Document:

EXHIBIT
10.3.4

 

ULTRATECH
STEPPER, INC.

1993 STOCK OPTION/STOCK ISSUANCE PLAN

(Amended and
Restated as of July 16, 2002)

 

ARTICLE ONE

GENERAL

I.              PURPOSE
OF THE PLAN

This 1993 Stock
Option/Stock Issuance Plan (“Plan”) is intended to promote the interests of
Ultratech Stepper, Inc., a Delaware corporation (the “Corporation”), by
providing (i) key employees (including officers) of the Corporation (or its
parent or subsidiary corporations) who are responsible for the management,
growth and financial success of the Corporation (or its parent or subsidiary
corporations), (ii) the non-employee members of the Corporation’s Board of
Directors and (iii) independent consultants and other advisors who provide
valuable services to the Corporation (or its parent or subsidiary corporations)
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation (or its parent or subsidiary
corporations).

A.            The Plan became effective on
September 29, 1993, the date on which the shares of the Corporation’s Common
Stock were registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the “1934 Act”).  Such
date is hereby designated as the Effective Date for the Plan.

B.            This Plan shall serve as the
successor to the Corporation’s existing 1993 Stock Option and 1993 Stock
Issuance Plans (the “Predecessor Plans”), and no further option grants or share
issuances shall be made under the Predecessor Plans from and after the
Effective Date of this Plan.  All
outstanding stock options and unvested share issuances under the Predecessor
Plans on the Effective Date are hereby incorporated into this Plan and shall
accordingly be treated as outstanding stock options and unvested share
issuances under this Plan.  However,
each outstanding option grant and unvested share issuance so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant or issuance, and no provision of this Plan
shall be deemed to affect or otherwise modify the rights or obligations of the
holders of such incorporated options with respect to their acquisition of
shares of Common Stock thereunder.  All
unvested shares of Common Stock outstanding under the Predecessor Plans on the
Effective Date shall continue to be governed solely by the express terms and
conditions of the instruments evidencing such issuances, and no provision of
this Plan shall be deemed to affect or modify the rights or obligations of the
holders of such unvested shares.

 

II.            DEFINITIONS

A.            For purposes of the Plan, the
following definitions shall be in effect:

Board:  the Corporation’s Board of
Directors.

Code:  the Internal Revenue Code of
1986, as amended.

Committee:  the
committee of two (2) or more non-employee Board members appointed by the Board
to administer the Plan.

Common Stock:  shares of
the Corporation’s common stock.

Change in Control:  a change in
ownership or control of the Corporation effected through either of the
following transactions:

a.             any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation’s stockholders; or

b.             there is a change in the
composition of the Board over a period of thirty-six (36) consecutive months or
less such that a majority of the Board members ceases, by reason of one or more
proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.

Corporate Transaction:  any of the
following stockholder-approved transactions to which the Corporation is a
party:

a.             a merger or consolidation in which
the Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the Corporation is
incorporated,

b.             the sale, transfer or other disposition
of all or substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or

c.             any reverse merger in which the
Corporation is the surviving entity but in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities are transferred to person or persons
different from the persons holding those securities immediately prior to such
merger.

 

2.

 

Employee:  an
individual who performs services while in the employ of the Corporation or one
or more parent or subsidiary corporations, subject to the control and direction
of the employer entity not only as to the work to be performed but also as to
the manner and method of performance.

Fair Market Value:  the Fair
Market Value per share of Common Stock determined in accordance with the
following provisions:

a.             If the Common Stock is not at the
time listed or admitted to trading on any national stock exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the closing
selling price per share on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system.  If there is no
reported closing selling price for the Common Stock on the date in question,
then the closing selling price on the last preceding date for which such
quotation exists shall be determinative of Fair Market Value.

b.             If the Common Stock is at the time
listed or admitted to trading on any national stock exchange, then the Fair
Market Value shall be the closing selling price per share on the date in
question on the exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange.  If there is no reported sale of Common Stock on such exchange on
the date in question, then the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for which such quotation
exists.

Hostile Take-Over:  the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities  pursuant to a tender or exchange offer made
directly to the Corporation’s stockholders which the Board does not recommend
such stockholders to accept.

Optionee:  any person
to whom an option is granted under the Discretionary Option Grant or Automatic
Option Grant Program in effect under the Plan.

Participant:  any person
who receives a direct issuance of Common Stock under the Stock Issuance Program
in effect under the Plan.

Plan Administrator:  the Committee
in its capacity as the administrator of the Plan.

Permanent Disability or Permanently Disabled:  the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.

 

3.

 

Service:  the performance of services
on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor, except to the extent
otherwise specifically provided in the applicable stock option or stock
issuance agreement.

Take-Over Price:  the greater
of (a) the Fair Market Value per share of Common Stock on the date the option
is surrendered to the Corporation in connection with a Hostile Take-Over or (b)
the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over. 
However, if the surrendered option is an Incentive Option, the Take-Over
Price shall not exceed the clause (a) price per share.

B.            The following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:

Any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation shall be considered to be a parent of the Corporation, provided each
such corporation in the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

Each corporation (other
than the Corporation) in an unbroken chain of corporations which begins with
the Corporation shall be considered to be a subsidiary of the
Corporation, provided each such corporation (other than the last corporation)
in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

III.           STRUCTURE
OF THE PLAN

A.            Stock Programs.  The Plan shall be divided into three
separate components: the Discretionary Option Grant Program specified in
Article Two, the Automatic Option Grant Program specified in Article Three and
the Stock Issuance Program specified in Article Four.  Under the Discretionary Option Grant Program, eligible individuals
may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock in accordance with the provisions of Article
Two.  Under the Automatic Option Grant
Program, non-employee Board members will receive a series of automatic option
grants over their period of continued Board service to purchase shares of
Common Stock in accordance with the provisions of Article Three.  Under the Stock Issuance Program, eligible
individuals may be issued shares of Common Stock directly, either through the
immediate purchase of such shares at Fair Market Value at the time of issuance
or as a bonus tied to the performance of services or the Corporation’s
attainment of financial objectives, without any cash payment required of the recipient.

B.            General Provisions.  Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.

 

4.

 

IV.           ADMINISTRATION
OF THE PLAN

A.            Both the Discretionary Option Grant
Program and the Stock Issuance Program shall be administered by a committee
(“Committee”) of two or more non-employee Board members.  Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time.

B.            The Committee as Plan Administrator
shall have full power and authority (subject to the express provisions of the
Plan) to establish rules and regulations for the proper administration of the
Discretionary Option Grant and Stock Issuance Programs and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding option grants or stock issuances thereunder as it
may deem necessary or advisable. 
Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Discretionary Option Grant or Stock
Issuance Program or any outstanding option or share issuance thereunder.

C.            Administration of the Automatic
Option Grant Program shall be self-executing in accordance with the express
terms and conditions of Article Three, and the Committee as Plan Administrator
shall exercise no discretionary functions with respect to option grants made
pursuant to that program.

V.            OPTION
GRANTS AND STOCK ISSUANCES

A.            The persons eligible to participate
in the Discretionary Option Grant Program under Article Two or the Stock
Issuance Program under Article Four shall be limited to the following:

1.             officers and other key employees of the Corporation (or
its parent or subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its parent or
subsidiary corporations);

2.             non-employee members of the Board; and

3.             those independent consultants or other advisors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations).

B.            The Plan Administrator shall have full authority to
determine, (I) with respect to the option grants made under the Discretionary
Option Grant Program, which eligible individuals are to receive option grants,
the time or time when such grants are to be made, the number of shares to be
covered by each such grant, the status of the granted option as either an
incentive stock option (“Incentive Option”) which satisfies the requirements of
Section 422 of the Code or a non-statutory option not intended to meet such
requirements, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding
and (II), with respect to stock issuances under the Stock Issuance Program, the
number of shares to be issued to each Participant, the vesting schedule (if
any) to be applicable to the issued shares, and the consideration to be paid by
the individual for such shares.

 

5.

