FORM OF
NEWPORT CORPORATION
STOCK APPRECIATION RIGHT AWARD AGREEMENT
THIS STOCK
APPRECIATION RIGHT AWARD AGREEMENT (the “Agreement”) is
entered into as of [GRANT DATE] (the “Grant Date”), by
and between Newport Corporation, a Nevada corporation (the
“Company”), and [GRANTEE NAME] (the
“Grantee”) pursuant to the Company’s 2006
Performance-Based Stock Incentive Plan (the “Plan”).
Any capitalized term not defined herein shall have the same meaning
ascribed to it in the Plan.
A.
Grantee is an employee, director, consultant or other Service
Provider, and in connection therewith has rendered services for and
on behalf of the Company.
B.
The Company desires to award Stock Appreciation Rights to Grantee
to provide an incentive for Grantee to remain a Service Provider of
the Company and to exert added effort towards its growth and
success.
NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth, and
for other good and valuable consideration, the parties agree as
follows:
1. Grant
of Stock Appreciation Rights. The Company hereby grants to
Grantee Stock Appreciation Rights with respect to [NUMBER OF STOCK
APPRECIATION RIGHTS] shares of the Company’s Common Stock at
the Base Value per share set forth in Section 2 below (the
“SARs”) on and subject to the terms and conditions set
forth in this Agreement and in the Plan.
2. Base
Value. The Base Value of each SAR is [BASE VALUE], which is
equal to the Fair Market Value of a share of the Company’s
Common Stock on the Grant Date.
(a) Vesting Schedule. Subject to the provisions of
Sections 4 and 5 below, the SARs evidenced by this Agreement
shall vest in installments as set forth in Exhibit A
attached hereto and incorporated herein by reference (each a
“Vesting Date”), subject to the achievement of
specified performance goals established by the Committee (as
defined in the Plan) with respect to the Performance Criteria (as
defined in the Plan) set forth in Exhibit A (each, a
“Performance Condition”) for the fiscal year(s) or
other fiscal period(s) or specific event(s) set forth in
Exhibit A (each, a “Performance Period”),
in accordance with the provisions set forth in
Exhibit A of this Agreement, and the other terms and
conditions set forth herein.
(b) Performance Determination Date. For each
Performance Condition, the Committee shall determine, in its sole
discretion, and certify in writing whether and the extent to which
such Performance Condition was achieved for a Performance Period.
Except as otherwise set forth in Exhibit A, such determination
and written certification will be made following completion of the
external audit of the Company’s financial statements for the
applicable Performance Period (the “Performance Determination
Date”).
(a) Definition of Continuous Service. For purposes of
this Agreement, the term “Continuous Service” means:
(1) employment of the Grantee by either the Company or any
Affiliated Company (as defined in the Plan), or by any successor
entity following a Change in Control (as defined in the Plan),
which is uninterrupted other than by vacations, illness (except for
permanent disability, as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the
“Code”)), or leaves of absence which are approved in
writing by the Company or any Affiliated Company, if applicable;
(2) service as a member of the Board of Directors of the
Company until Grantee resigns, is removed from office, or
Grantee’s term of office expires and he or she is not
reelected; or (3) so long as Grantee is engaged as a Service
Provider (as defined in the Plan) to the Company or an Affiliated
Company. Changes in Grantee’s status among the alternatives
set forth in the foregoing clauses (1), (2) and/or
(3) shall not be deemed to terminate Grantee’s
Continuous Service. For purposes of this Agreement, the length of
previous employment of Grantee by any entity, or relating to any
business, that has been acquired by the Company or any Affiliated
Company shall be included for purposes of calculating the number of
years of Grantee’s Continuous Service.
(b) Termination of Continuous Service. In the event of
any termination of Grantee’s Continuous Service,
notwithstanding Section 3(a) above, vesting of the SARs shall cease
immediately upon a termination of Grantee’s Continuous
Service. Service for only a portion of the vesting period, even if
a substantial portion, will not entitle the Grantee to any
proportionate vesting or avoid or mitigate a termination of rights
and benefits upon or following a termination of Continuous Service.
Any SARs subject to this Agreement, to the extent not vested as of
the date of termination of Grantee’s Continuous Service,
shall be automatically cancelled as of such date (regardless of the
reason for such termination, including, without limitation, a
termination due to death or permanent disability), and the Grantee
shall have no further rights with respect to such SARs; provided,
however, that any SARs that have vested as of the date of
termination of Grantee’s Continuous Service shall continue to
be exercisable in accordance with Section 6(a) below.
