 7. 
Any cash balance remaining in a participant’s account after a Purchase
Date because it was less than the amount required to purchase a full share
shall be retained in the participant’s account for the next Purchase
Period.  Any other amounts in a
participant’s account after a Purchase Date as a result of the limitations in
paragraph 5(b) will be repaid to the participant.

 

10.           Delivery and Custody of Shares.  Shares purchased by participants pursuant to
the Plan will be delivered to and held in the custody of such investment or
financial firm (the “Custodian”) as shall be appointed by the Board of
Directors.  The Custodian may hold in
nominee or street name certificates for shares purchased pursuant to the Plan,
and may commingle shares in its custody pursuant to the Plan in a single
account without identification as to individual participants.  By appropriate instructions to the Custodian
on forms to be provided for that purpose, a participant may from time to time
(a) transfer into the participant’s own name of all or part of the shares
held by the Custodian for the participant’s account and delivery of such shares
to the participant; (b) transfer of all or part of the shares held for the
participant’s account by the Custodian to a regular individual brokerage
account in the participant’s own name, either with the firm then acting as
Custodian or with another firm, or (c) sell all or part of the shares held
by the Custodian for the participant’s account at the market price at the time
the order is executed and obtain remittance of the net proceeds of sale to the
participant.  Upon termination of
participation in the Plan, the participant may elect to have the shares held by
the Custodian for the account of the participant transferred and delivered in
accordance with (a) above, transferred to a brokerage account in accordance
with (b), or sold in accordance with (c).

 

11.           Records and Statements. 
The Custodian will maintain the records of the Plan. As soon as
practicable after each Purchase Date each participant will receive a statement
showing the activity of his account since the preceding Purchase Date and the
balance on the Purchase Date as to both cash and shares.  Participants will be furnished such other
reports and statements, and at such intervals, as the Board of Directors shall
determine from time to time.

 

12.           Expense of the Plan. 
The Company will pay all expenses incident to operation of the Plan,
including costs of record keeping, accounting fees, legal fees, commissions and
issue or transfer taxes on purchases pursuant to the Plan and on delivery of
shares to a participant or into his or her brokerage account.  The Company will not pay expenses,
commissions or taxes incurred in connection with sales of shares by the
Custodian at the request of a participant. Expenses to be paid by a participant
will be deducted from the proceeds of sale prior to remittance.

 

13.           Rights Not Transferable. 
The right to purchase shares under this Plan is not transferable by a
participant, and such right is exercisable during the participant’s lifetime
only by the participant.  Upon the death
of a participant, any shares held by the Custodian for the participant’s
account shall be transferred to the persons entitled thereto under the laws of
the state of domicile of the participant upon a proper showing of authority.

 

 

14.           Dividends and Other Distributions.  Cash dividends and other cash distributions,
if any, on shares held by the Custodian will be paid currently to the
participants entitled thereto unless the Company subsequently adopts a dividend
reinvestment plan and the participant directs that his or her cash dividends be
invested in accordance with such plan. 
Stock dividends and other distributions in shares of the Company on
shares held by the Custodian shall be issued to the Custodian and held by it
for the account of the respective participants entitled thereto.

 

15.           Voting and Shareholder Communications.  In connection with voting on any matter
submitted to the shareholders of the Company, the Custodian will cause the
shares held by the Custodian for each participant’s account to be voted in
accordance with instructions from the participant or, if requested by a
participant, will furnish to the participant a proxy authorizing the
participant to vote the shares held by the Custodian for the participant’s
account.  Copies of all general
communications to shareholders of the Company will be sent to participants
participating in the Plan.

 

16.           Tax Withholding. 
Each participant who has purchased shares under the Plan shall
immediately upon notification of the amount due, if any, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local tax
withholding determined by the Company to be required.  If the Company determines that
additional withholding is required beyond any amount deposited at the time of
purchase, the participant shall pay such amount to the Company on demand.  If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable by
the Company to the participant, including salary, subject to applicable law.

