<PAGE>
EXHIBIT 10.2
FORM OF
SIRF TECHNOLOGY, INC.
2000 STOCK INCENTIVE PLAN
(Adopted by the Board on September 27, 2000)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE.................................. 1
SECTION 2. DEFINITIONS................................................ 1
(a) "Affiliate"..................................................... 1
(b) "Award"......................................................... 1
(c) "Board of Directors"............................................ 1
(d) "Change in Control"............................................. 1
(e) "Code".......................................................... 3
(f) "Committee"..................................................... 3
(g) "Company"....................................................... 3
(h) "Consultant".................................................... 3
(i) "Employee"...................................................... 3
(j) "Exchange Act".................................................. 3
(k) "Exercise Price"................................................ 3
(l) "Fair Market Value"............................................. 3
(m) "ISO"........................................................... 4
(n) "Nonstatutory Option" or "NSO".................................. 4
(o) "Offeree"....................................................... 4
(p) "Option"........................................................ 4
(q) "Optionee"...................................................... 4
(r) "Outside Director".............................................. 4
(s) "Parent"........................................................ 4
(t) "Participant"................................................... 4
(u) "Plan".......................................................... 4
(v) "Purchase Price"................................................ 4
(w) "Restricted Share".............................................. 4
(x) "Restricted Share Agreement "................................... 4
(y) "SAR"........................................................... 4
(z) "SAR Agreement"................................................. 5
(aa) "Service"....................................................... 5
(bb) "Share"......................................................... 5
(cc) "Stock"......................................................... 5
(dd) "Stock Option Agreement"........................................ 5
(ee) "Stock Purchase Agreement"...................................... 5
(ff) "Stock Unit".................................................... 5
(gg) "Stock Unit Agreement".......................................... 5
(hh) "Subsidiary".................................................... 5
(ii) "Total and Permanent Disability"................................ 5
SECTION 3. ADMINISTRATION............................................. 5
(a) Committee Composition........................................... 5
(b) Committee for Non-Officer Grants................................ 6
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
(c) Committee Procedures............................................ 6
(d) Committee Responsibilities...................................... 6
SECTION 4. ELIGIBILITY................................................ 7
(a) General Rule.................................................... 7
(b) Outside Directors............................................... 7
(c) Ten-Percent Stockholders........................................ 9
(d) Attribution Rules............................................... 9
(e) Outstanding Stock............................................... 9
SECTION 5. STOCK SUBJECT TO PLAN...................................... 9
(a) Basic Limitation................................................ 9
(b) Annual Increase in Shares....................................... 10
(c) Additional Shares............................................... 10
(d) Dividend Equivalents............................................ 10
SECTION 6. RESTRICTED SHARES.......................................... 10
(a) Restricted Stock Agreement...................................... 10
(b) Payment for Awards.............................................. 10
(c) Vesting......................................................... 11
(d) Voting and Dividend Rights...................................... 11
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES.............. 11
(a) Duration of Offers and Nontransferability of Rights............. 11
(b) Withholding Taxes............................................... 11
(c) Restrictions on Transfer of Shares.............................. 11
SECTION 8. TERMS AND CONDITIONS OF OPTIONS............................ 11
(a) Stock Option Agreement.......................................... 11
(b) Number of Shares................................................ 12
(c) Exercise Price.................................................. 12
(d) Withholding Taxes............................................... 12
(e) Exercisability and Term......................................... 12
(f) Nontransferability.............................................. 12
(g) Exercise of Options Upon Termination of Service................. 13
(h) Effect of Change in Control..................................... 13
(i) Leaves of Absence............................................... 13
(j) No Rights as a Stockholder...................................... 13
(k) Modification, Extension and Renewal of Options.................. 13
(l) Restrictions on Transfer of Shares.............................. 14
(m) Buyout Provisions............................................... 14
SECTION 9. PAYMENT FOR SHARES......................................... 14
(a) General Rule.................................................... 14
(b) Surrender of Stock.............................................. 14
(c) Services Rendered............................................... 14
(d) Cashless Exercise............................................... 14
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
(e) Exercise/Pledge................................................. 14
(f) Promissory Note................................................. 15
(g) Other Forms of Payment.......................................... 15
SECTION 10. STOCK APPRECIATION RIGHTS................................. 15
(a) SAR Agreement................................................... 15
(b) Number of Shares................................................ 15
(c) Exercise Price.................................................. 15
(d) Exercisability and Term......................................... 15
(e) Effect of Change in Control..................................... 15
(f) Exercise of SARs................................................ 16
