Document:

exv10w2

 

Exhibit 10.2

FSI INTERNATIONAL, INC.

1997 OMNIBUS STOCK PLAN

INCENTIVE STOCK OPTION AGREEMENT

	 
	Full Name of Optionee:

	 	 	 
	No. of Shares Covered:

	 	Date of Grant:

	 	 	 
	Exercise Price Per Share:

	 	Expiration Date:
	$
	 	 

Exercise Schedule pursuant to Section 4:

	 	 	 
	Initial Date

of Exercisability
 

	 	No. of Shares

As to Which Option

Becomes Exercisable

as of Such Date
 

This is an INCENTIVE STOCK OPTION AGREEMENT (“Agreement”) between FSI
International, Inc., a Minnesota corporation (the “Company”), and the Optionee
identified above (the “Optionee”) effective as of the date of grant specified
above.

RECITALS

WHEREAS, the Company maintains the FSI International, Inc. 1997
Omnibus Stock Plan (“Plan”); and

WHEREAS, the Company has appointed a committee (the “Committee”) with the
authority to determine the awards to be granted under the Plan; and

WHEREAS, the Committee or its designee has determined that the Optionee
is eligible to receive an award under the Plan in the form of a Stock
Option (the “Option”) and has set the terms and conditions thereof.

NOW, THEREFORE, this Option is issued to the Optionee under the terms and
conditions set by the Committee as follows.

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TERMS AND CONDITIONS*

	1.	 	Grant. The Optionee is granted this Option to purchase the number of
Shares specified at the beginning of this Agreement on the terms and
conditions set forth below.
	 
	2.	 	Exercise Price. The price to the Optionee of each Share subject to this
Option shall be the Exercise Price specified on the first page of this
Agreement (which price shall not be less than the Fair Market Value as of
the date of grant or, if the Optionee owns or is deemed to own stock
possessing more than 10% of the combined voting power of all classes of
stock of the Company, 110% of the Fair Market Value as of the date of
grant).
	 
	3.	 	Incentive Stock Option. This Option, to the extent permissible, is
intended to be an “incentive stock option” within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”).
	 
	4.	 	Exercise Schedule. Except as provided in Section 8, this Option may be
exercised in accordance with the Exercise Schedule set forth on the first
page of this Agreement. The Exercise Schedule is cumulative — that is, if
this Option has not expired prior thereto, the Optionee may at any time
purchase all or any portion of the Shares then available under the
Exercise Schedule to the extent not previously purchased.
	 
	 	 	To the extent the total Fair Market Value (determined as of the date of
grant of an option) of Shares with respect to which this Option and any
other incentive stock options granted by the Company or its Affiliates
shall become exercisable for the first time during any calendar year
shall exceed $100,000, such excess options shall be treated as
Non-Statutory Stock Options. This $100,000 limit shall be applied by
taking such incentive stock options into account in the order in which
they are granted.
	 
	 	 	This Option may be exercised in full (notwithstanding the Exercise
Schedule) under the circumstances described in Section 8 of this
Agreement if it has not expired prior thereto.
	 
	5.	 	Expiration. This Option shall expire at 4:00 p.m. Central Time on the
earliest of:

	 	(a)	 	The expiration date specified at the beginning of this
Agreement (which date shall not be later than ten years after the
date of grant or, if the Optionee owns or is deemed to own stock
possessing more than 10% of the combined voting power of all classes
of stock of the Company, five years after the date of grant);
	 
	 	(b)	 	The last day as of the periods of or following the
termination of Optionee as an employee of the Company or an
Affiliate, or as a Consultant of the Company during which this
Option can be exercised (as specified in Section 7 of this
Agreement); or
	 
	 	(c)	 	The date (if any) fixed for cancellation pursuant to Section 8 of
this Agreement.

In no event may anyone exercise this Option, in whole or in part, after
it has expired, notwithstanding any other provision of this Agreement.

* Unless the context indicates otherwise, capitalized terms that are not
defined in this Agreement shall have the meaning set forth in the Plan as it
currently exists or as it is amended in the future.

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	6.	 	Procedure to Exercise Option.
	 