 

VI.           STOCK
SUBJECT TO THE PLAN

A.            Shares of Common Stock shall be
available for issuance under the Plan and shall be drawn from either the
Corporation’s authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the
open market.  Subject to the automatic
share increase provisions of Section VI. B. of this Article One, the maximum
number of shares of Common Stock reserved for issuance over the term of the
Plan shall be limited to 6,126,229 shares(1).  
Such share reserve includes (i) the initial number of shares  incorporated into this Plan from the
Predecessor Plans on the Effective Date, (ii) an additional 600,000-share
increase authorized by the Board on March 21, 1996 and approved by the
stockholders at the 1996 Annual Stockholders Meeting, (iii) an additional
277,239 shares attributable to the automatic annual share increase for fiscal
1996 which was effected on January 2, 1996, (iv) an additional 284,346 shares
attributable to the automatic annual share increase for fiscal 1997 which was
effected on January 2, 1997, (v) an additional 450,000 shares authorized by the
Board on March 18, 1997 and approved by the stockholders at the 1997 Annual
Meeting, (vi) an additional 291,008 shares attributable to the automatic annual
share increase for fiscal 1998 which was effected on January 2, 1998,
(vii)  an additional 295,480 shares
attributable to the automatic annual share increase for fiscal 1999 which was
effected on January 4, 1999, and (viii) an additional 299,490 shares
attributable to the automatic annual share increase for fiscal 2000 which was
effected on January 3, 2000.  The share
reserve in effect from time to time under the Plan shall be subject to periodic
adjustment in accordance with the provisions of this Section VI.  To the extent one or more outstanding
options under the Predecessor Plans which have been incorporated into this Plan
are subsequently exercised, the number of shares issued with respect to each
such option shall reduce, on a share-for-share basis, the number of shares
available for issuance under this Plan.

(1)           All figures have
been adjusted to reflect the 2:1 stock split the Corporation effected
May 10, 1995.

 

B.            The number of shares of Common Stock
available for issuance under the Plan shall automatically increase on the first
trading day of January of each calendar year, beginning with calendar year 2002
and continuing through calendar year 2006, by an amount equal to four percent
(4%) of the total number of shares of Common Stock outstanding on the last
trading day of the calendar year immediately preceding the calendar year of
each such share increase, but in no event shall any such annual increase exceed
1,700,000 shares.

C.            In no event may the aggregate number
of shares of Common Stock for which any one individual participating in the
Plan may be granted stock options, separately-exercisable stock appreciation
rights and direct stock issuances exceed 400,000 shares per fiscal year,
beginning with the 1995 fiscal year. 
However, for the fiscal year in which an individual receives his or her
initial stock option grant or direct stock issuance under the Plan, the limit
shall be increased to 600,000 shares. 
Such limitations shall be subject to adjustment from time to time in
accordance with the provisions of this Section VI.

 

6.

 

D.            Should one or more outstanding
options under this Plan (including outstanding options under the Predecessor
Plans incorporated into this Plan) expire or terminate for any reason prior to
exercise in full (including any option cancelled in accordance with the
cancellation-regrant provisions of Section IV of Article Two of the Plan), then
the shares subject to the portion of each option not so exercised shall be
available for subsequent issuance under the Plan.  Unvested shares issued under the Plan and subsequently
repurchased by the Corporation, at the original exercise or issue price paid
per share, pursuant to the Corporation’s repurchase rights under the Plan shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants or direct stock issuances under the Plan.    Shares subject to any option or portion
thereof surrendered or cancelled in accordance with Section V of Article Two
shall reduce on a share-for-share basis the number of shares of Common Stock
available for subsequent issuance under the Plan.  In addition, should the exercise price of an outstanding option
under the Plan (including any option incorporated from the Predecessor Plans)
be paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an outstanding
option under the Plan or the vesting of a direct share issuance made under the
Plan, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the share issuance, and not by the net number of
shares of Common Stock actually issued to the holder of such option or share
issuance.

E.             Should any change be made to the
Common Stock issuable under the Plan by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, then appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the maximum number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock appreciations
rights and direct stock issuances under this Plan per calendar year, (iii) the
number and/or class of securities for which automatic option grants are to be
subsequently made per eligible non-employee Board member under the Automatic
Option Grant Program, (iv) the number and/or class of securities and price per
share in effect under each option outstanding under either the Discretionary
Option Grant or Automatic Option Grant Program and (v) the number and/or class
of securities and price per share in effect under each outstanding option
incorporated into this Plan from the Predecessor Plans.  Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or dilution
of rights and benefits under such options. 
The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

 

7.

 

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I.              TERMS
AND CONDITIONS OF OPTIONS

Options granted pursuant
to the Discretionary Option Grant Program shall be authorized by action of the
Plan Administrator and may, at the Plan Administrator’s discretion, be either
Incentive Options or non-statutory options. 
Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted non-statutory options.  Each granted option shall be evidenced by
one or more instruments in the form approved by the Plan Administrator;
provided, however, that each such instrument shall comply with the terms and
conditions specified below.  Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.

A.            Option Price.

1.             The option price per share shall be fixed by the Plan
Administrator and shall in no event be less than one hundred percent (100%) of
the fair market value of such Common Stock on the grant date.

2.             The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Four and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:

-               full payment in cash or check
drawn to the Corporation’s order; or

-               full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date (as such term is defined below); or

-               full payment in a combination of
shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date and cash or check drawn to the
Corporation’s order; or

-               full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee (I)
shall provide irrevocable written instructions to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit
to the Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the purchased
shares plus all applicable 

 

8.

 

Federal and State
income and employment taxes required to be withheld by the Corporation in
connection with such purchase and (II) shall provide written directives to the
Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.

For purposes of this
subparagraph (2), the Exercise Date shall be the date on which written notice
of the option exercise is delivered to the Corporation.  Except to the extent the sale and remittance
procedure is utilized in connection with the exercise of the option, payment of
the option price for the purchased shares must accompany such notice.

B.            Term and Exercise of Options.  Each option granted under this Discretionary
Option Grant Program shall be exercisable at such time or times and during such
period as is determined by the Plan Administrator and set forth in the
instrument evidencing the grant.  No
such option, however, shall have a maximum term in excess of ten (10) years
from the grant date.

C.            Limited Transferability.  During the lifetime of the Optionee,
Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee’s death. 
However, non-statutory options may, in connection with the Optionee’s
estate plan, be assigned in whole or in part during the Optionee’s lifetime to
one or more members of the Optionee’s immediate family or to a trust
established exclusively for one or more such family members.  The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment.  The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.

D.            Termination of Service.

1.             The following provisions shall govern the exercise
period applicable to any outstanding options held by the Optionee at the time
of cessation of Service or death.

-               Should an Optionee cease Service
for any reason (including death or Permanent Disability) while holding one or
more outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to subparagraph D.(3)
below) remain exercisable for more than a thirty-six (36)-month period (or such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) measured from the date of such cessation of
Service.

-               Any option held by the Optionee
under this Article Two and exercisable in whole or in part on the date of his or
her death may be subsequently exercised by the personal representative of the
Optionee’s estate or by the person or persons to whom the option is transferred
pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution.  Such 

9.

 

exercise, however,
must occur prior to the earlier of (i) the first anniversary of the date of the
Optionee’s death or (ii) the specified expiration date of the option term.  Upon the occurrence of the earlier event,
the option shall terminate.

-               Under no circumstances shall any
such option be exercisable after the specified expiration date of the option
term.

-               During the applicable
post-Service exercise period, the option may not be exercised in the aggregate
for more than the number of shares (if any) in which the Optionee is vested at
the time of his or her cessation of Service. 
Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such
option shall terminate and cease to be outstanding with respect to any vested
shares for which the option has not otherwise been exercised.  However, each outstanding option shall,
immediately upon the Optionee’s cessation of Service for any reason, terminate
and cease to be outstanding with respect to any shares for which the option is
not otherwise at that time exercisable or in which the Optionee is not
otherwise at that time vested.

