Exhibit 10.36
EAGLE TEST SYSTEMS,
INC.
2006 STOCK OPTION AND INCENTIVE
PLAN
SECTION 1. GENERAL PURPOSE OF
THE PLAN; DEFINITIONS
The name of the plan is the Eagle
Test Systems, Inc. 2006 Stock Option and Incentive Plan (the
“Plan”). The purpose of the Plan is to encourage and
enable the officers, employees, Non-Employee Directors and other
key persons (including consultants and prospective employees) of
Eagle Test Systems, Inc. (the “Company”) and its
Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business
to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the
Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders,
thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.
The following terms shall be defined
as set forth below:
“Act”
means the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
“Administrator”
is defined in
Section 2(a).
“Award”
or “Awards,”
except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards,
Restricted Stock Awards, Unrestricted Stock Awards and Dividend
Equivalent Rights.
“Board”
means the Board of Directors of the
Company.
“Code”
means the Internal Revenue Code of
1986, as amended, and any successor Code, and related rules,
regulations and interpretations.
“Committee” means the compensation committee of the Board or
a similar committee performing the functions of the compensation
committee and which is comprised of not less than two Non-Employee
Directors who are independent.
“Covered
Employee” means an
employee who is a “Covered Employee” within the meaning
of Section 162(m) of the Code.
“Deferred Stock
Award” means Awards
granted pursuant to Section 8.
“Dividend Equivalent
Right” means Awards
granted pursuant to Section 11.
“Effective
Date” means the
date on which the Plan is approved by stockholders as set forth in
Section 19.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
“Fair Market
Value” of the Stock
on any given date means the fair market value of the Stock
determined in good faith by the Administrator; provided, however,
that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation
System
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(“NASDAQ”), NASDAQ National System
or a national securities exchange, the determination shall be made
by reference to market quotations. If there are no market
quotations for such date, the determination shall be made by
reference to the last date preceding such date for which there are
market quotations; provided further, however, that if the date for
which Fair Market Value is determined is the first day when trading
prices for the Stock are reported on NASDAQ or on a national
securities exchange, the Fair Market Value shall be the
“Price to the Public” (or equivalent) set forth on the
cover page for the final prospectus relating to the Company’s
Initial Public Offering.
“Incentive Stock
Option” means any
Stock Option designated and qualified as an “incentive stock
option” as defined in Section 422 of the
Code.
“Initial Public
Offering” means the
consummation of the first fully underwritten, firm commitment
public offering pursuant to an effective registration statement
under the Act covering the offer and sale by the Company of its
equity securities, or such other event as a result of or following
which the Stock shall be publicly held.
“Non-Employee
Director” means a
member of the Board who is not also an employee of the Company or
any Subsidiary.
“Non-Qualified Stock
Option” means any
Stock Option that is not an Incentive Stock Option.
“Option”
or “Stock Option”
means any option to purchase shares of Stock granted pursuant to
Section 5.
“Performance
Cycle” means one or
more periods of time, which may be of varying and overlapping
durations, as the Administrator may select, over which the
attainment of one or more performance criteria will be measured for
the purpose of determining a grantee’s right to and the
payment of a Restricted Stock Award or Deferred Stock
Award.
“Restricted Stock
Award” means Awards
granted pursuant to Section 7.
“Section 409A”
means Section 409A of the Code
and the regulations and other guidance promulgated
thereunder.
“Stock”
means the Common Stock, par value
$0.01 per share, of the Company, subject to adjustments pursuant to
Section 3.
“Stock Appreciation
Right” means any
Award granted pursuant to Section 6.
“Subsidiary” means any corporation or other entity (other
than the Company) in which the Company has a controlling interest,
either directly or indirectly.
“Ten Percent
Owner” means an
employee who owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10 percent
of the combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation.
“Unrestricted Stock
Award” means any
Award granted pursuant to Section 9.
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SECTION 2. ADMINISTRATION OF PLAN;
ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE
AWARDS
(a) Committee . The
Plan shall be administered by either the Board or the Committee
(the “Administrator”).
(b) Powers of
Administrator . The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan,
including the power and authority:
(i) to select the individuals
to whom Awards may from time to time be granted;
(ii) to determine the time or
times of grant, and the extent, if any, of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards and
Dividend Equivalent Rights, or any combination of the foregoing,
granted to any one or more grantees;
(iii) to determine the number
of shares of Stock to be covered by any Award;
(iv) to determine and modify
from time to time the terms and conditions, including restrictions,
not inconsistent with the terms of the Plan, of any Award, which
terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing
the Awards;
(v) to accelerate at any time
the exercisability or vesting of all or any portion of any
Award;
(vi) subject to the provisions
of Section 5(a)(ii), to extend at any time the period in which
Stock Options may be exercised; and
(vii) at any time to adopt,
alter and repeal such rules, guidelines and practices for
administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award (including related written instruments); to
make all determinations it deems advisable for the administration
of the Plan; to decide all disputes arising in connection with the
Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be
binding on all persons, including the Company and Plan
grantees.
