Exhibit 10.3
ADVANCED ENERGY INDUSTRIES, INC.
2003 STOCK OPTION PLAN
Adopted February 12, 2003
Amended February 1, 2005
Amended and Restated February 21, 2007
1. Purpose
. The purpose of the Plan is to provide an incentive to
attract, retain and reward individuals performing services for the
Company, and to motivate such individuals to contribute to the
growth and profitability of the Company.
2. Definitions
. Whenever the following terms are used in the Plan, they
shall have the meaning indicated below, unless a different meaning
is required by the context.
(a) “Administrator”
means either the Board or a committee of at least two Board members
to which the Board allocates administration of the Plan.
(b) “Board” means
the board of directors of the Corporation.
(c) “Code” means the
Internal Revenue Code of 1986, as amended.
(d) “Company” means,
collectively, the Corporation and any “parent
corporation” or “subsidiary corporation” of the
Corporation as defined in Code §424(e) and §424(f),
respectively.
(e) “Corporation”
means Advanced Energy Industries, Inc., a Delaware
corporation.
(f) “Fair Market
Value” means, with respect to a Share as of any date, the
closing sale price of a Share on such date (or previous business
day if such date is not a business day) on the principal exchange
or market on which Shares are then listed or admitted to trading.
If, for any reason, the preceding rule cannot be applied to
determine fair market value, then the Administrator shall make a
good faith determination of fair market value.
(g) “ISO” means an
incentive stock option within the meaning of Code §422.
(h) “NSO” means an
option that is not an ISO.
(i) “Participant”
means a person who has received a grant or award under the Plan. If
a grant or award is assigned pursuant to Section 6(c), the
term “Participant” shall mean the assignee when
required by the context.
(j) “Plan” means
this Advanced Energy Industries, Inc. 2003 Stock Option Plan.
(k) “Service” means
the Participant’s employment or service with the Company,
whether in the capacity of an employee, a director, or a
consultant.
(l) “Share” means
one share of common stock of the Corporation.
3. Administration
. The Plan shall be administered by the Administrator.
Subject to the provisions of the Plan, the Administrator shall have
the authority to select the persons to be granted options under
this Plan, to fix the number of shares that each Participant may
purchase, to determine the exercise price of options granted, to
set the terms and conditions of each option (including the period
over which the option becomes exercisable), and to determine all
other matters relating to administration and operation of the Plan.
All questions of interpretation, implementation, and application of
the Plan shall be determined by the Administrator in its sole
discretion. Such determinations shall be final and binding on all
persons. No member of the Board or committee that acts as
Administrator shall be liable for any act or omission on such
member’s own part, including but not limited to the exercise
of any power or discretion given to such member under the Plan,
except for those acts or omissions resulting from such
member’s own gross negligence or willful misconduct.
4. Shares Subject to the
Plan . The maximum number of Shares that may be
issued pursuant to this Plan is six million seven hundred and fifty
thousand (6,750,000), subject to adjustment as provided in
Section 6(e), and subject to limited re-issuance as indicated
below. If an option expires, is surrendered, or becomes
unexercisable without having been exercised in full, or if any
unissued Shares are retained by the Corporation upon exercise of an
option in order to satisfy any withholding taxes due with respect
to such exercise, the unissued or retained Shares shall become
available for future grant under the Plan (unless the Plan has
terminated). If unvested Shares are forfeited, such Shares shall
also become available for future grant under the Plan, but the
total number of such forfeited Shares that become available may not
exceed twice the maximum number set forth above (subject to
adjustment as provided in Section 6(e)). Other Shares that
actually have been issued under the Plan pursuant to an option
shall not be returned to the Plan and shall not become available
for future grant under the Plan.
5. Eligibility
. The Administrator may grant an option or options to any
employee or consultant of the Company, as selected in the sole
discretion of the Administrator. No individual may receive
aggregate grants or awards under this Plan that exceed 25% of the
number of Shares reserved for issuance under Section 4
(subject to adjustment as provided in Section 6(e)).
6. General Terms and
Conditions .
(a) Option
Agreements . Each option granted under the Plan
shall be authorized by action of the Administrator and shall be
evidenced by a written agreement in such form as the Administrator
shall from time to time approve, which agreement shall comply with
and be subject to the terms and conditions of the Plan.
(b) ISOs or NSOs
. Options granted under the Plan shall be designated by the
Administrator as either ISOs or NSOs. The Company does not
represent or warrant that an option intended to be an ISO qualifies
as such. To the extent that the aggregate Fair Market Value
(determined as of the date the option is granted) of the Shares
with respect to which ISOs are exercisable for the first time by
any individual during any calendar year (under all plans of the
Company) exceeds one hundred thousand dollars ($100,000), the
option shall be treated as an NSO. If an ISO is exercised more than
three (3) months after the date on which the Participant
ceases to be an employee (other than by reason of death or
permanent and total disability as defined in Code §22(e)(3)),
the option will be treated as an NSO, and not an ISO, as required
by Code §422.
(c)
Transferability . Options granted under the
Plan are not transferable by the Participant and shall be
exercisable during the Participant’s lifetime only by the
Participant; provided, however, that an option may be transferred
upon the approval of the Administrator (in its sole discretion) by
appropriate instrument pursuant to a domestic relations order
described in Rule 16a-12 of the 1934 Act or to an inter vivos or
testamentary trust in which the option is to be passed to the
Participant’s beneficiaries upon the Participant’s
death or by gift to the Participant’s immediate family
(consisting of the Participant’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and shall include adoptive
relationships). No option or interest therein may be otherwise
transferred, assigned, pledged, or hypothecated by the Participant,
whether by operation of law or otherwise, or be made subject to
execution, attachment, or similar process. Any such purported
assignment, sale, transfer, delegation, or other disposition shall
be null and void.