-               Should (i) the Optionee’s Service
be terminated for misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or (ii) the Optionee
make any unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations, then in
any such event all outstanding options held by the Optionee under this Article
Two shall terminate immediately and cease to be outstanding.

2.             The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service
exercise period applicable under subparagraph (1) above, not only with respect
to the number of vested shares of Common Stock for which each such option is
exercisable at the time of the Optionee’s cessation of Service but also with
respect to one or more subsequent installments of the option shares in which
the Optionee would have otherwise vested had such cessation of Service not
occurred.

3.             The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the Optionee’s cessation of Service or death from the
limited period in effect under subparagraph (1) above to such greater period of
time as the Plan Administrator shall deem appropriate.  In no event, however, shall such option be
exercisable after the specified expiration date of the option term.

 

10.

 

E.             Stockholder Rights.

An Optionee shall have no
stockholder rights with respect to any shares covered by the option until such
individual shall have exercised the option and paid the option price for the
purchased shares.

F.             Repurchase
Rights.

The shares of Common
Stock acquired upon the exercise of any Article Two option grant may be subject
to repurchase by the Corporation in accordance with the following provisions:

(a)           The Plan Administrator shall have the
discretion to authorize the issuance of unvested shares of Common Stock under
this Article Two.  Should the Optionee
cease Service while holding such unvested shares, the Corporation shall have
the right to repurchase any or all of those unvested shares at the option price
paid per share.  The terms and
conditions upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Plan Administrator and set forth
in the instrument evidencing such repurchase right.

(b)           All of the Corporation’s outstanding
repurchase rights under this Article Two shall automatically terminate, and all
shares subject to such terminated rights shall immediately vest in full, upon
the occurrence of a Corporate Transaction, except to the extent:  (i) any such repurchase right is expressly
assigned to the successor corporation (or parent thereof) in connection with
the Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

(c)           The Plan Administrator shall have the
discretionary authority, exercisable either before or after the Optionee’s
cessation of Service, to cancel the Corporation’s outstanding repurchase rights
with respect to one or more shares purchased or purchasable by the Optionee
under this Option Grant Program and thereby accelerate the vesting of such
shares in whole or in part at any time.

II.            INCENTIVE
OPTIONS

The terms and conditions
specified below shall be applicable to all Incentive Options granted under this
Article Two.  Incentive Options may only
be granted to individuals who are Employees of the Corporation.  Options which are specifically designated as
“non-statutory” options when issued under the Plan shall not be subject to such
terms and conditions.

A.            Dollar Limitation.  The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee after December 31, 1986 under this Plan
(or any other option plan of the Corporation or its parent or subsidiary
corporations) may for the first time become exercisable as incentive stock
options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000).  To the extent the Employee holds two

 

11.

 

(2) or
more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options
as incentive stock options under the Federal tax laws shall be applied on the
basis of the order in which such options are granted.  Should the number of shares of Common Stock for which any
Incentive Option first becomes exercisable in any calendar year exceed the
applicable One Hundred Thousand Dollar ($100,000) limitation, then that option
may nevertheless be exercised in that calendar year for the excess number of
shares as a non-statutory option under the Federal tax laws.

B.            10% Stockholder.  If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Code) possessing ten percent (10%) or more of the total combined voting
power of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (5) years,
measured from the grant date.

Except as modified by the
preceding provisions of this Section II, the provisions of Articles One, Two
and Five of the Plan shall apply to all Incentive Options granted hereunder.

III.           CORPORATE
TRANSACTIONS/CHANGES IN CONTROL

A.            In the event of any Corporate
Transaction, each option which is at the time outstanding under this Article
Two shall automatically accelerate so that each such option shall, immediately
prior to the specified effective date for the Corporate Transaction, become
fully exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for all or any portion of
such shares as fully-vested shares. 
However, an outstanding option under this Article Two shall not
so accelerate if and to the extent:  (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, (ii) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the option spread existing
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant.  The determination of option comparability under clause (i) above
shall be made by the Plan Administrator, and its determination shall be final,
binding and conclusive.

B.            Immediately following the
consummation of the Corporate Transaction, all outstanding options under this
Article Two shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation or its parent company.

C.            Each outstanding option under this
Article Two which is assumed in connection with the Corporate Transaction or is
otherwise to continue in effect shall be appropriately adjusted, immediately
after such Corporate Transaction, to apply and pertain to the number and class
of securities which would have been issued to the option holder, in
consummation of such Corporate Transaction, had such person exercised the
option immediately 

 

12.

 

prior to
such Corporate Transaction.  Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities shall remain the
same.  In addition, appropriate
adjustments to reflect the Corporate Transaction shall be made to (i) the class
and number of securities available for issuance over the remaining term of the
Plan, (ii) the maximum number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances under this Plan per calendar year and (iii)
the maximum number and/or class of securities which may be issued pursuant to
Incentive Options granted under the Plan.

D.            The Plan Administrator shall have
the discretion,  exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for the
automatic acceleration of one or more outstanding options which are assumed or
replaced in the Corporate Transaction and do not otherwise accelerate at that
time, in the event the Optionee’s Service should subsequently terminate within
a designated period following the effective date of such Corporate Transaction.

E.             The grant of options under this
Article Two shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

F.             The Plan Administrator shall have
the discretionary authority, exercisable either at the time the option is
granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options under this Article
Two (and the termination of one or more of the Corporation’s outstanding
repurchase rights under this Article Two) upon the occurrence of any Change in
Control.  The Plan Administrator shall
also have full power and authority to condition any such option acceleration
(and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee’s Service within a specified period following the
Change in Control.

G.            Any options accelerated in
connection with the Change in Control shall remain fully exercisable until the
expiration or sooner termination of the option term.

H.            The exercisability as incentive
stock options under the Federal tax laws of any options accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain subject to the dollar limitation of Section II of this Article
Two.  To the extent such dollar
limitation is exceeded, the accelerated option shall be exercisable as a
non-statutory option under the Federal tax laws.

IV.           CANCELLATION
AND REGRANT OF OPTIONS

The Plan Administrator
shall have the authority to effect, at any time and from time to time, with the
consent of the affected optionees, the cancellation of any or all outstanding
options under this Article Two (including outstanding options under the
Predecessor Plans incorporated into this Plan) and to grant in substitution new
options under the Plan covering the same or different numbers of shares of Common
Stock but with an option price per share not less than the Fair Market Value of
the Common Stock on the new grant date.

 

13.

 

V.            STOCK
APPRECIATION RIGHTS

A.            Provided and only if the Plan
Administrator determines in its discretion to implement the stock appreciation
right provisions of this Section V, one or more Optionees may be granted the
right, exercisable upon such terms and conditions as the Plan Administrator may
establish, to surrender all or part of an unexercised option under this Article
Two in exchange for a distribution from the Corporation in an amount equal to
the excess of (i) the Fair Market Value (on the option surrender date) of the
number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (ii) the aggregate
option price payable for such vested shares.

B.            No surrender of an option shall be
effective hereunder unless it is approved by the Plan Administrator.  If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

C.            If the surrender of an option is
rejected by the Plan Administrator, then the Optionee shall retain whatever
rights the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at any time
prior to the later of (i) five (5) business days after the receipt of the
rejection notice or (ii) the last day on which the option is otherwise
exercisable in accordance with the terms of the instrument evidencing such
option, but in no event may such rights be exercised more than ten (10) years
after the date of the option grant.

D.            One or more officers of the
Corporation subject to the short-swing profit restrictions of the Federal
securities laws may, in the Plan Administrator’s sole discretion, be granted
limited stock appreciation rights in tandem with their outstanding options
under the Plan.  Upon the occurrence of
a Hostile Take-Over effected at any time when the Corporation’s outstanding
Common Stock is registered under Section 12(g) of the 1934 Act, the officer
shall have a thirty (30)-day period in which he or she may surrender any
outstanding option with such a limited stock appreciation right to the Corporation,
to the extent such option is at the time exercisable for fully-vested shares of
Common Stock.  The officer shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the vested shares of Common
Stock at the time subject to each surrendered option (or surrendered portion of
such option) over (ii) the aggregate exercise price payable for such
shares.  The cash distribution payable
upon such option surrender shall be made within five (5) days following the
consummation of the Hostile Take-Over. 
The Plan Administrator shall pre-approve, at the time the limited stock
appreciation right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section V.D.  No additional approval of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender and distribution.  Any
unsurrendered portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument evidencing
such grant.