(c) Delegation of Authority
to Grant Awards . The Administrator, in its discretion, may
delegate to the Chief Executive Officer of the Company all or part
of the Administrator’s authority and duties with respect to
the granting of Awards, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Exchange
Act or Covered Employees. Any such delegation by the Administrator
shall include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price of any
Stock Option or Stock Appreciation Right, the conversion ratio or
price of other Awards and the vesting criteria. The Administrator
may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the
Administrator’s delegate or delegates that were consistent
with the terms of the Plan.
(d) Indemnification .
Neither the Board nor the Committee, nor any member of either or
any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board
and
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the Committee (and any delegate thereof) shall
be entitled in all cases to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys’ fees)
arising or resulting therefrom to the fullest extent permitted by
law and/or under any directors’ and officers’ liability
insurance coverage which may be in effect from time to time and/or
any indemnification agreement between such individual and the
Company.
SECTION 3. STOCK ISSUABLE
UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable .
The maximum number of shares of Stock reserved and available for
issuance under the Plan shall be 2,600,000 shares, subject to
adjustment as provided in Section 3(b); provided that not more
than 2,600,000 shares shall be issued in the form of Incentive
Stock Options. For purposes of this limitation, the shares of Stock
underlying any Awards that are forfeited, canceled, held back upon
exercise of an Option or settlement of an Award to cover the
exercise price or tax withholding, reacquired by the Company prior
to vesting, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the
shares of Stock available for issuance under the Plan. Subject to
such overall limitations, shares of Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided,
however, that Stock Options or Stock Appreciation Rights with
respect to no more than 1,100,000 shares of Stock may be granted to
any one individual grantee during any one calendar year period. The
shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the
Company.
(b) Changes in Stock .
Subject to Section 3(c) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar change in the
Company’s capital stock, the outstanding shares of Stock are
increased or decreased or are exchanged for a different number or
kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to
such shares of Stock or other securities, or, if, as a result of
any merger or consolidation, sale of all or substantially all of
the assets of the Company, the outstanding shares of Stock are
converted into or exchanged for a different number or kind of
securities of the Company or any successor entity (or a parent or
subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares
reserved for issuance under the Plan, including the maximum number
of shares that may be issued in the form of Unrestricted Stock
Awards, Restricted Stock Awards or Deferred Stock Awards,
(ii) the number of Stock Options or Stock Appreciation Rights
that can be granted to any one individual grantee and the maximum
number of shares that may be granted under a Performance-based
Award, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan,
(iv) the repurchase price, if any, per share subject to each
outstanding Restricted Stock Award, (v) the number of Stock
Options automatically granted to Non-Employee Directors, and
(vi) the price for each share subject to any then outstanding
Stock Options and Stock Appreciation Rights under the Plan, without
changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of Stock Options and Stock Appreciation
Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable. The adjustment by the Administrator
shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the Plan resulting from any such
adjustment, but the Administrator in its discretion may make a cash
payment in lieu of fractional shares.
The Administrator may also adjust
the number of shares subject to outstanding Awards and the exercise
price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or
principles, extraordinary dividends, acquisitions or
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dispositions of stock or property or any other
event if it is determined by the Administrator that such adjustment
is appropriate to avoid distortion in the operation of the Plan,
provided that no such adjustment shall be made in the case of a
Stock Option or Stock Appreciation Right, without the consent of
the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of
the Code.
(c) Mergers and Other
Transactions . In the case of and subject to the consummation
of (i) the dissolution or liquidation of the Company,
(ii) the sale of all or substantially all of the assets of the
Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the
outstanding shares of Stock are converted into or exchanged for a
different kind of securities of the successor entity and the
holders of the Company’s outstanding voting power immediately
prior to such transaction do not own a majority of the outstanding
voting power of the successor entity immediately upon completion of
such transaction, or (iv) the sale of all of the Stock of the
Company to an unrelated person or entity (in each case, a
“Sale Event”), all Options and Stock Appreciation
Rights that are not exercisable immediately prior to the effective
time of the Sale Event shall become fully exercisable as of the
effective time of the Sale Event and all other Awards shall become
fully vested and nonforfeitable as of the effective time of the
Sale Event, except as the Administrator may otherwise specify with
respect to particular Awards in the relevant Award documentation,
and Awards with conditions and restrictions relating to the
attainment of performance goals may become vested and
nonforfeitable in connection with a Sale Event in the
Administrator’s discretion. Upon the effective time of the
Sale Event, the Plan and all outstanding Awards granted hereunder
shall terminate, unless provision is made in connection with the
Sale Event in the sole discretion of the parties thereto for the
assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new
Awards of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate,
the per share exercise prices, as such parties shall agree (after
taking into account any acceleration hereunder). In the event of
such termination, each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale
Event as determined by the Administrator, to exercise all
outstanding Options and Stock Appreciation Rights held by such
grantee, including those that will become exercisable upon the
consummation of the Sale Event; provided, however, that the
exercise of Options and Stock Appreciation Rights not exercisable
prior to the Sale Event shall be subject to the consummation of the
Sale Event.