	 	 	Notice of Exercise. Subject to the terms and conditions of this
Agreement, this Option may be exercised by delivering advance written
notice of exercise to the Company at its headquarters in the form
attached to this Agreement or a similar form containing substantially the
same information and addressed or delivered to an authorized Company
representative. The notice shall state the number of Shares to be
purchased, and shall be signed by the person exercising this Option. If
the person exercising this Option is not the Optionee, he or she also
must submit appropriate proof of his or her right to exercise this
Option.

Tender of Payment. Any notice of exercise hereunder shall be accompanied
by either:

	 	(a)	 	Payment (by check, bank draft or money order
payable to the Company) of the full purchase price of the
Shares being purchased; or
	 
	 	(b)	 	Certificates for unencumbered Shares having an
aggregate Fair Market Value on the date of exercise equal to
the full purchase price of the Shares being purchased (the
Optionee shall duly endorse all such certificates in blank and
shall represent and warrant in writing that he or she is the
owner of the Shares so delivered free and clear of all liens,
security interests and other restrictions or encumbrances); or
	 
	 	(c)	 	A combination of cash and unencumbered Shares.

Any Shares tendered as payment under (b) or (c) above must have been
owned by the Optionee for at least 180 days preceding the date of
exercise of Options to which the use of such Shares relates.

In lieu of the provisions of (a), (b) or (c) above, an Optionee may
simultaneously exercise an Option and sell the Shares thereby acquired
pursuant to a brokerage or similar relationship so long as the cash
proceeds from the sale are used promptly as payment of the purchase price
of those Shares and the Company has received adequate assurances thereof.

Delivery of Certificates. As soon as practicable after the Company
receives a properly executed notice and the purchase price provided for
above, it shall deliver to the person exercising the Option, in the name
of such person, a certificate or certificates representing the Shares
being purchased. The Company shall pay any original issue or transfer
taxes with respect to the issue or transfer of the Shares and all fees
and expenses incurred by it in connection therewith. All Shares so
issued shall be fully paid and nonassessable. Notwithstanding anything
to the contrary in this Agreement, the Company shall not be required to
issue or deliver any Shares prior to the completion of such registration
or other qualification of such Shares under any law, rule or regulation
as the Company shall determine to be necessary or desirable.

	7.	 	Vesting Requirement. This Option may be exercised only while the
Optionee remains employed with the Company or an Affiliate or is serving
as a Consultant of the Company or an Affiliate, and only if the Optionee
has been continuously in one or more such relationships with the Company
or an Affiliate, as the case may be; provided that:

	 	(a)	 	The Optionee may exercise this Option during the ninety-day
period following his ceasing to be any of the following: (i) an
employee of the Company or an Affiliate or (ii) a Consultant to the
Company or an Affiliate, but in either case only to the extent that
it was exercisable immediately prior to the last of such
relationships (i.e. the Optionee shall not progress on the exercise
schedule) and only if the Optionee’s employment was not terminated
for Cause. If the Optionee dies during such ninety-day period, the
Optionee’s Successor (i.e., legal representative of the Optionee’s
estate, or the person who has

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	 	 	 	acquired the right by bequest or inheritance), may exercise this
Option during the one-year period following the termination of
employment.
	 
	 	(b)	 	If the Optionee becomes totally and permanently disabled
(within the meaning of Code section 22(e)(3)) while in one of the
relationships described above in this Section 7, he or she may
exercise this Option during the one-year period following his or her
termination of employment.
	 
	 	(c)	 	If the Optionee dies while in one of the relationships
described above in this Section 7, the Optionee’s Successor, may
exercise this Option during the one-year period following the date
the Optionee dies.
	 
	 	(d)	 	If the Optionee ceases to be in one of the relationships
described above in this Section 7 after a declaration made pursuant
to Section 8 of this Agreement, he or she may exercise the Option at
any time permitted by such declaration.

Notwithstanding the above, this Option may not be exercised after it has
expired.

	8.	 	Acceleration of Option.
	 
	 	 	Disability. This Option may be exercised in full (notwithstanding the
Exercise Schedule) if the Optionee becomes totally and permanently
disabled (as defined in Code section 22(e)(3)) while employed with the
Company or an Affiliate.
	 
	 	 	Death. This Option may be exercised in full (notwithstanding the
Exercise Schedule) if the Optionee dies while employed with the Company
or an Affiliate.
	 
	 	 	Event. This option may be exercised in full (notwithstanding any
applicable exercise or vesting schedule) if an Event shall have occurred.
	 