 

14.

 

E.             The shares of Common Stock subject
to any option surrendered for an appreciation distribution pursuant to this
Section V shall not be available for subsequent issuance under the Plan.

 

15.

 

ARTICLE THREE

AUTOMATIC OPTION GRANT PROGRAM

I.              ELIGIBILITY

The provisions of the
Automatic Option Grant Program were revised, effective March 1, 1996, to
eliminate the special one-time option grant for 28,800 shares of Common Stock
to each newly-elected or newly-appointed non-employee Board member and to
implement a new program of periodic option grants to all eligible non-employee
Board members.  Under the revised
Automatic Option Grant Program, the following individuals shall be eligible to
receive automatic option grants over their period of Board service: (i) those
individuals who were serving as non-employee Board members on the date of the
1996 Annual Stockholders Meeting but who first joined the Board after September
29, 1993, (ii) those individuals who first join the Board as non-employee Board
members after the date of the 1996 Annual Stockholders Meeting and (iii) those
individuals who first joined the Board prior to September 30, 1993 and continue
to serve as non-employee Board members through one or more Annual Stockholders
Meetings, beginning with the 1996 Annual Meeting.  However, a non-employee Board member who has previously been in
the employ of the Corporation (or any Parent or Subsidiary) shall not be
eligible to receive a 12,000-share option grant at the time of his or her
initial election or appointment to the Board, but such individual shall be
eligible to receive one or more 4,000-share annual option grants (8,000-share
annual option grants for grants made on or after the date of the 2003 Annual
Meeting) over his or her period of continued Board service.  Each non-employee Board member eligible to
participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of the Plan.

II.            TERMS
AND CONDITIONS OF AUTOMATIC OPTION GRANTS

A.            Grant Date.

1.             Each individual serving as a non-employee Board member
on the date of the 1996 Annual Stockholders Meeting shall be granted on that
date a non-statutory stock option to purchase 12,000 shares of Common Stock
upon the terms and conditions of this Article Three, provided such individual
(i) has not previously been in the employ of the Corporation (or any Parent or
Subsidiary) and (ii) did not join the Board prior to September 30, 1993.  If any such individual previously received
an automatic option grant for 28,800 shares of Common Stock at the time of his
or her initial election or appointment to the Board, then that option was
automatically cancelled upon stockholder approval of the revised Automatic
Option Grant Program at the 1996 Annual Meeting.

2.             Each individual who is first elected or appointed as a
non-employee Board member after the date of the 1996 Annual Stockholders
Meeting shall automatically be granted, on the date of such initial election or
appointment, a non-statutory stock option to purchase 12,000 shares of Common
Stock upon the terms and conditions of this Article Three, provided such
individual has not previously been in the employ of the Corporation (or any Parent
or Subsidiary).

 

16.

 

3.             On the date of each Annual Stockholders Meeting,
beginning with the 1996 Annual Stockholders Meeting, each individual who is to
continue to serve as a non-employee Board member, whether or not he or she is
standing for re-election to the Board at that particular Annual Meeting, shall
automatically be granted a Non-Statutory Option to purchase 4,000 shares of
Common Stock (8,000-shares of Common Stock for grants made on or after the date
of the 2003 Annual Meeting), provided such individual did not receive any other
option grants under this Automatic Option Grant Program within the preceding
six (6) months.  There shall be no limit
on the number of such 4,000-share option grants (8,000-share option grants for
options granted on or after the date of the 2003 Annual Meeting) any one
Eligible Director may receive over his or her period of Board service, and
individuals who have previously been in the employ of the Corporation (or any
Parent or Subsidiary) shall be eligible to receive such annual option grants
over their period of continued Board service.

B.            Exercise Price. The exercise
price per share of Common Stock subject to each automatic option grant made
under this Article Three shall be equal to one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the automatic grant date.

C.            Payment.

The exercise price shall
be payable in one of the alternative forms specified below:

(i)            full payment in cash or check made
payable to the Corporation’s order; or

(ii)           full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation’s reported earnings and valued at Fair Market Value on the Exercise
Date (as such term is defined below); or

(iii)          full payment in a combination of
shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation’s reported earnings and valued at Fair Market Value
on the Exercise Date and cash or check payable to the Corporation’s order; or

(iv)          to the extent the option is exercised
for vested shares, full payment through a sale and remittance procedure
pursuant to which the non-employee Board member (I) shall provide irrevocable
written instructions to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares and shall (II)
concurrently provide written directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.

For purposes of this
subparagraph C, the Exercise Date shall be the date on which written notice of
the option exercise is delivered to the Corporation.  Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the option price for the purchased shares must accompany the
exercise notice.  However, if the option
is exercised for any unvested shares, then the optionee

 

17.

 

must also execute
and deliver to the Corporation a stock purchase agreement for those unvested
shares which provides the Corporation with the right to repurchase, at the
exercise price paid per share, any unvested shares held by the optionee at the
time of cessation of Board service and which precludes the sale, transfer or
other disposition of any shares purchased under the option, to the extent those
shares are subject to the Corporation’s repurchase right.

D.            Option Term.  Each automatic grant under this Article
Three shall have a maximum term of ten (10) years measured from the automatic
grant date.

E.             Exercisability/Vesting.  Each automatic grant shall be immediately
exercisable for any or all of the option shares.  However, any shares purchased under the option shall be subject
to repurchase by the Corporation, at the exercise price paid per share, upon
the Optionee’s cessation of Board service prior to vesting in those
shares.  The shares subject to each
12,000-share initial automatic option grant shall vest as follows:  (i) fifty percent (50%) of the shares shall
vest upon the optionee’s completion of one (1) year of Board service measured
from the grant date, and (ii) the remaining shares shall vest in three (3)
successive equal annual installments upon the optionee’s completion of each of
the next three (3) years of Board service thereafter.  The shares subject to each 4,000-share annual automatic option
grant (8,000-share annual automatic option grant for grants made on or after
the date of the 2003 Annual Meeting) shall vest upon the optionee’s completion
of one (1) year of Board service measured from the grant date.  Vesting of the option shares shall be
subject to acceleration as provided in Section II.G and Section III of this
Article Three.

F.             Limited Transferability.  Each option granted under this Automatic
Option Grant Program prior to the 1997 Annual Stockholders Meeting shall,
during the lifetime of the optionee, be exercisable only by the optionee and
shall not be assignable or transferable by the optionee otherwise than by will
or the by the laws of descent and distribution following the optionee’s
death.  However, each option granted
under this  Automatic Option Grant
Program on or after the 1997 Annual Stockholders Meeting shall be assignable in
whole or in part by the optionee during his or her lifetime, but only to the
extent such assignment is made in connection with the optionee’s estate plan to
one or more members of the optionee’s immediate family or to a trust
established exclusively for one or more such family members.  The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment.  The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.

G.            Effect of Termination of Board
Service.

1.             Should the Optionee cease to serve as a Board member for
any reason (other than death or Permanent Disability) while holding an
automatic option grant under this Article Three, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise such option for any or all of the option shares in
which the Optionee is vested at the time of such cessation of Board
service.  The option shall immediately
terminate and cease to be outstanding, at the time of such cessation of Board
service, with respect to any option shares in which the Optionee is not
otherwise at that time vested.

 

18.

 

2.             Should the Optionee die within six (6) months after
cessation of Board service, then any automatic option grant held by the Optionee
at the time of death may subsequently be exercised, for any or all of the
option shares in which the Optionee is vested at the time of his or her
cessation of Board service (less any vested option shares subsequently
purchased by the Optionee prior to death), by the personal representative of
the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or in accordance with the laws of
descent and distribution.  Any such
exercise must occur within twelve (12) months after the date of the Optionee’s
death.

