[EMPLOYEE NAME]
Employee ID Number
Grant Number:
APPLIED MATERIALS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Applied Materials, Inc. (the "Company") hereby grants you, [NAME OF
EMPLOYEE] (the "Employee"), an option under the Company's 1995 Equity
Incentive Plan (the "Plan") to purchase shares of common stock of the
Company. The date of this Agreement is [DATE] (the "Grant Date"). In
general, the latest date this option will expire is [DATE] (the "Expiration
Date"). However, as provided in Appendix A (on the other side of this
agreement), this option may expire earlier than the Expiration Date.
Subject to the provisions of Appendix A and of the Plan, the principal
features of this option are as follows:
Maximum Number of Shares
Purchasable with this Option: Exercise Price per Share:
[NUMBER] US $______
Scheduled Vesting Dates: Number of Shares
[DATE] [NUMBER]
[DATE] [NUMBER]
[DATE] [NUMBER]
[DATE] [NUMBER]
Event Triggering Maximum Time to Exercise
Option Termination After Triggering
Event*
Termination of Service (except as shown below) 30 days
Termination of Service due to Retirement (age 60
or over with at least 10 Years of Service) 1 year
Termination of Service due to Disability 6 months
Termination of Service due to death 1 year
* However, in no event may this option be exercised after the
Expiration Date.
IMPORTANT:
IT IS YOUR RESPONSIBILITY TO EXERCISE THIS OPTION BEFORE IT EXPIRES.
Your signature below indicates your agreement and understanding
that this option is subject to all of the terms and conditions contained
in Appendix A and the Plan. For example, important additional
information on vesting and termination of this option is contained in
Paragraphs 1 through 4 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS
OPTION, INCLUDING INFORMATION CONCERNING CANCELLATION AND TERMINATION OF
THIS OPTION.
APPLIED MATERIALS, INC. EMPLOYEE
___________________________________ ______________________________
[Title] [Name]
APPENDIX A - TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION
1. Vesting Schedule. As of the date of this Agreement, this option is
scheduled to become exercisable as to the number of shares, and on the
dates shown, on the attached Nonqualified Stock Option Agreement.
However, the Committee, in its sole discretion, may lengthen or shorten
the preceding vesting schedule if the Committee determines that the
Employee's position, grade level, or responsibilities have changed
significantly. No change in the vesting schedule will (a) affect any
shares which previously became exercisable, or (b) reduce the maximum
number of shares subject to this option. On any scheduled vesting date,
vesting actually will occur only if the Employee has been continuously
employed by the Company or an Affiliate from the Grant Date until such
scheduled vesting date.
2. Additional Vesting upon Retirement of Employee. In the event that
the Employee completes at least 10 Years of Service and then incurs a
Termination of Service due to Retirement, the right to exercise all or a
portion of any shares subject to this option that remain unexercisable
immediately prior to such Retirement shall accrue on the date on which the
Retirement occurs as follows:
(a) if the Employee has less than 15 Years of Service as of the date of
his or her Retirement, 50% of the shares that otherwise would have vested
during the 12 months immediately following the Retirement (had the
Employee remained an Employee throughout such 12 month period) shall
accrue on the Retirement date;
(b) if the Employee has at least 15 (but less than 20) Years of Service
as of the date of the Retirement, 100% of the shares that otherwise would
have vested during the 12 months immediately following the Retirement (had
the Employee remained an Employee throughout such 12 month period) shall
accrue on the Retirement date;
(c) if the Employee has at least 20 (but less than 25) Years of Service
as of the date of the Retirement, (i) 100% of the shares that otherwise
would have vested during the 12 months immediately following the
Retirement (had the Employee remained an Employee throughout such 12 month
period) shall accrue on the Retirement date, and (ii) 50% of the shares
that otherwise would have vested during the second 12 months following the
Retirement (had the Employee remained an Employee throughout such 12 month
period) shall accrue on the Retirement date; and
(d) if the Employee has at least 25 Years of Service as of the date of
the Retirement, 100% of the shares that otherwise would have vested during
the 24 months immediately following the Retirement (had the Employee
remained an Employee throughout such 24 month period) shall accrue on the
Retirement date.
"Retirement" and "Years of Service" are defined in the Plan. In general,
"Retirement" means a Termination of Service by an Employee after he or she
is at least age 60 and has completed at least 10 Years of Service, and
"Years of Service" means full years of employment since the Employee's
last hire date with the Company or an Affiliate (but giving credit for
prior service under the non-401(k) Plan principles of Company North
American Human Resources Policy No. 2-06, or any successor thereto).
