TTM TECHNOLOGIES, INC.
MANAGEMENT STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of ______________ (the "GRANT
DATE"), between TTM Technologies, Inc., a Washington corporation (the
"COMPANY"), __________ (the "PARTICIPANT").
1. DEFINITIONS; INCORPORATION OF PLAN TERMS. Capitalized terms
used herein without definition shall have the meanings assigned to them in the
TTM Technologies, Inc. Amended and Restated Management Stock Option Plan (the
"PLAN"), a copy of which is attached hereto. This Agreement, the option granted
hereunder (the "OPTION") and the Option Shares issued pursuant to the exercise
of Options shall be subject to the Plan, the terms of which are hereby
incorporated herein by reference, and in the event of any conflict or
inconsistency between the Plan and this Agreement, the Plan shall govern.
2. SHAREHOLDERS AGREEMENT; RESTRICTIONS ON TRANSFER.
(a) By executing this Option Agreement, the Participant shall
become a party to the Shareholders Agreement, and this Option and all Option
Shares issued hereunder shall be subject to the Shareholders Agreement. The
Participant shall not have any rights as a shareholder with respect to any
shares of Common Stock issuable upon exercise of an Option until the Option
Price has been paid in full and all other conditions to the exercise of the
Option set forth in the Plan and this Agreement have been satisfied.
(b) This Option may not be sold, offered, disposed of,
pledged, hypothecated, encumbered or otherwise transferred by the Participant
except, in the event of the Participant's death, to the Participant's executors,
administrators and testamentary trustees or as provided in the Shareholders
Agreement. During the lifetime of the Participant, the Option may be exercised
only by, or on behalf of, the Participant.
3. GRANT OF OPTIONS. Subject to the terms and conditions
contained herein and in the Plan, the Company hereby grants to the Participant,
effective as of the Grant Date, the number of A Options and B Options set forth
on the signature page hereto. Each such Option shall entitle the Participant to
purchase, upon payment of the Option Price specified at the foot of the
signature page hereof, one share of Common Stock; PROVIDED, HOWEVER, that such
Options may also be exercisable for fractional shares of Common Stock. The
Options shall be exercisable as hereinafter provided.
4. TERMS AND CONDITIONS OF OPTIONS. Except as otherwise
provided in the Plan, the Options granted hereunder shall vest and become
exercisable as follows:
(a) A OPTIONS. Subject to the Participant's continued
employment or service with the Company and its Subsidiaries, the following
vesting rules shall apply to all A Options:
(i) All A Options shall vest on the eighth anniversary of the
Grant Date.
(ii) Upon the occurrence of a Liquidity Event, the Applicable
Portion of the A Options shall vest on an accelerated basis. For
example, if upon a 50% Liquidity Event (e.g., a sale by Xxxxxx and
Xxxxxxxx Xxxxx of 50% of their respective interests) the Annualized
Rate of Return (i.e., the compounded annual rate of return on the stock
of the Company between the Commencement Date and date of the Liquidity
Event) equals 35%, then 50% of the A Options will become vested on an
accelerated basis. Schedule A sets forth the factors used in
determining A Option vesting and illustrates various vesting scenarios.
(iii) Upon the occurrence of a Liquidity Event, (A) the excess
of the Eligible Portion of the A Options over the Applicable Portion of
the A Options shall no longer be eligible for accelerated vesting under
Section 4(a)(ii) and shall vest in accordance with Section 4(a)(i) and
(B) the excess of the aggregate number of A Options over the Eligible
Portion of the A Options will continue to be eligible for accelerated
vesting under Section 4(a)(ii).
For purposes of this Section 4, the following terms shall have
the meanings set forth below:
"AGGREGATE RETURN" means, with respect to the Common Stock as
of any Liquidation Event, a fraction, the numerator of which is the Net
Proceeds from a share of Common Stock in connection with such Liquidity
Event and the denominator of which is the Closing Price.
"ANNUALIZED RATE OF RETURN" means, with respect to the Common
Stock as of any Liquidation Event, the compounded annual rate of return
on the price of the Common Stock between the Commencement Date and the
Liquidity Date, calculated by solving for X, where
X = Aggregate Return ^[(365)Y] - 1; and
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Y = the number of days elapsed during the
period commencing on the Commencement Date
and ending on the date of the Liquidity
Event.
"APPLICABLE EXCESS PORTION" means, with respect to the A
Options as of any Liquidity Event, the product of A and B, where
A = the Excess Portion; and
B = a fraction, the numerator of which is the
amount by which the annualized Rate of
Return exceeds 25% (not to exceed ten
percentage points), and the denominator of
which equals 10%.