3.             Should the Optionee die or become Permanent Disabled
while serving as a Board member, then the shares of Common Stock at the time
subject to each automatic option grant held by such Optionee under this Article
Three shall immediately vest in full, and the Optionee (or the representative
of the Optionee’s estate or the person or persons to whom the option is
transferred upon the Optionee’s death) shall have a twelve (12)-month period
following the date of the Optionee’s cessation of Board service in which to
exercise such option for any or all of those vested shares of Common Stock.

4.             In no event shall any automatic grant under this Article
Three remain exercisable after the expiration date of the ten (10)-year option
term.  Upon the expiration of the
applicable post-service exercise period under subparagraph 1, 2 or 3 above or
(if earlier) upon the expiration of the ten (10)-year option term, the
automatic grant shall terminate and cease to be outstanding for any option
shares in which the Optionee was vested at the time of his or her cessation of
Board service but which were not otherwise purchased thereunder.

H.            Stockholder Rights.  The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.

I.              Remaining Terms.  The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Non-statutory Stock
Option Agreement attached as Exhibit A.

III.                                 CORPORATE
TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

A.            In the event of any Corporate
Transaction, the shares of Common Stock at the time subject to each outstanding
option under this Article Three but not otherwise vested shall automatically
vest in full so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to that option and may be
exercised for all or any portion of such shares as fully-vested shares of
Common Stock.  Immediately following the
consummation of the Corporate Transaction, all automatic option grants under
this Article Three shall terminate and cease to be outstanding, unless assumed
by the successor corporation or its parent company.

 

19.

 

B.            In connection with any Change in
Control of the Corporation, the shares of Common Stock at the time subject to
each outstanding option under this Article Three but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the specified effective date for the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. 
Each such option shall remain fully exercisable for the option shares
which vest in connection with the Change in Control until the expiration or
sooner termination of the option term.

C.            Upon the occurrence of a Hostile
Take-Over, the Optionee shall have a thirty (30)-day period in which to
surrender each option held by him or her under this Article Three to the
Corporation.  The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate exercise
price payable for such shares.  Such
cash distribution shall be paid within five (5) days following the consummation
of the Hostile Take-Over.  Stockholder
approval of this March 1997 restatement of the Plan shall constitute
pre-approval of each option subsequently granted with a surrender provision and
the subsequent surrender of that option in accordance with the terms and
provisions of this Section III.C.  No
additional approval of the Plan Administrator or the Board shall be required at
the time of the actual option cancellation and cash distribution.

D.            The shares of Common Stock subject
to each option surrendered in connection with the Hostile Take-Over shall not
be available for subsequent issuance under this Plan.

E.             The automatic option grants
outstanding under this Article Three shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

 

20.

 

ARTICLE FOUR

STOCK ISSUANCE PROGRAM

I.              TERMS
AND CONDITIONS OF STOCK ISSUANCES

Shares may be issued
under the Stock Issuance Program through direct and immediate purchases without
any intervening stock option grants. 
The issued shares shall be evidenced by a Stock Issuance Agreement
(“Issuance Agreement”) that complies with the terms and conditions of this
Article Four.

A.            Consideration.

1.             Shares of Common Stock drawn from the Corporation’s
authorized but unissued shares of Common Stock (“Newly Issued Shares”) shall be
issued under the Stock Issuance Program for one or more of the following items
of consideration which the Plan Administrator may deem appropriate in each
individual instance:

(i)            cash or cash equivalents (such as a
personal check or bank draft) paid the Corporation;

(ii)           a promissory note payable to the
Corporation’s order in one or more installments, which may be subject to
cancellation in whole or in part upon terms and conditions established by the
Plan Administrator; or

(iii)          past services rendered to the
Corporation or any parent or subsidiary corporation.

2.             The consideration for any Newly Issued Shares issued
under this Stock Issuance Program shall have a value determined by the Plan
Administrator to be not less than one-hundred percent (100%) of the Fair Market
Value of those shares at the time of issuance.

3.             Shares of Common Stock reacquired by the Corporation and
held as treasury shares (“Treasury Shares”) may be issued under the Stock
Issuance Program for such consideration (including one or more of the items of
consideration specified in subparagraph 1. above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal
to, or greater than the Fair Market Value of the Treasury Shares at the time of
issuance.  Treasury Shares may, in lieu
of any cash consideration, be issued subject to such vesting requirements tied
to the Participant’s period of future Service or the Corporation’s attainment
of specified performance objectives as the Plan Administrator may establish at
the time of issuance.

 

21.

 

B.            Vesting Provisions.

1.             Shares of Common Stock issued under the Stock Issuance
Program may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant’s period of Service. 
The elements of the vesting schedule applicable to any unvested shares of
Common Stock issued under the Stock Issuance Program, namely:

(i)            the Service period to be completed
by the Participant or the performance objectives to be achieved by the
Corporation,

(ii)           the number of installments in which
the shares are to vest,

(iii)          the interval or intervals (if any)
which are to lapse between installments, and

(iv)          the effect which death, Permanent
Disability or other event designated by the Plan Administrator is to have upon
the vesting schedule,

shall be
determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.

2.             The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested.  Accordingly, the Participant shall have the
right to vote such shares and to receive any regular cash dividends paid on
such shares.  Any new, additional or
different shares of stock or other property (including money paid other than as
a regular cash dividend) which the Participant may have the right to receive
with respect to his or her unvested shares by reason of any stock dividend,
stock split, reclassification of Common Stock or other similar change in the
Corporation’s capital structure or by reason of any Corporate Transaction shall
be issued, subject to (i) the same vesting requirements applicable to his or
her unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.

3.             Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Plan, then those
shares shall be immediately surrendered to the Corporation for cancellation,
and the Participant shall have no further stockholder rights with respect to
those shares.  To the extent the
surrendered shares were previously issued to the Participant for consideration
paid in cash or cash equivalent (including the Participant’s purchase-money
promissory note), the Corporation shall repay to the Participant the cash
consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares. 
The surrendered shares may, at the Plan Administrator’s discretion, be
retained by the Corporation as Treasury Shares or may be retired to authorized
but unissued share status.

 

22.

 

4.             The Plan Administrator may in its discretion elect to
waive the surrender and cancellation of one or more unvested shares of Common
Stock (or other assets attributable thereto) which would otherwise occur upon
the non-completion of the vesting schedule applicable to such shares.  Such waiver shall result in the immediate
vesting of the Participant’s interest in the shares of Common Stock as to which
the waiver applies.  Such waiver may be
effected at any time, whether before or after the Participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

II.            CORPORATE
TRANSACTIONS/CHANGE IN CONTROL

A.            Upon the occurrence of any Corporate
Transaction, all unvested shares of Common Stock at the time outstanding under
the Stock Issuance Program shall immediately vest in full, except to the extent
the Plan Administrator imposes limitations in the Issuance Agreement which
preclude such accelerated vesting in whole or in part.

B.            The Plan Administrator shall have
the discretionary authority, exercisable either in advance of any
actually-anticipated Change in Control or at the time of an actual Change in
Control, to provide for the immediate and automatic vesting of one or more
unvested shares outstanding under the Stock Issuance Program at the time of such
Change in Control.  The Plan
Administrator shall also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the Participant’s
Service within a specified period following the Change in Control.

III.           TRANSFER
RESTRICTIONS/SHARE ESCROW

A.            Unvested shares may, in the Plan
Administrator’s discretion, be held in escrow by the Corporation until the
Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing such
unvested shares.  To the extent an
escrow arrangement is utilized, the unvested shares and any securities or other
assets issued with respect to such shares (other than regular cash dividends)
shall be delivered in escrow to the Corporation to be held until the
Participant’s interest in such shares (or other securities or assets)
vests.  Alternatively, if the unvested
shares are issued directly to the Participant, the restrictive legend on the
certificates for such shares shall read substantially as follows:

“THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I)
CERTAIN TRANSFER RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT
THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN
THE CORPORATION’S SERVICE.  SUCH
TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION
AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED
_____________, 199__, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.”