3. Termination of Option. In the event of the Employee's Termination
of Service for any reason other than Retirement, Disability or death, the
Employee may, within thirty (30) days after the date of the Termination,
or prior to the Expiration Date, whichever shall first occur, exercise any
vested but unexercised portion of this option. In the event of the
Employee's Termination of Service due to Retirement, the Employee may,
within one (1) year after the date of such Termination, or prior to the
Expiration Date, whichever shall first occur, exercise any vested but
unexercised portion of the option. In the event of the Employee's
Termination of Service due to Disability, the Employee may, within six (6)
months after the date of such Termination, or prior to the Expiration
Date, whichever shall first occur, exercise any vested but unexercised
portion of the option. Upon the Employee's Termination of Service, any
unvested portion of this option (after applying the rules of Paragraphs 2
and 4) shall immediately terminate.
4. Death of Employee. If the Employee incurs a Termination of Service
due to his or her death, then (a) the right to exercise one hundred
percent (100%) of the shares subject to this option shall vest on the date
of the Employee's Termination of Service, and (b) the Employee's
designated beneficiary, or if either no beneficiary survives the Employee
or beneficiary designations are not permitted under the Plan, the
administrator or executor of the Employee's estate, may, within one (1)
year after the date of death or prior to the Expiration Date, whichever
shall first occur, exercise any unexercised portion of this option. If the
Employee dies after incurring a Termination of Service but before any
vested portion of this option has expired in accordance with Paragraph 3
above, then the Employee's designated beneficiary, or if either no
beneficiary survives the Employee or beneficiary designations are not
permitted under the Plan, the administrator or executor of the Employee's
estate, may, within one (1) year after the date of death or prior to the
Expiration Date, whichever shall first occur, exercise any vested but
unexercised portion of this option. Any transferee under this Paragraph 4
must furnish the Company (A) evidence satisfactory to the Company
establishing the valid transfer of the option, and (B) written acceptance
of the terms and conditions of this option as set forth in this Agreement.
5. No Effect on Employment. The Employee's employment with the
Company and its Affiliates is on an at-will basis only, subject to the
provisions of local law. Accordingly, the terms of the Employee's
employment with the Company and its Affiliates shall be determined from
time to time by the Company or the Affiliate employing the Employee (as
the case may be), and the Company or the Affiliate shall have the right,
which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with
or without good cause (subject to the provisions of local law).
6. Address for Notices. Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company, in care of
Stock Administration, at Applied Materials, Inc., P.O. Box 58039, Santa
Clara, CA 95052, or at such other address as the Company may hereafter
designate in writing.
7. Option is Not Transferable. Except as provided in Paragraph 4
above, this option and the rights and privileges conferred hereby shall
not be transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this option, or of any
right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
8. Conditions to Exercise. The exercise price for this option must be
paid in the legal tender of the United States or, in the Committee's
discretion, in shares of the Company's common stock. No partial exercise
of this option may be made for fewer than ten (10) shares. Exercise of
this option will not be permitted until satisfactory arrangements have
been made for the payment of the appropriate amount of withholding taxes
(as determined by the Company). If the Employee receives a hardship
withdrawal from the Employee's account under the Company's Employee
Savings and Retirement Plan (the "401(k) Plan"), this option may not be
exercised during the twelve (12) month period following the hardship
withdrawal (unless the Company determines that exercise would not
jeopardize the tax-qualification of the 401(k) Plan).
9. Plan Governs. This Agreement is subject to all terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used and not defined in this
Agreement shall have the meaning set forth in the Plan. This option is
not an incentive stock option as defined in Section 422 of the Internal
Revenue Code. If the Employee is resident in Italy, only newly issued
shares (rather than treasury shares) will be issued pursuant to this
option.
10. Binding Agreement. Subject to the limitation on the
transferability of the option contained herein, this Agreement shall be
binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.
11. Committee Authority. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All
actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. The Committee shall not be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
12. Captions. Captions provided herein are for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
13. Agreement Severable. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, the remaining provisions of this
Agreement.
14. Modifications to the Agreement. This Agreement constitutes the
entire understanding of the parties on the subjects covered. The Employee
expressly warrants that he or she is not accepting this Agreement in
reliance on any promises, representations, or inducements other than those
contained herein. Modifications to this Agreement or the Plan can be made
only in an express written contract executed by a duly authorized officer
of the Company.
15. Amendment, Suspension, Termination. By accepting this option, the
Employee expressly warrants that he or she has received an option to
purchase stock under the Plan, and has received, read and understood a
description of the Plan. The Employee understands that the Company has
reserved the right to amend or terminate the Plan at any time, and that
the grant of an option in one year or at one time does not in any way
obligate the Company or any Affiliate thereof to make a grant in any
future year or in any given amount. The Employee acknowledges and
understands that the Plan is wholly discretionary in nature and income
received as a result of exercising an option under the Plan shall not be
considered part of the Employee's normal or expected compensation subject
to severance, resignation, redundancy or similar pay.
16. Disclosure of Employee Information. By accepting this option, the
Employee authorizes and directs the Company or any Affiliate of the
Company to disclose to the Company or any of its Affiliates such
information regarding the Employee's employment, the nature and amount of
the Employee's compensation and the fact and conditions of the Employee's
participation in the Plan as the Company or the Affiliate deems necessary
to facilitate the administration of the Plan.