(d) Modification,
Extension, and Renewal . The Administrator shall
have the power to modify, extend, or renew outstanding options and
authorize the grant of new options in substitution therefor,
provided that any such action may not have the effect of
significantly impairing any rights or obligations of any option
previously granted without the consent of the affected Participant.
However, the Company will not reduce the exercise price of any
outstanding option or cancel outstanding options and grant
replacement options with a lower exercise price without prior
approval of the shareholders.
(e) Changes in
Capitalization or Corporate Transaction . In the
event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split,
separation, liquidation or other change in the corporate structure
or capitalization affecting the Shares, appropriate adjustment
shall be made by the Administrator in the kind, option price, and
number of shares of stock (including, but not limited to, the
maximum number of Shares reserved under the Plan) that are or may
become subject to options and other awards granted or to be granted
under the Plan. If in connection with the change the Corporation
ceases to exist, the surviving or successor entity must either
assume the Corporation’s rights and obligations with respect
to outstanding options or substitute for outstanding options
substantially equivalent options for equity interests in the
entity. If there is no surviving or successor entity, a
Participant’s outstanding option must be exercised before the
change, or the option will terminate and cease to be
outstanding.
7. Exercise
.
(a) Exercise
Price . The exercise price of an option shall be not
less than the Fair Market Value of a Share on the date of the grant
of the option.
(b) Time of
Exercise . An option shall become exercisable as
specified in the option agreement; provided, however, that
(i) an option shall not be exercisable after the 10th
anniversary of the date of grant and (ii) unless expressly
provided otherwise in the option agreement, an option shall not be
exercisable to the extent its exercise would result (determined at
the time of exercise) in compensation not deductible by the
Corporation under Code §162(m) (unless a failure to exercise
will result in the termination of the option).
(c) Special Rules for 10%
Owners . The exercise price of an ISO granted to an
individual who owns stock possessing more than ten percent (10%) of
the combined voting power of all classes of stock of the
Corporation shall not be less than one hundred ten percent (110%)
of the Fair Market Value of a Share on the date of grant. No ISO
granted to an individual who owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Corporation shall be exercisable after the expiration
of five (5) years from the date of grant. For purposes of
determining whether an individual owns stock possessing more than
10 percent (10%) of the total combined voting power of all classes
of stock of the Corporation, the individual shall be considered as
owning the stock owned, directly or indirectly, by or for his or
her brothers and sisters (whether by the whole or half
blood),
spouse, ancestors, and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust
shall be considered as being owned proportionately by or for its
shareholders, partners, or beneficiaries. Stock with respect to
which the individual holds an option shall not be counted.
(d) Notice of
Exercise . Participants may exercise only by
providing written notice to the Corporation at the address
specified in the option agreement, accompanied by full payment for
the Shares to be purchased. After receiving proper notice of
exercise and payment, the Corporation shall issue a certificate(s)
for the Shares purchased, registered in Participant’s name
(or in Participant’s name and the name of Participant’s
spouse as community property or as joint tenants with a right of
survivorship).
(e) Taxes and
Withholding . The Company shall have the right to
deduct from the Shares issuable upon the exercise of an option, or
to accept from the Participant the tender of, a number of whole
Shares having a fair market value, as determined by the
Administrator, equal to all or any part of the federal, state,
local and foreign taxes, if any, required by law to be withheld by
the Company with respect to such option or the Shares acquired upon
the exercise thereof. Alternatively or in addition, in its sole
discretion, the Company shall have the right to require
Participant, through payroll withholding, cash payment or
otherwise, including by means of a cashless exercise (as described
in Section 8(b)), to make adequate provision for any such tax
withholding obligations of the Company arising in connection with
the option, or the Shares acquired upon the exercise thereof.
8. Payment of Exercise
Price . Payment of any option’s exercise price
may be made in cash, by check or cash equivalent. At the sole
discretion of the Administrator, the exercise price may be made as
follows:
(a) By Tender of
Stock . Payment may be made by tender (or by
attestation) to the Corporation of Shares owned by Participant
having a fair market value (as determined by the Administrator
without regard to any restrictions on transferability applicable to
such Shares by reason of federal or state securities laws or
agreements with the Corporation’s underwriter) not less than
the exercise price; provided that, an option may not be exercised
by tender to the Corporation of Shares to the extent such tender
would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Shares.
Unless otherwise provided by the Administrator, an option may not
be exercised by tender to the Corporation of Shares unless such
Shares either have been owned by the Participant for more than six
(6) months or were not acquired, directly or indirectly, from
the Corporation.
(b) By Cashless
Exercise . The Administrator reserves, at any and
all times, the right, in the Administrator’s sole and
absolute discretion, to establish, decline to approve or terminate
any program or procedures for the exercise of options by payment by
the assignment of the proceeds of a sale or loan with respect to
some or all of the Shares being acquired upon the exercise of the
option, including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve
System.
(c) By Promissory
Note . Payment may be made by the
Participant’s promissory note in a form approved by the
Administrator, except that no promissory note shall be permitted if
the exercise of an option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on
such terms as the Administrator shall determine; provided that
(i) the note (including interest) shall be full recourse,
(ii) interest shall be payable in at least annual installments
at a current market interest rate, (iii) the note shall be
secured by the Shares acquired, and (iv) the remaining balance
of the note (including accrued interest) shall be due and payable
within 90 days of termination of Participant’s Service
for any reason. Unless otherwise provided by the Administrator, if
the Corporation at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserv
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