 

23.

 

B.            The Participant shall have no right
to transfer any unvested shares of Common Stock issued to him or her under the
Stock Issuance Program.  For purposes of
this restriction, the term “transfer” shall include (without limitation) any
sale, pledge, assignment, encumbrance, gift, or other disposition of such
shares, whether voluntary or involuntary. 
Upon any such attempted transfer, the unvested shares shall immediately
be cancelled, and neither the Participant nor the proposed transferee shall
have any rights with respect to those shares. 
However, the Participant shall have the right to make a gift of unvested
shares acquired under the Stock Issuance Program to his or her spouse or issue,
including adopted children, or to a trust established for such spouse or issue,
provided the donee of such shares delivers to the Corporation a written
agreement to be bound by all the provisions of the Stock Issuance Program and
the Issuance Agreement applicable to the gifted shares.

 

24.

 

ARTICLE FIVE

MISCELLANEOUS

I.              LOANS
OR INSTALLMENT PAYMENTS

A.            The Plan Administrator may, in its
discretion, assist any Optionee or Participant (including an Optionee or
Participant who is an officer of the Corporation) in the exercise of one or
more options granted to such Optionee under the Discretionary Option Grant
Program or the purchase of one or more shares issued to such Participant under
the Stock Issuance Program, including the satisfaction of any Federal and State
income and employment tax obligations arising therefrom, by (i) authorizing the
extension of a loan from the Corporation to such Optionee or Participant or
(ii) permitting the Optionee or Participant to pay the option price or purchase
price for the purchased Common Stock in installments over a period of years.  The terms of any loan or installment method
of payment (including the interest rate and terms of repayment) shall be upon
such terms as the Plan Administrator specifies in the applicable option or
issuance agreement or otherwise deems appropriate under the circumstances.  Loans or installment payments may be
authorized with or without security or collateral.  However, the maximum credit available to the Optionee or
Participant may not exceed the option or purchase price of the acquired shares
(less the par value of such shares) plus any Federal and State income and
employment tax liability incurred by the Optionee or Participant in connection
with the acquisition of such shares.

B.            The Plan Administrator may, in its
absolute discretion, determine that one or more loans extended under this
financial assistance program shall be subject to forgiveness by the Corporation
in whole or in part upon such terms and conditions as the Plan Administrator
may deem appropriate.

II.            AMENDMENT
OF THE PLAN AND AWARDS

A.            The Board has complete and exclusive
power and authority to amend or modify the Plan (or any component thereof) in
any or all respects whatsoever. 
However, no such amendment or modification shall adversely affect rights
and obligations with respect to options at the time outstanding under the Plan,
nor adversely affect the rights of any Participant with respect to Common Stock
issued under the Stock Issuance Program prior to such action, unless the
Optionee or Participant consents to such amendment.  In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

B.            (i) Options to purchase shares of
Common Stock may be granted under the Discretionary Option Grant Program and
(ii) shares of Common Stock may be issued under the Stock Issuance Program,
which are in both instances in excess of the number of shares then available
for issuance under the Plan, provided any excess shares actually issued under
the Discretionary Option Grant Program or the Stock Issuance Program are held
in escrow until stockholder approval is obtained for a sufficient increase in
the number of shares available for issuance under the Plan.  If such stockholder approval is not obtained
within twelve (12) months 

 

25.

 

after the
date the first such excess option grants or excess share issuances are made,
then (I) any unexercised excess options shall terminate and cease to be
exercisable and (II) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.

III.           TAX
WITHHOLDING

The Corporation’s
obligation to deliver shares of Common Stock upon the exercise of stock options
for such shares or the vesting of such shares under the Plan shall be subject
to the satisfaction of all applicable Federal, State and local income tax and
employment tax withholding requirements.

The Plan Administrator
may, in its discretion and in accordance with the provisions of this Section
III of Article Five and such supplemental rules as the Plan Administrator may
from time to time adopt (including the applicable safe-harbor provisions of SEC
Rule 16b-3), provide any or all holders of non-statutory options (other than
the automatic grants made pursuant to Article Three of the Plan) or unvested
shares under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Federal, State and local income and
employment withholding taxes to which such holders may become subject in
connection with the exercise of their options or the vesting of their shares
(the “Withholding Taxes”).  Such right
may be provided to any such holder in either or both of the following formats:

(a)           Stock Withholding:  The holder of the non-statutory option or
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such non-statutory option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
applicable Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.

(b)           Stock Delivery:  The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option or the unvested
shares with the election to deliver to the Corporation, at the time the
non-statutory option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than in connection
with the option exercise or share vesting triggering the Withholding Taxes)
with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes incurred in connection with such option exercise or share vesting (not to
exceed one hundred percent (100%)) designated by the holder.

IV.           EFFECTIVE
DATE AND TERM OF PLAN

A.            The Plan was adopted by the Board on
July 23, 1993, and was approved by the stockholders on the same date.  The Plan became effective on September 29,
1993, the date on which the shares of the Corporation’s Common Stock were first
registered under the 1934 Act.  No
further option grants or stock issuances shall be made under the Predecessor
Plans from and after the Effective Date.

 

26.

 

B.            Each stock option grant outstanding
under the Predecessor Plans immediately prior to the Effective Date of the
Discretionary Option Grant Program shall be incorporated into this Plan and
treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such options with respect to
their acquisition of shares of Common Stock thereunder.  Each unvested share of Common Stock
outstanding under the Predecessor Plans on the Effective Date of the Stock Issuance
Program shall continue to be governed solely by the terms and conditions of the
instrument evidencing such share issuance, and nothing in this Plan shall be
deemed to affect or otherwise modify the rights or obligations of the holder of
such unvested shares.

C.            The option/vesting acceleration
provisions of Section III of Article Two and Section II of Article Four
relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator’s discretion, be extended to one or more stock options or
unvested share issuances which are outstanding under the Predecessor Plans on
the Effective Date of the Discretionary Option Grant and Stock Issuance
Programs but which do not otherwise provide for such acceleration.

D.            On March 16, 1995, the Board adopted
an amendment to the Plan which (i) increased the number of shares of Common
Stock available for issuance under the Plan by an additional 600,000 shares (as
adjusted for the May 1995 stock split), (ii) provided for an automatic annual
increase to the existing share reserve on the first trading day in each of the
next five (5) fiscal years, beginning with the 1996 fiscal year and continuing
through fiscal year 2000, equal to 1.4% of the total number of shares of Common
Stock outstanding on the last trading day of the fiscal year immediately
preceding the fiscal year of each such share increase and (iii) imposed certain
limitations required under applicable Federal tax laws with respect to
Incentive Option grants.  The amendment
was approved by the stockholders at the 1995 Annual Meeting on May 17, 1995.

E.             On March 21, 1996, the Board
adopted an amendment to the Plan which (i) increased the number of shares of
Common Stock available for issuance under the Plan by an additional 600,000
shares, (ii) increased the limit on the maximum number of shares of Common
Stock issuable under the 1993 Plan prior to the required cessation of further
Incentive Option grants to 3,780,000 shares plus an additional increase of
277,000 shares per fiscal year over each of the next four (4) fiscal years,
beginning with the 1997 fiscal year, (iii) revised the Automatic Option Grant
Program to eliminate the special one-time option grant for 28,800 shares of
Common Stock to each newly-elected or newly-appointed non-employee Board member
and implement a new option grant program pursuant to which all eligible
non-employee Board members will receive a series of automatic option grants
over their period of continued Board service. 
The amendment was approved by the stockholders at the 1996 Annual
Meeting.

F.             On March 18, 1997, the Board
adopted a series of amendments to the Plan which (i) increased the number of
shares of Common Stock reserved for issuance over the term of the Plan by an
additional 450,000 shares, (ii) rendered all non-employee Board members
eligible to receive option grants and direct stock issuances under the
Discretionary Option Grant and Stock Issuance Programs, (iii) allowed unvested
shares issued under the Plan and

 

27.