(g) Special Holding Period.......................................... 16
(h) Special Exercise Window......................................... 16
(i) Modification or Assumption of SARs.............................. 16
SECTION 11. STOCK UNITS............................................... 16
(a) Stock Unit Agreement............................................ 16
(b) Payment for Awards.............................................. 16
(c) Vesting Conditions.............................................. 16
(d) Voting and Dividend Rights...................................... 17
(e) Form and Time of Settlement of Stock Units...................... 17
(f) Death of Recipient.............................................. 17
(g) Creditors' Rights............................................... 17
SECTION 12. ADJUSTMENT OF SHARES...................................... 18
(a) Adjustments..................................................... 18
(b) Dissolution or Liquidation...................................... 18
(c) Reorganizations................................................. 18
(d) Reservation of Rights........................................... 19
SECTION 13. DEFERRAL OF AWARDS........................................ 19
SECTION 14. AWARDS UNDER OTHER PLANS.................................. 19
PAYMENT OF DIRECTOR'S FEES IN SECURITIES.............................. 20
(a) Effective Date.................................................. 20
(b) Elections to Receive NSOs, Restricted Shares or Stock Units..... 20
(c) Number and Terms of NSOs, Restricted Shares or Stock Units...... 20
SECTION 16. LEGAL AND REGULATORY REQUIREMENTS......................... 20
SECTION 17. WITHHOLDING TAXES......................................... 20
(a) General......................................................... 20
(b) Share Withholding............................................... 20
SECTION 18. LIMITATION ON PARACHUTE PAYMENTS.......................... 21
(a) Scope of Limitation............................................. 21
(b) Basic Rule...................................................... 21
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
(c) Reduction of Payments........................................... 21
(d) Overpayments and Underpayments.................................. 21
(e) Related Corporations............................................. 22
SECTION 19. NO EMPLOYMENT RIGHTS....................................... 22
SECTION 20. DURATION AND AMENDMENTS................................... 22
(a) Term of the Plan................................................ 22
(b) Right to Amend or Terminate the Plan............................ 22
(c) Effect of Amendment or Termination.............................. 22
SECTION 21. EXECUTION................................................. 23
</TABLE>
-iv-
<PAGE>
SIRF TECHNOLOGY, INC.
---------------------
2000 STOCK INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was adopted by the Board of Directors effective September 27,
2000. The purpose of the Plan is to promote the long-term success of the Company
and the creation of stockholder value by (a) encouraging Employees, Outside
Directors and Consultants to focus on critical long-range objectives, (b)
encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside
Directors and Consultants directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of Restricted Shares, Stock Units, Options (which may constitute
incentive stock options or nonstatutory stock options) or stock appreciation
rights.
SECTION 2. DEFINITIONS.
(a) "Affiliate" shall mean any entity other than a Subsidiary, if the
Company and/or one of more Subsidiaries own not less than 50% of such entity.
(b) "Award" shall mean any award of an Option, a SAR, a Restricted Share
or a Stock Unit under the Plan.
(c) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(d) "Change in Control" shall mean the occurrence of any of the following
events:
(i) A change in the composition of the Board of Directors occurs, as
a result of which fewer than two-thirds of the incumbent directors are
directors who either:
(A) Had been directors of the Company on the "look-back date"
(as defined below) (the "original directors"); or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the
aggregate of the original directors who were still in office at the
time of the election or nomination and the directors whose election or
nomination was previously so approved (the "continuing directors"); or
(ii) Any "person" (as defined below) who by the acquisition or
aggregation of securities, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities ordinarily (and apart
from rights accruing under special circumstances) having the right
-1-
<PAGE>
to vote at elections of directors (the "Base Capital Stock"); except that
any change in the relative beneficial ownership of the Company's securities
by any person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter in
such person's ownership of securities, shall be disregarded until such
person increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company;
(iii) The consummation of a merger or consolidation of the Corporation
with or into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such
merger, consolidation or other reorganization 50% or more of the voting
power of the outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent corporation of such
continuing or surviving entity;
(iv) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(v) Both:
(A) Any "person" (as defined below) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's Base Capital
Stock; except that any change in the relative beneficial ownership of
the Company's securities by any person resulting solely from a
reduction in the aggregate number of outstanding shares of Base
Capital Stock, and any decrease thereafter in such person's ownership
of securities, shall be disregarded until such person increases in any
manner, directly or indirectly, such person's beneficial ownership of
any securities of the Company; and
(B) The beneficial ownership by such person of securities
representing such percentage has not been approved by a majority of
the continuing directors.
For purposes of subsection (d)(i) above, the term "look-back" date shall
mean the later of (1) September 27, 2000 or (2) the date 24 months prior to the
date of the event that may constitute a Change in Control.
For purposes of subsections (d)(ii) and (v) above, the term "person" shall
have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange
Act but shall exclude (1) a trustee or other fiduciary holding securities under
an employee benefit plan maintained by the Company or a Parent or Subsidiary and
(2) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the Stock.