"APPLICABLE PORTION" means, with respect to the A Options as
of any Liquidity Event, the product of A and B, where
A = the Eligible Portion; and
B = a fraction, the numerator of which is the
amount by which the Annualized Rate of
Return exceeds 25% (not to exceed ten
percentage points), and the denominator of
which equals 10%.
"BASE AMOUNT" means the number of shares of Common Stock held
by the Principal Stockholders on the Grant Date, plus any additional
shares of Common Stock acquired by the Principal Stockholders after the
Grant Date, adjusting as necessary for stock splits, reverse stock
splits and any other changes in the capitalization of the Company.
"CLOSING PRICE" means the price of a share of Common Stock on
the Grant Date.
"COMMENCEMENT DATE" means July 14, 1999.
"ELIGIBLE PORTION" means, with respect to the A Options as of
any Liquidity Event, the product of A and B, where
A = the number of A Options granted to the
Participant on the Grant Date pursuant
to this Agreement; and
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B = a fraction, the numerator of which is the
aggregate number of shares of Common Stock
disposed by the Principal Stockholders
pursuant to such Liquidity Event and the
denominator of which is the Base Amount.
"EXCESS PORTION" means, with respect to the A Options as of
any Liquidity Event, the difference between A and B, where
A = the number of A Options granted to the
Participant on the Grant Date pursuant
to this Agreement; and
B = the Eligible Portion.
"LIQUIDITY EVENT" means (i) an offering of the Common Stock to
the public, provided that the Principal Stockholders participate in
such offering by selling at least 10% of the Base Amount, (ii) a merger
of the Company with or into another corporation negotiated by the
Principal Stockholders on an arms-length basis and approved by the
Principal Stockholders, other than any merger after which the
stockholders of the Company prior to the merger hold shares
representing more than 50% of the voting power of the combined entity,
(iii) an arms-length sale of the Common Stock by the Principal
Stockholders in excess of 10% of the Base Amount or (iv) any other
event declared to be a Liquidity Event by the Board in its sole
discretion. The Board shall have sole discretion in the determination
of what events constitute a Liquidity Event, which determination shall
be final and binding on all parties.
"NET PROCEEDS" means, with respect to the Common Stock as of
any Liquidity Event, the value of the per share consideration with
respect to the Common Stock disposed in such Liquidity Event, less the
sum of (i) the per share transaction expenses incurred in such
transaction (i.e., fees of accountants, attorneys, investment bankers
and other professionals excluding, unless otherwise determined by the
Board, fees of Xxxxxx Capital Partners, Xxxxxxxx Xxxxx & Partners and
any of their affiliates) and the per share amount of any other
transaction fees as determined by the Board and (ii) if applicable, the
per share amount of any gross spread charged by any financial
institutions in connection with a public offering of the Common Stock
and the per share amount of any other expenses incurred in connection
with any such public offering as determined by the Board.
"PRINCIPAL STOCKHOLDERS" means Xxxxxx Equity Investors III,
L.P., Xxxxxx Equity Investors IV, L.P., TC Circuits, L.L.C., Xxxxxxxx
Xxxxx & Partners Fund,
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L.P., and any of their respective affiliates or permitted transferees
who at any time directly or indirectly hold shares of Common Stock.
(b) B OPTIONS. Subject to the Participant's continued
employment or service with the Company or its Subsidiaries, 20% of the B Options
granted hereunder shall vest annually over five years commencing on the first
anniversary of the Grant Date and on each anniversary thereafter. In the event
of a Change in Control or an IPO (each as defined in the Plan), the Participant
shall receive one additional year's service credit towards the vesting and
exercisability of the B Options.
(c) INCENTIVE STOCK OPTIONS. The A Options and B Options
granted hereunder are intended to qualify as Incentive Stock Options to the
greatest extent possible, it being understood and agreed that if all such
Options cannot qualify as Incentive Stock Options, then the B Options shall be
designated first, and to the greatest extent possible, as Incentive Stock
Options, and then the A Options shall be so designated to the extent possible.
(d) EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE. Anything
in the Plan to the contrary notwithstanding, subject to the Company's Call
Right, the following provisions shall apply to the termination of employment or
service of the Participant:
(i) TERMINATION FOR CAUSE. In the event of the termination of
the Participant's employment or service relationship the Company or any
of its Subsidiaries for Cause, all of the Participant's Options (Vested
and Unvested) shall immediately expire.
(ii) RESIGNATION. In the event of the Participant's
resignation for any reason, then all of such Participant's Unvested
Options shall immediately expire and the Participant's Vested Options
shall remain exercisable for a period of 30 days following such
resignation.