 

subsequently
repurchased by the Corporation at the option exercise price or direct issue
price paid per share to be reissued under the Plan, (iv) eliminated the plan
limitation which precluded the grant of additional Incentive Options once the
number of shares of Common Stock issued under the Plan, whether as vested or
unvested shares, exceeded a certain level, (v) removed certain restrictions on
the eligibility of non-employee Board members to serve as Plan Administrator,
and (vi) effected a series of additional changes to the provisions of the Plan
(including the stockholder approval requirements) in order to take advantage of
the recent amendments to Rule 16b-3 of the 1934 Act which exempts certain
officer and director transactions under the Plan from the short-swing liability
provisions of the federal securities laws. 
The March 18, 1997 amendments were approved by the stockholders at the
1997 Annual Meeting.

G.            On March 14, 2001, the Board adopted
an amendment to the Plan which (i) established an automatic share increase
feature pursuant to which the share reserve under the Plan will automatically
increase on the first trading day in January of each of the next five (5)
calendar years, beginning with the 2002 calendar year and continuing through the
2006 calendar year, by an amount equal to 4% of the total number of shares of
Common Stock outstanding on the last trading day of the calendar year
immediately preceding the calendar year of each such share increase and (ii)
extended the termination date of the Plan from June 30, 2003 to February 28,
2011.  The March 14, 2001 amendment was
approved by the stockholders at the 2001 Annual Meeting.

H.            On July 16, 2002, the Board adopted
an amendment to the Plan which revised the Automatic Option Grant Program to
increase the size of the annual option grant to be received by all eligible
non-employee Board members over their period of continued Board service from
4,000 to 8,000 shares of Common Stock. 
This amendment is subject to stockholder approval at the 2003 Annual
Meeting.

I.              The Plan shall terminate upon the earlier
of (i) February 28, 2011 or (ii) the date on which all shares available for
issuance under the Plan shall have been issued as vested shares or cancelled
pursuant to the exercise of stock appreciation or other cash-out rights granted
under the Plan.  If the date of the plan
termination is determined under clause (i) above, then all option grants and
unvested share issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.

V.            USE
OF PROCEEDS

Any cash proceeds
received by the Corporation from the sale of shares pursuant to option grants
or share issuances under the Plan shall be used for general corporate purposes.

VI.           REGULATORY
APPROVALS

A.            The implementation of the Plan, the
granting of any option under the Plan, the issuance of any shares under the
Stock Issuance Program, and the issuance of Common Stock upon the exercise or
surrender of the option grants made hereunder shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory
authorities having

 

28.

 

jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.

B.            No shares of Common Stock or other
assets shall be issued or delivered under this Plan unless and until there
shall have been compliance with all applicable requirements of Federal and State
securities laws, including the filing and effectiveness of the Form S-8
registration statement for the shares of Common Stock issuable under the Plan,
and all applicable listing requirements of any securities exchange (or the
Nasdaq National Market, if applicable) on which shares of the Common Stock are
then listed for trading.

VII.         NO
EMPLOYMENT/SERVICE RIGHTS

Neither the action of the
Corporation in establishing the Plan, nor any action taken by the Plan
Administrator hereunder, nor any provision of the Plan shall be construed so as
to grant any individual the right to remain in the employ or service of the
Corporation (or any parent or subsidiary corporation) for any period of
specific duration, and the Corporation (or any parent or subsidiary corporation
retaining the services of such individual) may terminate such individual’s
employment or service at any time and for any reason, with or without cause.

VIII.        MISCELLANEOUS
PROVISIONS

A.            The right to acquire Common Stock or
other assets under the Plan may not be assigned, encumbered or otherwise
transferred by any Optionee or Participant.

B.            The provisions of the Plan relating
to the exercise of options and the vesting of shares shall be governed by the
laws of the State of California, as such laws are applied to contracts entered
into and performed in such State.

C.            The provisions of the Plan shall
inure to the benefit of, and be binding upon, the Corporation and its
successors or assigns, whether by Corporate Transaction or otherwise, and the
Participants and Optionees and the legal representatives, heirs or legatees of
their respective estates.

 

29.Exhibit 10.16

 

Donaldson, Lufkin & Jenrette

Securities Corporation

277 Park Avenue • New York,
New York 10172

 

CUSTOMER
AGREEMENT

 

                                In
consideration of your accepting and carrying for the undersigned one or more
accounts, the undersigned hereby consents and agrees that:

 

APPLICABLE
RULES AND REGULATIONS

1.             All transactions for the
undersigned shall be subject to the constitution, rules, regulations, customs
and usages of the exchange or market and its clearing house, if any, where
executed by you or your agents, including your subsidiaries and affiliates.

 

DEFINITION

2.             For purposes of this agreement
“securities, commodities and other property,” as used herein shall include, but
not be limited to money, securities, and commodities of every kind and nature and
all contracts and options relating thereto, whether for present or future
delivery.

 

LIEN

3.             All securities, commodities and
other property now or hereafter held, carried or maintained by you in your
possession and control for any purpose, in or for any of the accounts of the
undersigned, now or hereafter opened, including accounts in which the
undersigned may have an interest, shall be subject to a lien for the discharge
of all the indebtedness and other obligations of the undersigned to you, and
are to be held by you as security for the payment of any liability or
indebtedness of the undersigned to you in any of said accounts. You shall have
the right to transfer securities, commodities and other property so held by you
from or to any other of the accounts of the undersigned whenever in your
judgement you consider such a transfer necessary for your protection. In
enforcing your lien, you shall have the discretion to determine which
securities and property are to be sold and which contracts are to be closed.

 

LIQUIDATION

4.             You shall have the right, in
accordance with your general policies regarding your maintenance requirements,
as such may be modified, amended or supplemented from time to time, or if, in
your discretion you consider it necessary for your protection to require
additional collateral at an earlier or later point in time than called for by
said general policies, or in the event that a petition in bankruptcy, or for
appointment of a receiver is filed by or against the undersigned, or an attachment
is levied against the accounts of the undersigned, or in the event of the death
of the undersigned, to sell any or all securities, commodities and other
property in the accounts of the undersigned with you, whether carried
individually or jointly with others, to buy any or all securities, commodities
and other property which may be short in such accounts, to cancel any open
orders and to close any or all outstanding contracts, all without demand for
margin or additional margin, notice of sale or purchase or other notice or
advertisement. Any such sales or purchases may be at your discretion on any
exchange or other market where such business is usually transacted, or at
public auction or private sale, and you may be the purchasers for your own
account. It being understood that a prior demand, or call, or prior notice of
the time and place of such a sale or purchase shall not be considered a waiver
of your right to sell or buy without demand or notice as herein provided.

 

PAYMENT OF
INDEBTEDNESS UPON DEMAND

5.             The undersigned shall at all times
be liable for the payment upon demand of any debit balance or other obligations
owing in any of the accounts of the undersigned with you and, the undersigned
shall be liable to you for any deficiency remaining in any such accounts in the
event of the liquidation thereof, in whole or in part, by you or by the
undersigned; and the undersigned shall make payment of such obligations and
indebtedness upon demand.

 

LIABILITY
FOR COSTS OF COLLECTION:

6.             The reasonable costs and expenses
of collection of the debit balance and any unpaid deficiency in the accounts of
the undersigned with you, including, but not limited to attorney’s fees,
incurred and payable or paid by you shall be payable to you by the undersigned.

 

PLEDGE OF
SECURITIES, COMMODITIES, AND OTHER PROPERTY

7.             All securities, commodities and
other property now or thereafter held, carried or maintained by you in your
possession in any of the undersigned may be pledged and repledged by you from
time to time, without notice to the undersigned, either separately or in common
with other such securities, commodities and other property for any amount due
in the accounts of the undersigned, or for any greater amount, and you may do
so without retaining to your possession or control for delivery a like amount
of similar securities, commodities or other property.