-2-
<PAGE>
Any other provision of this Section 2(d) notwithstanding, a transaction
shall not constitute a Change in Control if its sole purpose is to change the
state of the Company's incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons who held the
Company's securities immediately before such transaction.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the committee designated by the Board of
Directors, which is authorized to administer the Plan, as described in Section 3
hereof.
(g) "Company" shall mean SIRF TECHNOLOGY, INC., a Delaware corporation.
(h) "Consultant" shall mean a consultant or advisor who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor or a member of the board of directors of a Parent or a
Subsidiary who is not an Employee. Service as a Consultant shall be considered
Service for all purposes of the Plan.
(i) "Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Price" shall mean, in the case of an Option, the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of a SAR, shall mean an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
(l) "Fair Market Value" with respect to a Share, shall mean the market
price of one Share of Stock, determined by the Committee as follows:
(i) If the Stock was traded over-the-counter on the date in question
but was not traded on The Nasdaq Stock Market, then the Fair Market Value
shall be equal to the last transaction price quoted for such date by the
OTC Bulletin Board or, if not so quoted, shall be equal to the mean between
the last reported representative bid and asked prices quoted for such date
by the principal automated inter-dealer quotation system on which the Stock
is quoted or, if the Stock is not quoted on any such system, by the "Pink
Sheets" published by the National Quotation Bureau, Inc.;
(ii) If the Stock was traded on The Nasdaq Stock Market, then the
Fair Market Value shall be equal to the last reported sale price quoted for
such date by The Nasdaq Stock Market;
(iii) If the Stock was traded on a United States stock exchange on the
date in question, then the Fair Market Value shall be equal to the closing
price reported for such date by the applicable composite-transactions
report; and
-3-
<PAGE>
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.
(m) "ISO" shall mean an employee incentive stock option described in
Section 422 of the Code.
(n) "Nonstatutory Option" or "NSO" shall mean an employee stock option
that is not an ISO.
(o) "Offeree" shall mean an individual to whom the Committee has offered
the right to acquire Shares under the Plan (other than upon exercise of an
Option).
(p) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(q) "Optionee" shall mean an individual or estate who holds an Option or
SAR.
(r) "Outside Director" shall mean a member of the Board of Directors who
is not a common-law employee of the Company, a Parent or a Subsidiary. Service
as an Outside Director shall be considered Service for all purposes of the Plan,
except as provided in the second sentence of Section 4(a).
(s) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be a Parent commencing as of such
date.
(t) "Participant" shall mean an individual or estate who holds an Award.
(u) "Plan" shall mean this 2000 Stock Incentive Plan of SIRF TECHNOLOGY,
INC., as amended from time to time.
(v) "Purchase Price" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.
(w) "Restricted Share" shall mean a Share awarded under the Plan.
(x) "Restricted Share Agreement" shall mean the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Shares.
(y) "SAR" shall mean a stock appreciation right granted under the Plan.
-4-
<PAGE>
(z) "SAR Agreement" shall mean the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
(aa) "Service" shall mean service as an Employee, Consultant or Outside
Director.
(bb) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 9 (if applicable).
(cc) "Stock" shall mean the Common Stock of the Company.
(dd) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to his Option.
(ee) "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan that contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(ff) "Stock Unit" shall mean a bookkeeping entry representing the
equivalent of one Share, as awarded under the Plan.
(gg) "Stock Unit Agreement" shall mean the agreement between the Company
and the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.
(hh) "Subsidiary" shall mean any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50% of the total combined voting power
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
(ii) "Total and Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted, or can be expected to last, for a continuous period of
not less than 12 months.
SECTION 3. ADMINISTRATION.
(a) Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist of two or more directors of the Company,
who shall be appointed by the Board. In addition, the composition of the
Committee shall satisfy
(i) such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(ii) such requirements as the Internal Revenue Service may establish
for outside directors acting under plans intended to qualify for exemption
under Section 162(m)(4)(C) of the Code.
-5-
<PAGE>
(b) Committee for Non-Officer Grants. The Board may also appoint one or
more separate committees of the Board, each composed of one or more directors of
the Company who need not satisfy the requirements of Section 3(a), who may
administer the Plan with respect to Employees who are not considered officers or
directors of the Company under Section 16 of the Exchange Act, may grant Awards
under the Plan to such Employees and may determine all terms of such grants.
Within the limitations of the preceding sentence, any reference in the Plan to
the Committee shall include such committee or committees appointed pursuant to
the preceding sentence.