 

17.           Responsibility and Indemnity.  Neither the Company, its Board of Directors,
the Custodian, any Participating Subsidiary, nor any member, officer, agent, or
employee of any of them, shall be liable to any participant under the Plan for
any mistake of judgment or for any omission or wrongful act unless resulting
from gross negligence, willful misconduct or intentional misfeasance.  The Company will indemnify and save harmless
its Board of Directors, the Custodian and any such member, officer, agent or employee
against any claim, loss, liability or expense arising out of the Plan, except
such as may result from the gross negligence, willful misconduct or intentional
misfeasance of such entity or person.

 

18.           Conditions and Approvals. 
The obligations of the Company under the Plan shall be subject to
compliance with all applicable state and federal laws and regulations,
compliance with the rules of any stock 

 

 

exchange on which the Company’s securities may be listed, and approval
of such federal and state authorities or agencies as may have jurisdiction over
the Plan or the Company.  The Company
will use its best effort to comply with such laws, regulations and rules and to
obtain such approvals.

 

19.           Amendment of the Plan. 
The Board of Directors of the Company may from time to time amend the Plan
in any and all respects, except that without the approval of the shareholders
of the Company, the Board of Directors may not increase the number of shares
reserved for the Plan or decrease the purchase price of shares offered pursuant
to the Plan.

 

20.           Termination of the Plan. 
The Plan shall terminate when all of the shares reserved for purposes of
the Plan have been purchased, provided that the Board of Directors in its sole
discretion may (a) elect to continue the Plan in connection with the reservation
of additional shares for purposes of the Plan or (b) at any time terminate the
Plan without any obligation on account of such termination, except as
hereinafter in this paragraph provided. 
Upon termination of the Plan, the cash and shares, if any, held in the
account of each participant shall forthwith be distributed to the participant
or to the participant’s order, provided that if prior to the termination of the
Plan, the Board of Directors and shareholders of the Company shall have adopted
and approved a substantially similar plan, the Board of Directors may in its
discretion determine that the account of each participant under this Plan shall
be carried forward and continued as the account of such participant under such
other plan, subject to the right of any participant to request distribution of
the cash and shares, if any, held for his account.Exhibit
10.3

 

	
  

  	
  Electro Scientific Industries,
  Inc.

  13900 NW Science Park Dr.

  Portland, OR 97229

  

 

Notice of Grant of Stock Options

and Option Agreement

 

	
  [Name]

  	
  Option
  Number:

  	
              

  
	
  [Address]

  	
  Plan:

  	
  2004

  

 

Effective                         
(the Grant Date), you (Optionee) have been granted an Incentive Stock Option to
buy               
shares of Common Stock of Electro Scientific Industries, Inc. (the Company) at
$                
per share.

 

The total option price of
this option is $                        .

 

Shares vest at a rate of
25% annually on the date shown.

 

	
  Shares

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  	
   

  	
  Expiration

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
   

  	
   

  	
   

  

 

By your signature and the
Company’s signature below, you and the Company agree that this option is
granted under and governed by the terms and conditions of the Company’s 2004
Stock Incentive Plan and the attached Option Terms and Conditions which are
incorporated into and made a part of this agreement.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Nicholas Konidaris

  	
   

  	
  Date

  	
   

  
	
  President and Chief
  Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Name]

  	
   

  	
  Date

  	
   

  

 

 

OPTION TERMS AND CONDITIONS

2004
Stock Incentive Plan

Incentive
Stock Option

 

Pursuant to the Company’s
2004 Stock Incentive Plan (the “2004 Plan”), the Board of Directors has voted
in favor of granting to the Optionee an option to purchase Common Stock of the
Company (the “Option”) in the amount indicated on the attached notice.  The option is intended to be an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”).

 

1.             The
Option is granted upon the following terms:

 

1.1           Duration
of Options.  Subject to reductions in the
Option period as hereinafter provided in the event of termination of employment
or death of the Optionee, the Option shall continue in effect for a period of
10 years from the Grant Date.

 

1.2           Time
of Exercise.  Except as provided in
paragraph 1.5, the Option may be exercised from time to time in the following
amounts: (a) none during the first year following the Grant Date (b) thereafter
not to exceed in any one year 25 percent of the total number of shares covered
by the Option, but if the Optionee does not exercise the Option in any one year
for the full number of shares to which the Optionee is entitled, the rights
shall be cumulative and the Optionee may exercise the Option for such shares in
any subsequent year during the term of the Option.