(iii) TERMINATION OTHER THAN FOR CAUSE. In the event of the
termination of the Participant's employment or service relationship the
Company or any of its Subsidiaries other than for Cause, then the
Participant's Unvested Options shall be treated as follows:
(A) A pro rata portion of the Participant's Unvested
B Options which were scheduled to vest during the 12-month
period commencing on the Grant Date or any anniversary of the
Grant Date in which such termination occurs (based on the
number of days elapsed in such 12-month period prior to such
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termination) shall become vested and shall remain exercisable
for a period of 90 days after such termination.
(B) If such termination occurs before the date which
is 18 months before the eighth anniversary of the Grant Date,
the Participant's Unvested A Options shall remain outstanding
for nine months after such termination of employment or
service and shall be eligible for accelerated vesting in the
manner set forth in Section 4(a) upon the occurrence of a
Liquidity Event as if the Participant's employment or service
had not terminated, and, to the extent any such accelerated
vesting occurs, shall remain exercisable for a period of 90
days following such accelerated vesting. Any such Unvested A
Options that do not vest on an accelerated basis during the
nine-month period following such termination shall expire at
the end of such period.
(C) If such termination occurs on or after the date
which is 18 months before the eighth anniversary of the Grant
Date but before the date which is six months before the eighth
anniversary of the Grant Date, then 50% of the Participant's
Unvested A Options shall become Vested on an accelerated basis
at such time and shall remain exercisable for a period of 90
days following such accelerated vesting.
(D) If such termination occurs on or after the date
which is six months before the eighth anniversary of the Grant
Date, then 100% of the Participant's Unvested A Options shall
become Vested on an accelerated basis at such time and shall
remain exercisable for a period of 90 days following such
accelerated vesting.
(iv) DEATH OR DISABILITY. If the Participant's employment or
service with the Company or any of its Subsidiaries terminates due to
the Participant's death or Disability, then the Participant's Unvested
Options shall be treated as follows:
(A) A pro rata portion of the Participant's Unvested
B Options which were scheduled to vest during the 12-month
period commencing on the Grant Date or any anniversary of the
Grant Date in which the Participant's death or Disability
occurs (based on the number of days elapsed in such 12-month
period prior to such termination) shall become vested and
shall remain exercisable for a period of one year after such
termination.
(B) The Participant's Unvested A Options shall remain
outstanding for 18 months after the Participant's death or
Disability and shall be eligible for
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accelerated vesting in the manner set forth in Section 4(a)
upon the occurrence of a Liquidity Event as if the
Participant's employment or service had not terminated, and,
to the extent any such accelerated vesting occurs, shall
remain exercisable for a period of one year following such
accelerated vesting. Any such Unvested A Options that do not
vest on an accelerated basis during the 18-month period
following such termination shall expire at the end of such
period; PROVIDED, HOWEVER, that if the eighth anniversary of
the Grant Date occurs during such 18-month period, all of the
Participant's Unvested A Options shall vest at such time and
shall remain exercisable for a period of one year.
(v) CHANGE IN CONTROL. If the Participant's employment or
service with the Company or any of its Subsidiaries is terminated
without Cause within one-year following a Change in Control, then the
Participant's Unvested Options shall be treated as follows:
(A) All of the Participant's Unvested B Options shall
vest and shall remain exercisable for a period of 90 days
after such termination.
(B) The Applicable Excess Portion of the A Options
shall vest on an accelerated basis and shall remain
exercisable for a period of 90 days after such termination.
For example, if the Participant's employment or service with
the Company or any of its Subsidiaries is terminated without
Cause within one year following a 50% Liquidity Event (e.g., a
sale by the Principal Stockholder of 50% of their respective
interests) and the Annualized Rate of Return at the time of
the Liquidity Event equaled 35%, then the remaining 50% of the
A Options that did not vest upon the Liquidity Event will
become vested on an accelerated basis. Schedule A sets forth
the factors used in determining A Option vesting and
illustrates various vesting scenarios.
5. REPRESENTATIONS AND WARRANTIES. (a) The Participant hereby
represents that the Participant is aware of and familiar with the restrictions
imposed on the transfer of any share of Common Stock and Options, including,
without limitation, the restrictions contained in this Agreement and the Plan.
(b) In the event the Option Shares have not been registered
under the Securities Act at the time the Participant's Options are exercised in
whole or in part, the Participant shall represent to the Company the following:
(i) The Participant is aware of the Company's business affairs
and financial condition and has acquired sufficient information about
the Company to reach an
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informed and knowledgeable decision to acquire the securities. The
Participant is purchasing these securities for investment for the
Participant's own account only and not with a view to, or for resale
in connection with, any "distribution" thereof within the meaning of
the Securities Act of 1933, as amended (the "SECURITIES Act").