	 	 	Fundamental Change. At least thirty days prior to a Fundamental Change,
the Committee may, but shall not be obligated to declare, and provide
written notice to the Optionee of the declaration, that this Option shall
be canceled at the time of, or immediately prior to the occurrence of,
the Fundamental Change (unless it is exercised prior to the Fundamental
Change) in exchange for payment to the Optionee, within ten days after
the Fundamental Change, of cash equal to the amount, for each Share
covered by the canceled Option, by which the event proceeds per share (as
defined below) exceeds the exercise price per Share covered by this
Option. This Option may be exercised in full (notwithstanding the
Exercise Schedule) at any time after such declaration and prior to the
time of cancellation of this Option. This Option, to the extent it has
not been exercised prior to the Fundamental Change, shall be canceled at
the time of, or immediately prior to, the Fundamental Change, as provided
in the declaration, and this Agreement shall terminate at the time of
such cancellation, subject to the payment obligations of the Company
provided in this paragraph.
	 
	 	 	In the case of a Fundamental Change that consists of the merger or
consolidation of the Company with or into any other corporation, the
Committee, in lieu of the declaration above, may make appropriate
provision for the protection of this Option by the substitution, in lieu
of this Option, of an option to purchase appropriate voting common stock
or appropriate voting common stock of the corporation surviving any such
merger or consolidation or, if appropriate, the parent corporation of the
Company or such surviving corporation.
	 
	 	 	For purposes of the preceding paragraphs, the “event proceeds per share”
is the cash plus the value (as determined by the Committee) of the
non-cash consideration to be received per Share by the stockholders of
the Company upon the occurrence of the Fundamental Change.

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	9.	 	Limitation on Transfer. While the Optionee is alive, only the Optionee
or his or her guardian or legal representative may exercise this Option.
This Option may not be assigned or transferred other than by will or the
laws of descent and distribution, and shall not be subject to pledge,
hypothecation, execution, attachment or similar process. Any attempt to
assign, transfer, pledge, hypothecate or otherwise dispose of this Option
contrary to the provisions hereof, and the levy of any attachment or
similar process upon this Option, shall be null and void.
	 
	10.	 	No Stockholder Rights Before Exercise. No person shall have any of the
rights of a stockholder of the Company with respect to any Share subject
to this Option until the Share actually is issued to him or her upon
exercise of this Option.
	 
	11.	 	Discretionary Adjustment. The Committee may in its sole discretion make
appropriate adjustments in the number of Shares subject to this Option and
in the purchase price per Share to give effect to any adjustments made in
the number of outstanding Shares through a merger, consolidation,
recapitalization, reclassification, combination, stock dividend, stock
split or other relevant change; provided that, fractional Shares shall be
rounded to the nearest whole Share.
	 
	12.	 	Tax Withholding.
	 
	 	 	General Rule. If the Company or an Affiliate is required to withhold
federal, state or local income taxes, or social security or other taxes,
upon the exercise of this Option, the person exercising this Option
shall, upon exercise and demand by the Company or Affiliate, promptly pay
in cash such amount as is necessary to satisfy such requirement prior to
receipt of such Shares; provided that, in lieu of all or any part of such
cash payment, the Committee may (but shall not be required to) allow the
person exercising this Option to cover all or any part of the required
withholdings, and to cover any additional withholdings up to the amount
needed to cover the full federal, state and local income tax obligation
of such person with respect to income arising from the exercise of this
Option, through a reduction of the number of Shares delivered or through
a subsequent return to the Company of Shares delivered, in each case
valued in the same manner as used in computing the withholding taxes
under applicable laws.
	 
	 	 	Committee Approval; Revocation. The Committee may approve an election
under this section to reduce the number of Shares delivered in advance,
but the approval is subject to revocation by the Committee at any time.
Once such an election is made by the person exercising this Option, the
Optionee may not revoke it.
	 
	 	 	Exception. Notwithstanding the foregoing, the Optionee who tenders
previously owned Shares to the Company in payment of the purchase price
of Shares in connection with an option exercise may also tender
previously owned Shares to the Company in satisfaction of any tax
withholding obligations in connection with such option exercise without
regard to the specified time periods set forth above for insiders. If
the Company or an Affiliate is required to withhold federal, state or
local income taxes, or social security or other taxes, upon the exercise
of this Option, the person exercising this Option shall, upon exercise
and demand by the Company or Affiliate, promptly pay in cash such amount
as is necessary to satisfy such requirement.
	 