(c) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairman. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(d) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each Offeree
or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price, the vesting of
the award (including accelerating the vesting of awards) and to specify the
provisions of the Stock Purchase Agreement relating to such award or sale;
(viii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, the vesting or duration of the
Option (including accelerating the vesting of the Option), to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(ix) To amend any outstanding Stock Purchase Agreement or Stock
Option Agreement, subject to applicable legal restrictions and to the
consent of the Offeree or Optionee who entered into such agreement;
-6-
<PAGE>
(x) To prescribe the consideration for the grant of each Option or
other right under the Plan and to determine the sufficiency of such
consideration;
(xi) To determine the disposition of each Option or other right
under the Plan in the event of an Optionee's or Offeree's divorce or
dissolution of marriage;
(xii) To determine whether Options or other rights under the Plan
will be granted in replacement of other grants under an incentive or other
compensation plan of an acquired business;
(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Option Agreement or any Stock Purchase
Agreement; and
(xiv) To take any other actions deemed necessary or advisable for the
administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Offerees, all Optionees, and all persons deriving their rights from an
Offeree or Optionee. No member of the Committee shall be liable for any action
that he has taken or has failed to take in good faith with respect to the Plan,
any Option, or any right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees shall be eligible for the grant of ISOs.
Only Employees, Consultants and Outside Directors shall be eligible for the
grant of Restricted Shares, Stock Units, NSOs or SARs, and grants to Outside
Directors shall comply with the provisions of Section 4(b).
(b) Outside Directors. Any other provision of the Plan notwithstanding,
the participation of Outside Directors in the Plan shall be subject to the
following restrictions:
(i) Outside Directors shall only be eligible for the grant of
Restricted Shares, Stock Units, Nonstatutory Options and SARs.
(ii) Each Outside Director who first joins the Board of Directors
after the date of adoption of the Plan shall receive a Nonstatutory Option,
subject to approval of the Plan by the Company's stockholders, to purchase
thirty thousand (30,000) Shares (subject to adjustment under Section 12) on
the first business day after his or her election to the Board of Directors.
(iii) On the first business day following the conclusion of each
regular annual meeting of the Company's stockholders after such Outside
Director's appointment or election to the Board of Directors, commencing
with the annual meeting occurring after
-7-
<PAGE>
the adoption of the Plan, each Outside Director who will continue serving
as a member of the Board of Directors thereafter shall receive an Option to
purchase seven thousand five hundred (7,500) Shares, subject to adjustment
under Section 12. Each Outside Director who is not initially elected at a
regular annual meeting of the Company's stockholders shall receive an
Option to purchase a pro rata portion of thirty thousand (30,000) Shares
within ten business days of his or her election based on the number of full
months remaining from date of election until the next regular annual
meeting of the Company's stockholders divided by 12. Any fractional shares
resulting from such calculation shall be rounded up to the nearest whole
number.
(iv) The Exercise Price of all Nonstatutory Options granted to an
Outside Director under this Section 4(b) shall be equal to 100% of the Fair
Market Value of a Share on the date of grant, payable in one of the forms
described in Section 9(a), (b) and (d).
(v) Under Section 4(b)(ii) the first twenty-five percent 25% of the
Shares subject to each Option shall become exercisable upon the six (6)
month anniversary of the date of grant, and the remaining shares subject to
each Option shall become exercisable in equal monthly installments over the
following forty-two (42) months. Except as set forth in the next succeeding
sentence, each Option granted under Section 4(b)(iii) above shall become
exercisable in full on the first anniversary of the date of grant. Each
Option granted to Outside Directors who were not initially elected at a
regular annual meeting of the Company's stockholders shall become
exercisable in full at the next regular annual meeting of the Company's
stockholders following the date of grant. Notwithstanding the foregoing,
each Option shall become exercisable in full in the event that a Change in
Control occurs with respect to the Company.
(vi) Subject to Sections 4(b)(vii) and (viii), all Nonstatutory
Options granted to an Outside Director under this Section 4(b) shall
terminate on the tenth anniversary of the date of grant of such Options.
(vii) If an Optionee's Service terminates for any reason other than
death, then his or her Options shall expire on the earliest of the
following occasions:
(A) The expiration date determined pursuant to Section 4(b)(vi)
above;
(B) The date 24 months after the termination of the Optionee's
Service, if the termination occurs because of his or her Total and
Permanent Disability; or
(C) The date six months after the termination of the Optionee's
Service for any reason other than Total and Permanent Disability.
The Optionee may exercise all or part of his or her Options at any time
before the expiration of such Options under the preceding sentence, but
only to the extent that such Options had become exercisable before his or
her Service terminated. The balance of such Options shall lapse when the
Optionee's Service terminates. In the event that the Optionee dies after
the termination of his or her Service but before the expiration of his or
-8-
<PAGE>
her Options, all or part of such Options may be exercised at any time prior
to their expiration by the executors or administrators of the Optionee's
estate or by any person who has acquired such Options directly from him or
her by bequest, inheritance or beneficiary designation under the Plan, but
only to the extent that such Options had become exercisable before his or
her Service terminated.
