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EXHIBIT 4.2
APPLIED MATERIALS, INC.
1998 NON-EXECUTIVE EMPLOYEE RETENTION STOCK OPTION GRANT
NONQUALIFIED STOCK OPTION AGREEMENT
Applied Materials, Inc. (the "Company") hereby grants you (the
"Employee") an option under the Company's 1998 Non-Executive Employee Rentention
Stock Option Plan (the "Plan") to purchase shares of common stock of the
Company. You are eligible to receive this option only if you are a non-executive
(below global job grade 50) regular full time or part time employee of record of
Applied Materials, Inc. (or an Affiliate thereof) as of October 9, 1998
(excluding co-ops and interns). The date of this Agreement is October 9, 1998
(the "Grant Date"). In general, the latest date this option will expire is
November 13, 2005 (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: 200 EXERCISE PRICE PER SHARE: US $23.625
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SCHEDULED VESTING DATES: NUMBER OF SHARES
------------------------ ----------------
11/14/99 50
11/14/00 50
11/14/01 50
11/14/02 50
EVENT TRIGGERING MAXIMUM TIME TO EXERCISE
OPTION TERMINATION AFTER TRIGGERING EVENT*
------------------ ------------------------
Termination of Service (except as shown below) 15 days
Termination of Service due to Retirement (age 65 or over) 6 months
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.
PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE
SPECIFIC TERMS AND CONDITIONS OF THIS OPTION, INCLUDING IMPORTANT ADDITIONAL
INFORMATION CONCERNING VESTING, CANCELLATION AND TERMINATION OF THIS OPTION.
APPLIED MATERIALS, INC.
-------------------------------------------------
Xxxxx X. Xxxxxx
Chairman of the Board and Chief Executive Officer
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APPENDIX A
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION
1. Vesting Schedule. This option is scheduled to become exercisable as
to fifty (50) of the shares subject to this option on the first anniversary of
the date of this Agreement, and as to an additional fifty (50) shares on each
succeeding anniversary date, until one hundred percent (100%) of the shares
subject to this option shall have vested. 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. 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 fifteen (15) days after the date of the Termination, or within seven
(7) years from the date of this Agreement, 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 or Disability, the Employee
may, within six (6) months after the date of such Termination, or within seven
(7) years from the date of this Agreement, whichever shall first occur, exercise
any vested but unexercised portion of the option.
3. Death of Employee. In the event that the Employee dies while an
employee of the Company or an Affiliate or during the fifteen (15) day or six
(6) month periods referred to in Paragraph 2 above, the Employee's designated
beneficiary or beneficiaries, 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 within seven (7) years from the date of this Agreement, whichever
shall first occur, exercise any vested but unexercised portion of this option.
Any such transferee must furnish the Company (a) evidence satisfactory to the
Company to establish the validity of the transfer of the option, and (b) written
acceptance of the terms and conditions of this option as set forth in this
Agreement.
4. 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).
5. 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.
6. Option is Not Transferable. Except as provided in Paragraph 3 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.
7. 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).
8. 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.
9. 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.
10. 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.
11. Captions. Captions provided herein are for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.
12. 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.
13. 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.
14. 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.
15. 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.
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