	13.	 	Forfeitures. In the event the Optionee has exercised this Option
following or within six months prior to his or her termination of
employment with the Company and its Affiliates, the Company, by action of
the Committee, will have the right and option (the “Purchase Right”) to
purchase from the Optionee or his or her legal representative a number of
shares equal to the number of Shares which had been purchased under this
Option by the Optionee following or within six months prior to the
Optionee’s termination of employment with the Company and its Affiliates
(the “Purchase Right Shares”), if the Optionee (i) has engaged in
competition with the Company or its Affiliates during the term of the
Optionee’s employment with the Company or its Affiliates or within six
months after the termination of such employment (the “Applicable Period”)
that the Committee concludes is detrimental to the Company or its
Affiliates, (ii) has made an unauthorized disclosure of material
non-public or confidential information of the Company or any of its
Affiliates during the

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	 	 	Applicable period, (iii) has committed a material violation of any
applicable policies or practices of the Company or any of its Affiliates
during the Applicable Period, or (iv) has engaged in conduct reflecting
dishonesty or disloyalty to the Company or any of its Affiliates during
the Applicable Period.
	 
	 	 	In addition, the Committee may terminate this Option prior to exercise by
Optionee if it determines that the Optionee has engaged or intends to
engage in the activities described in (i)-(iv) above.
	 
	 	 	The decision to exercise the Company’s Purchase Right will be based
solely on the judgment of the Committee, in its sole and complete
discretion, given the facts and circumstances of each particular case.
The Purchase Right also will cover any shares received from adjustments
which pertained to the Purchase Right Shares and which were made as a
result of any of the types of transactions referred to in Section 11, and
such shares will also constitute Purchase Right Shares.
	 
	 	 	Such Purchase Right may be exercised by the Committee within 90 days
after the Committee’s discovery of an occurrence that entitles it to
exercise its Purchase Right (but in no event later than 15 months after
the Optionee’s termination of employment with the Company and its
Affiliates) for a purchase price equal to the total amount paid by the
Optionee for the Purchase Right Shares. Such Purchase Right will be
deemed to be exercised upon the Company’s mailing written notice of such
exercise postage prepaid, addressed to the Optionee at the Optionee’s
most recent home address as shown on the personnel records of the
Company.
	 
	 	 	The Optionee agrees on the Optionee’s behalf and on behalf of the
Optionee’s Successor, as the case may be, to deliver to the Company, on
the date specified in such notice, which will not be less than ten nor
more than thirty days after such notice, a certificate or certificates
for the number of shares for which the Purchase Right has been exercised,
duly endorsed for transfer to the Company against payment of the purchase
price for the Purchase Right Shares. The Purchase Right of the Company
may not be exercised on or after the occurrence of any Event.
	 
	14.	 	Cause. Cause means a termination of employment of the Optionee due to
(i) the inability or failure of the Optionee to adequately perform the
material duties of his or her position, (ii) conduct reflecting dishonesty
or disloyalty to the Company and its Affiliates, (iii) failure to comply
with the material business plans, policies or practices of the Company or
its Affiliates or (iv) an unauthorized disclosure of material non-public
or confidential information of the Company or its Affiliates.
	 
	15.	 	Interpretation of This Agreement. All decisions and interpretations made
by the Committee with regard to any question arising hereunder or under
the Plan shall be binding and conclusive upon the Company and the
Optionee. If there is any inconsistency between the provisions of the
Agreement and the Plan, the provisions of the Plan shall govern.
	 
	16.	 	Discontinuance of Employment. This Agreement shall not give the Optionee
a right to continued employment with the Company or any Affiliate, and the
Company or Affiliate employing the Optionee may terminate his or her
employment and otherwise deal with the Optionee without regard to the
effect it may have upon him or her under this Agreement.
	 
	17.	 	Obligation to Reserve Sufficient Shares. The Company shall at all times
during the term of this Option reserve and keep available a sufficient
number of Shares to satisfy this Agreement.
	 
	18.	 	Binding Effect. This Agreement shall be binding in all respects on the
heirs, representatives, successors and assigns (including a Successor) of
the Optionee.
	 
	19.	 	Choice of Law. The Agreement is entered into under the laws of the State
of Minnesota and shall be construed and interpreted thereunder (without
regard to its conflict of law principles).