(viii) If an Optionee dies while he or she is in Service, then his or
her Options shall expire on the earlier of the following dates:
(A) The expiration date determined pursuant to Section
4(b)(vi) above; or
(B) The date 24 months after his or her death.
All or part of the Optionee's Options may be exercised at any time before
the expiration of such Options under the preceding sentence by the
executors or administrators of his or her estate or by any person who has
acquired such Options directly from him or her by bequest, inheritance or
beneficiary designation under the Plan.
(ix) No Option shall be transferable by the Optionee other than by
will, by written beneficiary designation or by the laws of descent and
distribution. An Option may be exercised during the lifetime of the
Optionee only by the Optionee or by the Optionee's guardian or legal
representative. No Option or interest therein may be transferred, assigned,
pledged or hypothecated by the Optionee during his or her lifetime, whether
by operation of law or otherwise, or be made subject to execution,
attachment or similar process.
(c) Ten-Percent Stockholders. An Employee who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company,
a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such
grant satisfies the requirements of Section 422(c)(6) of the Code.
(d) Attribution Rules. For purposes of Section 4(d) above, in determining
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for such Employee's brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries.
(e) Outstanding Stock. For purposes of Section 4(d) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares or treasury Shares. The maximum aggregate number of Options,
SARs, Stock Units and Restricted Shares awarded under the Plan shall not exceed
two million (2,000,000) Shares, plus the
-9-
<PAGE>
additional Shares described in Sections (b) and (c), but in no event more than
two million (2,000,000) Shares. The limitation of this Section 5(a) shall be
subject to adjustment pursuant to Section 12.
(b) Annual Increase in Shares. As of January 1 of each year, commencing
with the year 2001, the aggregate number of Options, SARs, Stock Units and
Restricted Shares that may be awarded under the Plan shall automatically
increase by a number equal to the lesser of (i) two million (2,000,000) shares,
(ii) five percent (5%) of the fully diluted outstanding shares of Stock of the
Company on such date or (iii) a lesser amount determined by the Board. The
aggregate number of Shares that may be issued under the Plan shall at all times
be subject to adjustment pursuant to Section 12. The number of Shares that are
subject to Options or other rights outstanding at any time under the Plan shall
not exceed the number of Shares which then remain available for issuance under
the Plan. The Company, during the term of the Plan, shall at all times reserve
and keep available sufficient Shares to satisfy the requirements of the Plan.
(c) Additional Shares. If Restricted Shares or Shares issued upon the
exercise of Options are forfeited, then such Shares shall again become available
for Awards under the Plan. If Stock Units, Options or SARs are forfeited or
terminate for any other reason before being exercised, then the corresponding
Shares shall again become available for Awards under the Plan. If Stock Units
are settled, then only the number of Shares (if any) actually issued in
settlement of such Stock Units shall reduce the number available under Section
5(a) and the balance shall again become available for Awards under the Plan. If
SARs are exercised, then only the number of Shares (if any) actually issued in
settlement of such SARs shall reduce the number available in Section 5(a) and
the balance shall again become available for Awards under the Plan. The
foregoing notwithstanding, the aggregate number of Shares that may be issued
under the Plan upon the exercise of ISOs shall not be increased when Restricted
Shares or other Shares are forfeited.
(d) Dividend Equivalents. Any dividend equivalents paid or credited under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
SECTION 6. RESTRICTED SHARES
(a) Restricted Stock Agreement. Each grant of Restricted Shares under the
Plan shall be evidenced by a Restricted Stock Agreement between the recipient
and the Company. Such Restricted Shares shall be subject to all applicable terms
of the Plan and may be subject to any other terms that are not inconsistent with
the Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.
(b) Payment for Awards. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the Award recipient
shall furnish consideration with a value not less than the par value of such
Restricted Shares in the form of cash, cash equivalents, or past services
rendered to the Company (or a Parent or Subsidiary), as the Committee may
determine.
-10-
<PAGE>
(c) Vesting. Each Award of Restricted Shares may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Restricted Stock Agreement. The Committee may
include among such conditions the requirement that the performance of the
Company or a business unit of the Company for a specified period of one or more
years equal or exceed a target determined in advance by the Committee. Such
performance shall be determined by the Company's independent auditors. Such
target shall be based on one or more of the criteria set forth in Appendix A.
The Committee shall determine such target not later than the 90th day of such
period. In no event shall the number of Restricted Shares which are subject to
performance based vesting conditions exceed two million (2,000,000), subject to
adjustment in accordance with Section 12. A Restricted Stock Agreement may
provide for accelerated vesting in the event of the Participant's death,
disability or retirement or other events. The Committee may determine, at the
time of granting Restricted Shares of thereafter, that all or part of such
Restricted Shares shall become vested in the event that a Change in Control
occurs with respect to the Company.