Notwithstanding anything to the
contrary in this Section 3(c), in the event of a Sale Event
pursuant to which holders of the Stock of the Company will receive
upon consummation thereof a cash payment for each share surrendered
in the Sale Event, the Company shall have the right, but not the
obligation, to make or provide for a cash payment to the grantees
holding Options and Stock Appreciation Rights, in exchange for the
cancellation thereof, in an amount equal to the difference between
(A) the value as determined by the Administrator of the
consideration payable per share of Stock pursuant to the Sale Event
(the “Sale Price”) times the number of shares of Stock
subject to outstanding Options and Stock Appreciation Rights (to
the extent then exercisable at prices not in excess of the Sale
Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights.
(d) Substitute Awards .
The Administrator may grant Awards under the Plan in substitution
for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation. The
Administrator may direct that the substitute awards be granted on
such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted
under the Plan shall not count against the share limitation set
forth in Section 3(a).
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SECTION 4. ELIGIBILITY
Grantees under the Plan will be such
full or part-time officers and other employees, Non-Employee
Directors and key persons (including consultants and prospective
employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole
discretion.
SECTION 5. STOCK
OPTIONS
Any Stock Option granted under the
Plan shall be in such form as the Administrator may from time to
time approve.
Stock Options granted under the Plan
may be either Incentive Stock Options or Non-Qualified Stock
Options. Incentive Stock Options may be granted only to employees
of the Company or any Subsidiary that is a “subsidiary
corporation” within the meaning of Section 424(f) of the
Code. To the extent that any Option does not qualify as an
Incentive Stock Option, it shall be deemed a Non-Qualified Stock
Option.
(a) Stock Options Granted
to Employees and Key Persons . The Administrator in its
discretion may grant Stock Options to eligible employees and key
persons of the Company or any Subsidiary. Stock Options granted
pursuant to this Section 5(a) shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan,
as the Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash
compensation at the optionee’s election, subject to such
terms and conditions as the Administrator may establish.
(i) Exercise Price . The
exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(a) shall be determined by
the Administrator at the time of grant but shall not be less than
100 percent of the Fair Market Value on the date of grant. In
the case of an Incentive Stock Option that is granted to a Ten
Percent Owner, the option price of such Incentive Stock Option
shall be not less than 110 percent of the Fair Market Value on
the grant date.
(ii) Option Term . The term
of each Stock Option shall be fixed by the Administrator, but no
Stock Option shall be exercisable more than ten years after the
date the Stock Option is granted. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the term of such
Stock Option shall be no more than five years from the date of
grant.
(iii) Exercisability; Rights of a
Stockholder. Stock Options shall become exercisable at such
time or times, whether or not in installments, as shall be
determined by the Administrator at or after the grant date. The
Administrator may at any time accelerate the exercisability of all
or any portion of any Stock Option. An optionee shall have the
rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock
Options.
(iv) Method of Exercise .
Stock Options may be exercised in whole or in part, by giving
written notice of exercise to the Company, specifying the number of
shares to be purchased. Payment of the purchase price may be made
by one or more of the following methods to the extent provided in
the Option Award agreement:
(A) In cash, by certified or bank
check or other instrument acceptable to the
Administrator;
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(B) Through the delivery (or
attestation to the ownership) of shares of Stock that have been
purchased by the optionee on the open market or that are
beneficially owned by the optionee and are not then subject to
restrictions under any Company plan. Such surrendered shares shall
be valued at Fair Market Value on the exercise date. To the extent
required to avoid variable accounting treatment under FAS 123R or
other applicable accounting rules, such surrendered shares shall
have been owned by the optionee for at least six months;
or
(C) By the optionee delivering to
the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company for
the purchase price; provided that in the event the optionee chooses
to pay the purchase price as so provided, the optionee and the
broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure. Payment
instruments will be received subject to collection. The transfer to
the optionee on the records of the Company or of the transfer agent
of the shares of Stock to be purchased pursuant to the exercise of
a Stock Option will be contingent upon receipt from the optionee
(or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase
price for such shares and the fulfillment of any other requirements
contained in the Option Award agreement or applicable provisions of
laws (including the satisfaction of any withholding taxes that the
Company is obligated to withhold with respect to the optionee). In
the event an optionee chooses to pay the purchase price by
previously-owned shares of Stock through the attestation
met