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	 	 	IN WITNESS WHEREOF, the Optionee and the Company have executed this Stock
Option Agreement effective as of the                      .

	 	 	 	 	 
	FSI INTERNATIONAL, INC.	 	OPTIONEE
	 
	 	 	 	 
	By
	 	 	 	 
	

	 	
 
	 	
 
	Its

	 	Patricia M. Hollister

Chief Financial Officer	 	 

7exv10w3

 

Exhibit 10.3

FSI INTERNATIONAL, INC.

1997 OMNIBUS STOCK PLAN

Stock Option Agreement for [Initial/Annual] Outside Director Option

	 
	Full Name of Outside Director:

	 	 	 
	No. of Shares Covered:

	 	Date of Grant:

	 	 	 
	Exercise Price Per Share:

	 	Expiration Date:

Vesting Schedule (Cumulative):

	 	 	 
	Initial Date

of Exercisability
 

	 	No. of Options

Which Become

Exercisable
 

     This is an [INITIAL/ANNUAL] OUTSIDE DIRECTOR STOCK OPTION AGREEMENT
between FSI International, Inc., a Minnesota corporation (the “Company”), and
the Outside Director of the Company listed above (the “Optionee”).

     WHEREAS, the Company maintains the FSI International, Inc. 1997 Omnibus
Stock Plan (the “Plan”);

     WHEREAS, the Company’s Board of Directors (“Board”) has delegated the
authority to administer the Plan and to enter into Agreements thereunder to the
Omnibus Stock Plan Committee of the Board (the “Committee”); and

     WHEREAS, the Plan provides for automatic nonstatutory stock option awards
to the Company’s Outside Directors [upon initial election to the Board or
following each Annual Meeting of the Company’s Shareholders], to be evidenced
by an Agreement, with such terms as the Committee may approve or provide.

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     NOW, THEREFORE, the parties hereby agree as follows:*

     1. Grant of Option. Subject to the terms of the Plan, the Company hereby
grants to the Outside Director the right and option (the “Option”) to purchase
the number of shares specified at the beginning of this Agreement, on the terms
and conditions set forth in the Plan. This Option is an [Initial/Annual]
Outside Director Option under the terms of the Plan.

     2. Purchase Price. The purchase price of each of the shares subject to the
Option shall be the exercise price per share specified at the beginning of this
Agreement, which price was determined in accordance with the Plan.

     3. Vesting. The Option shall vest according to the schedule set out at the
beginning of this Agreement except that the Option shall immediately vest upon
the occurrence of an Event or the death of the Optionee.

     4. Death of Optionee. In the event of the death of the Optionee, the Option
may be exercised, at any time within 12 months following the date of death (but
in no instance later than the expiration date of the term of this Option), by
the Optionee’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance. If the Optionee’s Successor does not
exercise such Option within the time specified herein, the Option shall
terminate.

     5. Disability of Optionee. In the event of termination of the Optionee’s
relationship with the Company due to total and permanent disability (as defined
in Section 22(e)(3) of the Code or its successor provision), the Optionee may,
but only within 12 months from the date of such termination (but in no event
later than the expiration date of the term of this Option), exercise the
Option. If Optionee does not exercise this Option within the time specified
herein, the Option shall terminate.

     6. Transfer of Option. The Option may be transferred only to a Successor or to
a Transferee, as defined in the Plan.

     7. No Rights as Shareholder. No person shall have any of the rights of a
shareholder of the Company with respect to any shares subject to the Option
until the shares are actually issued upon the proper exercise of the Option.

     8. The Plan. This Option is subject to all of the terms and conditions
contained in the Plan, and the Plan is hereby incorporated by reference into
this Agreement. All terms contained herein that are not otherwise defined
shall have the meanings set forth in the Plan.

     9. Governing Law. This Agreement is entered into under the laws of the State
of Minnesota and shall be construed and interpreted thereunder.

* Unless the context indicates otherwise, capitalized terms not defined in the
Agreement shall have the meaning set forth in the Plan.

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     IN WITNESS WHEREOF, the Outside Director and the Company have executed
this Agreement as of the [     ] day of [January], 200_.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	Outside Director
	 	 
	 
 
	 	 	 	 	 	 
	

	 	 	 	

	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	FSI INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
 	 	 
	

	 	Its:
	 	Patricia M. Hollister

Chief Financial Officer	 	 

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