(d) Voting and Dividend Rights. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Restricted Stock Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be subject
to the same conditions and restrictions as the Award with respect to which the
dividends were paid.
SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree 30 days after the grant of such right was
communicated to him by the Committee. Such right shall not be transferable and
shall be exercisable only by the Offeree to whom such right was granted.
(b) Withholding Taxes. As a condition to the purchase of Shares, the
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
(c) Restrictions on Transfer of Shares. Any Shares awarded or sold under
the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The Stock Option Agreement shall
-11-
<PAGE>
specify whether the Option is an ISO or an NSO. The provisions of the various
Stock Option Agreements entered into under the Plan need not be identical.
Options may be granted in consideration of a reduction in the Optionee's other
compensation. A Stock Option Agreement may provide that a new Option will be
granted automatically to the Optionee when he or she exercises a prior Option
and pays the Exercise Price in a form described in Section 9(b).
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 12. Options granted to an
Optionee in a single fiscal year of the Company shall not cover more than two
million (2,000,000) Shares, except that Options granted to a new Employee or
Consultant in the fiscal year of the Company in which his or her Service first
commences shall not cover more than two million (2,000,000) Shares (in each case
subject to adjustment in accordance with Section 12).
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, except as otherwise provided
in Section 4(d), and the Exercise Price of an NSO shall not be less than the par
value of the Shares subject to such NSO. Subject to the foregoing in this
Section 8(c), the Exercise Price under any Option shall be determined by the
Committee at its sole discretion. The Exercise Price shall be payable in one of
the forms described in Section 9.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
(e) Exercisability and Term. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of grant
(five years for Employees described in Section 4(d)). A Stock Option Agreement
may provide for accelerated exercisability in the event of the Optionee's death,
disability, or retirement or other events and may provide for expiration prior
to the end of its term in the event of the termination of the Optionee's
service. Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited. Subject to the foregoing in this Section 8(e), the Committee at its
sole discretion shall determine when all or any installment of an Option is to
become exercisable and when an Option is to expire.
(f) Nontransferability. During an Optionee's lifetime, his or her
Option(s) shall be exercisable only by the Optionee and shall not be
transferable. In the event of an Optionee's death, his or her Option(s) shall
not be transferable other than by will or by the laws of descent and
distribution.
-12-
<PAGE>
(g) Exercise of Options Upon Termination of Service. Each Stock Option
Agreement shall set forth the extent to which the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service with the
Company and its Subsidiaries, and the right to exercise the Option of any
executors or administrators of the Optionee's estate or any person who has
acquired such Option(s) directly from the Optionee by bequest or inheritance.
Such provisions shall be determined in the sole discretion of the Committee,
need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of Service.
(h) Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
as to all or part of the Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company, subject to the following
limitations:
(i) In the case of an ISO, the acceleration of exercisability shall
not occur without the Optionee's written consent.
(ii) If the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be
treated as a "pooling of interests" for financial reporting purposes, and
if such transaction in fact is so treated, then the acceleration of
exercisability shall not occur to the extent that the Company's independent
accountants and such other party's independent accountants separately
determine in good faith that such acceleration would preclude the use of
"pooling of interests" accounting.
(i) Leaves of Absence. An Employee's Service shall cease when such
Employee ceases to be actively employed by, or a consultant or adviser to, the
Company (or any subsidiary) as determined in the sole discretion of the Board of
Directors. For purposes of Options, Service does not terminate when an Employee
goes on a bona fide leave of absence, that was approved by the Company in
writing, if the terms of the leave provide for continued service crediting, or
when continued service crediting is required by applicable law. However, for
purposes of determining whether an Option is entitled to ISO status, an
Employee's Service will be treated as terminating 90 days after such Employee
went on leave, unless such Employee's right to return to active work is
guaranteed by law or by a contract. Service terminates in any event when the
approved leave ends, unless such Employee immediately returns to active work.
The Company determines which leaves count toward Service, and when Service
terminates for all purposes under the Plan.
(j) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his Option until the date of the issuance of a stock certificate for
such Shares. No adjustments shall be made, except as provided in Section 12.
(k) Modification, Extension and Renewal of Options. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
options or may accept the can-
-13-
<PAGE>
cellation of outstanding options (to the extent not previously exercised),
whether or not granted hereunder, in return for the grant of new Options for the
same or a different number of Shares and at the same or a different exercise
price. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair his or her rights or
obligations under such Option.
(l) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
(m) Buyout Provisions. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
SECTION 9. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Sections 9(b) through
9(g) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by surrendering, or attesting to
the ownership of, Shares which have already been owned by the Optionee or his
representative for more than 12 months. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased under the Plan.