5. Change
in Control. Notwithstanding Section 3(a) above, in the event
there occurs a Change in Control (as defined in the Plan) of the
Company, then, except as provided herein, the portion of the SARs
that is outstanding and unvested immediately prior to such
occurrence shall accelerate and become fully vested (100%
achievement of all applicable Performance Conditions shall be
deemed to have occurred) upon (or, as may be necessary to effect
such acceleration, immediately prior to) the consummation of the
Change in Control. If, however, this Agreement is assigned by the
Company and assumed by the acquiring or successor entity (or parent
thereof), or if new SARs under a new stock incentive program are to
be issued in exchange therefor, in connection with such Change in
Control transaction (as such events are more particularly described
in the Plan), then vesting of the SARs shall not accelerate
and the time-based vesting schedule shall continue to apply, but
100% achievement of all applicable Performance Conditions shall be
deemed to have occurred.
(a) Exercise Period. The right of the Grantee to
exercise SARs that have vested in accordance with the terms of this
Agreement shall terminate upon the first to occur of the
following:
(i) the
expiration of seven (7) years from the date of this
Agreement;
(ii) the
expiration of three (3) months from the date of termination of
Grantee’s Continuous Service if such termination occurs for
any reason other than Qualifying Retirement (as defined
hereinbelow), permanent disability, death or cause; provided,
however, that if Grantee dies during such three-month period the
provisions of subsection 6(a)(v) below shall apply;
(iii) immediately
on the date of termination of Grantee’s Continuous Service if
such termination occurs for cause;
(iv) the
expiration of one (1) year from the date of termination of
Grantee’s Continuous Service if such termination is due to
permanent disability of the Grantee (as defined in Section 22(e)(3)
of the Code) where the Grantee does not have ten (10) years of
Continuous Service at the time of such termination;
(v) the
expiration of one (1) year from the date of termination of
Grantee’s Continuous Service if such termination is due to
Grantee’s death or if death occurs during the three-month
period following termination of Grantee’s Continuous Service
pursuant to subsection 6(a)(ii) above, in either case where the
Grantee does not have ten (10) years of Continuous Service at
the time of such termination;
(vi) the
expiration of seven (7) years from the date of this Agreement
if such termination is due to: (i) Grantee’s Qualifying
Retirement, (ii) Grantee’s permanent disability (as
defined in Section 22(e)(3) of the Code), where at the time of
Grantee’s termination Grantee has ten (10) years of
Continuous Service, or (iii) Grantee’s death, where at
the time of Grantee’s termination Grantee has ten
(10) years of Continuous Service; or
(vii) upon
the consummation of a Change in Control, unless otherwise provided
pursuant to Section 5 above.
(b) Qualifying Retirement. For purposes of this
Agreement, a “Qualifying Retirement” shall occur if at
the time of Grantee’s retirement (i) Grantee has had ten
(10) years of Continuous Service and (ii) is age
59 1
/ 2 or
older.
7. Delivery of Common Stock Upon Exercise. Upon
exercise of the SARs, Grantee will receive an amount, payable in
shares of the Company’s Common Stock, determined by
multiplying: (a) the excess of the Fair Market Value of a
share of Common Stock on the date of exercise of the SARs over the
Base Value of such Stock Appreciation Right, by (b) the number
of shares of Common Stock as to which such SARs are exercised. Upon
such exercise, the Company shall issue to Grantee a number of
shares of Common Stock determined by dividing the amount determined
under the preceding sentence by the Fair Market Value of such
shares on the date of exercise, subject to applicable tax
withholding requirements as set forth in Section 8(b). The
value of any fractional shares of Common Stock shall be paid in
cash at the time the shares are delivered to Grantee in connection
with the exercise of the SARs.
(a) Compliance with Tax Laws. In order to comply with
all applicable federal or state income tax laws or regulations, the
Company may take such action as it deems appropriate to ensure that
all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of
Grantee, are withheld or collected from Grantee.
(b) Tax Withholding. The Company shall reasonably
determine the amount of any federal, state, local or other income,
employment, or other taxes which the Company or any Affiliated
Company may reasonably be obligated to withhold with respect to the
grant, vesting, exercise or other event with respect to the SARs.
The Company may, in its sole discretion, withhold a sufficient
number of shares of Common Stock in connection with the exercise of
the SARs at the Fair Market Value (as defined in the Plan) of the
Common Stock (determined as of the date of measurement of the
amount of income subject to such withholding) to satisfy the amount
of any such withholding obligations that arise with respect to the
exercise of such SARs. The Company may take such action(s) without
notice to the Grantee and shall remit to the Grantee the balance of
any proceeds from withholding such shares in excess of the amount
reasonably determined to be necessary to satisfy such withholding
obligations. The Grantee shall have no discretion as to the
satisfaction of tax withholding obligations in such manner. If,
however, any withholding event occurs with respect to the SARs
other than upon the exercise of such SARs, or if the C
|