(ii) The Participant understands that the securities have not
been registered under the Securities Act by reason of a specific
exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of the Participant's investment intent as
expressed herein. In this connection, the Participant understands that,
in the view of the Securities Exchange Commission, the statutory basis
for such exemption may not be present if the Participant's
representations meant that the Participant's present intention was to
hold these securities for a minimum capital gains period under the tax
statutes, for a deferred sale, for a market rise, for a sale if the
market does not rise, or for a year or any other fixed period in the
future.
(iii) The Participant further acknowledges and understands
that the securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from
such registration is available. The Participant further acknowledges
and understands that the Company is under no obligation to register the
securities. The Participant understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the
transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to
the Company.
6. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or sent by certified
or registered mail, return receipt requested, postage prepaid, addressed, if to
the Participant, to the Participant's attention at the mailing address set forth
at the foot of this Agreement (or to such other address as the Participant shall
have specified to the Company in writing) and, if to the Company, to Pacific
Circuits, Inc., 00000 X.X. 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention:
President. All such notices shall be conclusively deemed to be received and
shall be effective, if sent by hand delivery, upon receipt, or if sent by
registered or certified mail, on the fifth day after the day on which such
notice is mailed.
7. WAIVER. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
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8. ENTIRE AGREEMENT; GOVERNING LAW. This Agreement, the Plan
and the other related agreements expressly referred to herein set forth the
entire agreement and understanding between the parties hereto and supersede all
prior agreements and understandings relating to the subject matter hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same agreement. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of this Agreement. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Washington, without regard to the choice of law principles thereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers and the Participant has executed
this Agreement, both as of the day and year first above written.
TTM TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
PARTICIPANT
------------------------------------------
Name:
Address:
Option Price:
Number of A Options:
Number of B Options:
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SCHEDULE A
A OPTION VESTING SCENARIOS
The A Options granted under the Plan are "performance-vesting"
options. This means that certain performance criteria must be satisfied in order
for them to vest on an accelerated basis. If the performance criteria are never
met, the A Options will not vest until the eighth anniversary of the Grant Date.
Unlike the A Options, the B Options vest over time (20% per year for five years,
commencing on the first anniversary of the Grant Date). The illustrations below
apply only to the A Options.
The following examples are intended to illustrate the
mechanics of the vesting of A options under the Plan. They are intended as
illustrations only and are not an indication of the actual performance of the
Common Stock or the future value of the A Options that have been granted under
the Plan.
The vesting of Options is dependent on the following factors:
OCCURRENCE OF A LIQUIDITY EVENT.
X All Unvested A Options will vest on the eighth
anniversary of grant. However, A Options may vest
earlier upon the occurrence of a Liquidity Event
under certain circumstances.
X "LIQUIDITY EVENT" is defined in the Plan as a sale or
other disposition of the Common Stock by entities
holding Common Stock which are controlled by Xxxxxx
Capital Partners and Xxxxxxxx Xxxxx & Partners
(defined in the Plan as the "PRINCIPAL
STOCKHOLDERS").
AMOUNT OF COMMON STOCK DISPOSED BY PRINCIPAL STOCKHOLDERS IN
LIQUIDITY EVENT
X The amount of A Options that will be eligible to vest
on any Liquidity Event depends on the amount of
Common Stock sold or disposed by the Principal
Stockholders.
VALUE OF COMMON STOCK AT LIQUIDITY EVENT
X The amount of A Options that will vest on a Liquidity
Event is determined by the Annualized Rate of Return
on the Common Stock (the compounded
annual rate of return on the Common Stock between
July 14, 1999 and the Liquidity Event).
X If the Annualized Rate of Return on the Common Stock
is 35% or greater, all of the A Options eligible for
accelerated vesting on the Liquidity Event will vest.
X If the Annualized Rate of Return is 25% or lower, no
A Options will vest on the Liquidity Event.
X A proportionate amount of A Options will vest if the
Annualized Rate of Return is between 25% and 35%.
TERMINATION OF EMPLOYMENT WITHOUT CAUSE WITHIN ONE YEAR
FOLLOWING A LIQUIDITY EVENT
X If a Participant's employment is terminated within
one year following a Liquidity Event then the excess
A Options held by the Participant that were not
ELIGIBLE for acceleration in connection with the
Liquidity Event (E.G., the Liquidity Event was for
less than 100% of the Principal Stockholders' Common
Stock holdings) will be eligible for accelerated
vesting in the same proportion as A Options vested at
the time of the Liquidity Event.
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