The Optionee shall not surrender, or attest to the ownership of, Shares in
payment of the Exercise Price if such action would cause the Company to
recognize compensation expense (or additional compensation expense) with respect
to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Committee, Shares may be
awarded under the Plan in consideration of services rendered to the Company or a
Subsidiary prior to the award. If Shares are awarded without the payment of a
Purchase Price in cash, the Committee shall make a determination (at the time of
the award) of the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of Section 6(c).
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale proceeds to the Company in payment
of the aggregate Exercise Price.
(e) Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker or lender
to pledge Shares, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of the aggregate Exercise Price.
-14-
<PAGE>
(f) Promissory Note. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by delivering (on a form prescribed
by the Company) a full-recourse promissory note. However, the par value of the
Common Shares being purchased under the Plan, if newly issued, shall be paid in
cash or cash equivalents.
(g) Other Forms of Payment. To the extent that a Stock Option Agreement
so provides, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
SECTION 10. STOCK APPRECIATION RIGHTS.
(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced
by a SAR Agreement between the Optionee and the Company. Such SAR shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Optionee's other compensation.
(b) Number of Shares. Each SAR Agreement shall specify the number of
Shares to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Section 12. SARs granted to any Optionee in a single
calendar year shall in no event pertain to more than two million (2,000,000)
Shares, except that SARs granted to a new Employee or Consultant in the fiscal
year of the Company in which his or her Service first commences shall not
pertain to more than two million (2,000,000) Shares. The limitations set forth
in the preceding sentence shall be subject to adjustment in accordance with
Section 12.
(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price.
A SAR Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.
(d) Exercisability and Term. Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. A SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. SARs may be
awarded in combination with Options, and such an Award may provide that the SARs
will not be exercisable unless the related Options are forfeited. A SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or thereafter. A SAR granted under the Plan may provide that
it will be exercisable only in the event of a Change in Control.
(e) Effect of Change in Control. The Committee may determine, at the
time of granting a SAR or thereafter, that such SAR shall become fully
exercisable as to all Common Shares subject to such SAR in the event that a
Change in Control occurs with respect to the Company, subject to the following
sentence. If the Company and the other party to the transaction constituting a
Change in Control agree that such transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if such transaction in fact is
so
-15-
<PAGE>
treated, then the acceleration of exercisability shall not occur to the extent
that the Company's independent accountants and such other party's independent
accountants separately determine in good faith that such acceleration would
preclude the use of "pooling of interests" accounting.
(f) Exercise of SARs. If, on the date when a SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any
portion of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of a SAR, the Optionee (or any person having the right to
exercise the SAR after his or her death) shall receive from the Company (a)
Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall
determine. The amount of cash and/or the Fair Market Value of Shares received
upon exercise of SARs shall, in the aggregate, be equal to the amount by which
the Fair Market Value (on the date of surrender) of the Shares subject to the
SARs exceeds the Exercise Price.
(g) Special Holding Period. To the extent required by Section 16 of the
Exchange Act or any rule thereunder, an SAR shall not be exercised for cash
unless both it and the related Option have been outstanding for more than six
months.
(h) Special Exercise Window. To the extent required by Section 16 of the
Exchange Act or any rule thereunder, an SAR may only be exercised for cash
during a period which (a) begins on the third business day following a date when
the Company's quarterly summary statement of sales and earnings is released to
the public and (b) ends on the third business day following such date. This
Section 10(h) shall not apply if the exercise occurs automatically on the date
when the related Option expires, and the Committee may determine that it shall
not apply to limited SARs that are exercisable only in the event of a Change in
Control.
(i) Modification or Assumption of SARs. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the
Optionee, may alter or impair his or her rights or obligations under such SAR.
SECTION 11. STOCK UNITS.
(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall
be evidenced by a Stock Unit Agreement between the recipient and the Company.
Such Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient's other compensation.
(b) Payment for Awards. To the extent that an Award is granted in the
form of Stock Units, no cash consideration shall be required of the Award
recipients.
(c) Vesting Conditions. Each Award of Stock Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Stock Unit Agreement. A Stock
Unit Agreement may provide for accelerated
-16-
<PAGE>
vesting in the e vent of the Participant's death, disability or retirement or
other events. The Committee may determine, at the time of granting Stock Units
or thereafter, that all or part of such Stock Units shall become vested in the
event that a Change in Control occurs with respect to the Company, except as
provided in the next following sentence. If the Company and the other party to
the transaction constituting a Change in Control agree that such transaction is
to be treated as a "pooling of interests" for financial reporting purposes, and
if such transaction in fact is so treated, then the acceleration of vesting
shall not occur to the extent that the Company's independent accountants and
such other party's independent accountants separately determine in good faith
that such acceleration would preclude the use of "pooling of interests"
accounting.