 

1.3           Limitations
on Rights to Exercise.  Except as
provided in paragraph 1.5, the Option may not be exercised unless at the time
of such exercise the Optionee is employed by the Company or any parent or
subsidiary of the Company and shall have been so employed continuously since
the date such option was granted.

 

1.4           Nonassignability.  The Option is 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 is exercisable during the Optionee’s lifetime only by the Optionee.

 

1.5           Termination
of Employment.

 

(a)           Unless
otherwise determined by the Board of Directors, if an optionee’s employment or
service with the Company terminates for any reason other than in the
circumstances specified in subsection (b), 
(c) or (d) below, his or her option may be exercised at any time before
the expiration date of the option or the expiration of three months after the
date of termination, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date of
termination.

 

(b)           Unless
otherwise determined by the Board of Directors, if an optionee’s employment or
service with the Company terminates because of total disability, his or her
option may be exercised at any time before the expiration date of the option or
before the date 12 months after the date of termination, whichever is the
shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of termination. 
The term “total disability” means a medically determinable mental
or physical impairment that is expected to result in death or has lasted or is
expected to last for a continuous period of 12 months or more and that, in the
opinion of the Company and two independent physicians, causes the optionee to
be unable to perform his or her duties as an employee, director, officer or
consultant of the Employer and unable to be engaged in any substantial gainful
activity.  Total disability shall be deemed
to have occurred on the first day after the two independent physicians have
furnished their written opinion of total disability to the Company and the
Company has reached an opinion of total disability.

 

(c)           Unless
otherwise determined by the Board of Directors, if an optionee dies while employed
by or providing service to the Company, his or her option may be exercised at
any time before the expiration date of the option or before the date 12 months
after the date of death, whichever is the shorter period, but only if and to
the extent the optionee was entitled to exercise the option at the date of
death and only by the person or persons to whom the optionee’s rights under the
option shall pass by the optionee’s will or by the laws of descent and
distribution of the state or country of domicile at the time of death.

 

(d)           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
(as defined in Section 1.5(b)), 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 of 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.

 

(e)           To
the extent the Option held by any deceased Optionee or by the Optionee whose
employment is terminated shall not have been exercised within the limited
periods provided above, all further rights to purchase shares pursuant to the
Option shall cease and terminate at the expiration of such periods.

 

(f)            Absence
on leave approved by the Employer or on account of illness or disability shall
not be deemed a termination or interruption of employment or service.  Unless otherwise determined by the Board of
Directors, vesting of options shall continue during a medical, family, military
or other leave of absence, whether paid or unpaid.

 

1.6           Purchase
of Shares.  Shares may be purchased or
acquired pursuant to the Option 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 the Option, the Optionee must
have paid the Company the full purchase price of such shares in cash (including
cash which may at the election of the Company be the proceeds of a loan from
the Company), or in shares of Common Stock of the Company previously acquired
and held by the optionee for at least six months and valued at fair market
value as defined in the 2004 Plan, 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 the Optionee
shall have none of the rights of a shareholder until a certificate for shares
is issued to the Optionee.  The Optionee
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.

 

1.7           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 purchase pursuant to the Option and the corresponding
Option price.  Any such adjustment made by
the Board of Directors shall be conclusive.

 

2.             The
obligations of the Company under this Agreement are 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 on which the Company’s shares may
then be listed, in connection with the issuance or sale of any shares purchased
upon the exercise of the Option.

 

3.             Nothing
in the 2004 Plan or this Agreement shall confer upon the Optionee any right to
be continued in the employment of the Company or any subsidiary of the Company,
or to interfere in any way with the right of the Company or any subsidiary by
whom the Optionee is employed to terminate the Optionee’s employment at any
time, with or without cause.

 

4.             This
Agreement shall be binding upon and shall inure to the benefit of any successor
or successors of the Company but except as hereinabove provided the Option
herein granted shall not be assigned or otherwise disposed of by the Optionee.

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