 

MARGIN
REQUIREMENTS, CREDIT CHARGES AND CREDIT INVESTIGATION

8.             The undersigned will at all times
maintain such securities, commodities and other property in the accounts of the
undersigned for margin purposes as you shall require from time to time and the
monthly debit balances or adjusted balances in the accounts of the undersigned
with you shall be charged, in accordance with your usual custom, with interest
at a rate permitted by the laws of the State of New York. It is understood that
the interest charge made to the undersigned’s account at the close of a charge
period will be added to the opening balance for the next charge period unless
paid.

 

                You
may exchange credit information about the undersigned with others. You may
request a credit report on the undersigned and upon request, you will state the
name and address of the consumer reporting agency that furnished it. If you
extend, update or renew the undersigned’s credit, you may request a new credit
report without telling the undersigned.

 

PRESUMPTION
OF RECEIPT OF COMMUNICATIONS

9.             Communications may be sent to the
undersigned at the address of the undersigned or at such other address as the
undersigned may hereafter give you in writing, and all communications so sent,
whether by mail, telegraph, messenger or otherwise, shall be deemed given to
the undersigned personally, whether actually received or not.

 

NO
NON-INVESTMENT ADVICE

10.          The undersigned acknowledges that you
will not provide the undersigned with any legal, tax or accounting advice, that
your employees are not authorized to give any such advice and that the
undersigned will not solicit or rely upon any such advice from you or your
employees whether in connection with transactions in or for any of the accounts
of the undersigned or otherwise. In making legal, tax or accounting decisions
with respect to transactions in or for the accounts of the undersigned or any
other matter, the undersigned will consult with and rely upon its own advisors
and not you, and you shall have no liability therefor.

 

SCOPE AND
TRANSFERABILITY

11.          This agreement shall cover
individually and collectively all accounts which the undersigned may open or
reopen with you, and shall inure to the benefit of your successors whether by
merger, consolidation or otherwise, and assigns, and you may transfer the
accounts of the undersigned to your successors and assigns, and this agreement
shall be binding upon the heirs, executors, administrators, successors and
assigns of the undersigned.

 

EXTRAORDINARY
EVENTS

12.          You shall not be liable for the loss
caused directly or indirectly by the government restrictions, exchange or
market rulings, suspension of trading, war, strikes or other conditions beyond
your control.

 

 

 

REPRESENTATIONS
AS TO CAPACITY TO ENTER INTO AGREEMENT

13.          The undersigned, if an individual,
represents that the undersigned is of full age, that unless otherwise disclosed
to you in writing the undersigned is not employee of any exchange, or of any
corporation of which any exchange owns a majority of the capital stock, or of a
member firm or member corporation registered on any exchange or of a bank,
trust company, insurance company or of any corporations, firm or individual
engaged in the business of dealing either as a broker or as a principal in
securities, bills of exchange, acceptances or other forms of commercial paper.
The undersigned further represents that no one except the undersigned has an
interest in the account or accounts of the undersigned with you.

 

JOINT AND
SEVERAL LIABILITY

14.          If the undersigned shall consist of
more than one individual, their obligations under this agreement shall be joint
and several. The undersigned have executed the Joint Account Agreement and made
the election required therein. Pursuant to that agreement, you may, but are not
required to, accept instructions from either joint party.

 

OPTION
TRANSACTIONS

15.          If at any time the undersigned shall
enter into any transaction for the purchase or resale of an option contract,
the undersigned hereby agrees to abide by the rules of any national securities
association, registered securities exchange or clearing organization applicable
to the trading or option contracts and, acting alone or in concert, will not
violate the position or exercise limitation rules of any such association or
exchange or of the Options Clearing Corporation or other clearing organization.

 

SEPARABILITY

16.          If any provision or condition of this
agreement shall be held to be invalid or unenforceable by any court, or
regulatory or self-regulatory agency or body, such invalidity or
unenforceability shall attach only to such provision or condition. The validity
of the remaining provisions and conditions shall not be affected thereby and
this agreement shall be carried out as if any such unenforceable provision or
condition were not contained herein.

 

HEADINGS
AND DESCRIPTIVE

17.          The heading of each provision hereof
is for descriptive purposes only and shall not be deemed to modify or qualify
any of the rights or obligations set forth in each such provision.

 

ARBITRATION
DISCLOSURES

	
  18.

  	
  •

  	
  ARBITRATION
  IS FINAL AND BINDING ON THE PARTIES.

  
	
   

  	
  •

  	
  THE
  PARTIES ARE WAIVING THEIR RIGHT TO SEEK TO REMEDIES IN COURT, INCLUDING THE
  RIGHT TO JURY TRIAL.

  
	
   

  	
  •

  	
  PRE-ARBITRATION
  DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT
  PROCEEDINGS.

  
	
   

  	
  •

  	
  THE
  ARBITRATORS’ AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
  REASONING AND ANY PARTY’S RIGHT TO APPEAL OR SEEK MODIFICATION OF RULINGS BY
  THE ARBITRATORS IS STRICTLY LIMITED.

  
	
   

  	
  •

  	
  THE PANEL
  OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OR ARBITRATORS WHO WERE OR
  ARE AFFILIATED WITH THE SECURITIES INDUSTRY.

  

 

AGREEMENT
TO ARBITRATE CONTROVERSIES

19.          IT IS
AGREED THAT ANY CONTROVERSY BETWEEN US ARISING OUT OF YOUR BUSINESS OR THIS
AGREEMENT, SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE NEW YORK
STOCK EXCHANGE, INC. OR ANY OTHER NATIONAL SECURITIES EXCHANGE ON WHICH A
TRANSACTION GIVING RISE TO THE CLAIM TOOK PLACE (AND ONLY BEFORE SUCH EXCHANGE)
OR NASD REGULATION, INC., AS THE UNDERSIGNED MAY ELECT AND IN ACCORDANCE
WITH THE RULES OBTAINING OF THE SELECTED ORGANIZATION. ARBITRATION MUST BE
COMMENCED BY SERVICE UPON THE OTHER PARTY OF A WRITTEN DEMAND FOR ARBITRATION
OR A WRITTEN NOTICE OF INTENTION TO ARBITRATE, THEREIN ELECTING THE ARBITRATION
TRIBUNAL. IN THE EVENT THE UNDERSIGNED DOES NOT MAKE SUCH ELECTION WITHIN
FIVE (5) DAYS OF SUCH DEMAND OR NOTICE, THEN THE UNDERSIGNED AUTHORIZES
YOU TO DO SO ON BEHALF OF THE UNDERSIGNED.

 

                NO
PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION NOR SEEK
TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS
INITIATED IN COURT A PUTATIVE CLASS ACTION; OR WHO IS A MEMBER OF A PUTATIVE
CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED
BY THE PUTATIVE CLASS ACTION UNTIL; (I) THE CLASS CERTIFICATION IS DENIED;
OR (II) THE CLASS IS DECERTIFIED; OR (III) THE CUSTOMER IS EXCLUDED
FROM THE CLASS BY THE COURT, SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO
ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT
EXCEPT TO THE EXTENT STATED HEREIN.

 

THE LAWS OF THE STATE OF NEW YORK GOVERN

20.          THIS
AGREEMENT AND ITS ENFORCEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS.

 

LOAN CONSENT

21.          BY SIGNING
THIS AGREEMENT, THE UNDERSIGNED ACKNOWLEDGES THAT SECURITIES NOT FULLY PAID FOR
BY THE UNDERSIGNED MAY BE LOANED TO YOU OR LOANED OUT TO OTHERS.

 

                THIS
AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN PARAGRAPHS 18 AND
19 ON THIS PAGE. I ACKNOWLEDGE RECEIVING A COPY OF THIS AGREEMENT.

 

SIGNATURES

 

	
  (If
  a Corporation, Partner or Other Entity)

  	
   

  	
  (If
  Individuals)

  
	
   

  	
   

  	
   

  
	
  Ultratech
  Stepper, Inc.

  	
   

  	
   

  
	
  (Name
  of Entity)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Second
  Party, If Joint Account)

  

 

	
  By

  	
  /s/ Bruce R. Wright

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
  SEAL

  	
   

  

 

	
   

  	
   

  	
  DATED

  	
  20
  SEP 02

  	
   

  	
  ACCOUNT NO.

  	
  219-629334

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