(d) Voting and Dividend Rights. The holders of Stock Units shall have no
voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under
the Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions (including
without limitation, any forfeiture conditions) as the Stock Units to which they
attach.
(e) Form and Time of Settlement of Stock Units. Settlement of vested
Stock Units may be made in the form of (i) cash, (ii) Shares or (iii) any
combination of both, as determined by the Committee. The actual number of Stock
Units eligible for settlement may be larger or smaller than the number included
in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Shares over a series of trading days. Vested
Stock Units may be settled in a lump sum or in installments. The distribution
may occur or commence when all vesting conditions applicable to the Stock Units
have been satisfied or have lapsed, or it may be deferred to any later date. The
amount of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Section 12.
(f) Death of Recipient. Any Stock Units Award that becomes payable after
the recipient's death shall be distributed to the recipient's beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.
(g) Creditors' Rights. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
-17-
<PAGE>
SECTION 12. ADJUSTMENT OF SHARES.
(a) Adjustments. In the event of a subdivision of the outstanding stock
a declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect on
the price of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of:
(i) The number of Options, SARs, Restricted Shares and Stock Units
available for future Awards under Section 5;
(ii) The limitations set forth in Sections 4(c), 8(b) and 10(b);
(iii) The number of NSOs to be granted to Outside Directors under
Section 4(b);
(iv) The number of Shares covered by each outstanding Option and
SAR;
(v) The Exercise Price under each outstanding Option and SAR; or
(vi) The number of Stock Units included in any prior Award which has
not yet been settled.
Except as provided in this Section 12, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
(b) Dissolution or Liquidation. To the extent not previously exercised
or settled, Options, SARs and Stock Units shall terminate immediately prior to
the dissolution or liquidation of the Company.
(c) Reorganizations. In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for:
(i) The continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation;
(ii) The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary;
(iii) The substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards;
(iv) Full exercisability or vesting and accelerated expiration of
the outstanding Awards; or
-18-
<PAGE>
(v) Settlement of the full value of the outstanding Awards in cash
or cash equivalents followed by cancellation of such Awards.
(d) Reservation of Rights. Except as provided in this Section 12, an
Optionee or Offeree shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 13. DEFERRAL OF AWARDS.
The Committee (in its sole discretion) may permit or require a Participant
to:
(a) Have cash that otherwise would be paid to such Participant as a
result of the exercise of a SAR or the settlement of Stock Units credited
to a deferred compensation account established for such Participant by the
Committee as an entry on the Company's books;
(b) Have Shares that otherwise would be delivered to such Participant
as a result of the exercise of an Option or SAR converted into an equal
number of Stock Units; or
(c) Have Shares that otherwise would be delivered to such Participant
as a result of the exercise of an Option or SAR or the settlement of Stock
Units converted into amounts credited to a deferred compensation account
established for such Participant by the Committee as an entry on the
Company's books. Such amounts shall be determined by reference to the Fair
Market Value of such Shares as of the date when they otherwise would have
been delivered to such Participant.
A deferred compensation account established under this Section 13 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Section 13.
SECTION 14. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Shares issued under this Plan. Such Shares shall be
treated for all purposes
-19-
<PAGE>
under the Plan like Shares issued in settlement of Stock Units and shall, when
issued, reduce the number of Shares available under Section 5.
SECTION 15. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
(a) Effective Date. No provision of this Section 15 shall be effective
unless and until the Board has determined to implement such provision.
(b) Elections to Receive NSOs, Restricted Shares or Stock Units. An
Outside Director may elect to receive his or her annual retainer payments and/or
meeting fees from the Company in the form of cash, NSOs, Restricted Shares or
Stock Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 15 shall be filed with the Company on the prescribed form.
(c) Number and Terms of NSOs, Restricted Shares or Stock Units. The
number of NSOs, Restricted Shares or Stock Units to be granted to Outside
Directors in lieu of annual retainers and meeting fees that would otherwise be
paid in cash shall be calculated in a manner determined by the Board. The terms
of such NSOs, Restricted Shares or Stock Units shall also be determined by the
Board.
SECTION 16. LEGAL AND REGULATORY REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on which the Company's
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is
necessary or advisable.
SECTION 17. WITHHOLDING TAXES.
(a) General. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
(b) Share Withholding. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Shares that otherwise would be issued
to him or her or by surrendering all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued at their Fair Market Value on
the date when taxes otherwise would be withheld in cash. In no event may a
Participant have Shares withheld that would otherwise be issued to him or her in
excess of the number necessary to satisfy the legally required minimum tax
withholding.
-20-
<PAGE>
SECTION 18. LIMITATION ON PARACHUTE PAYMENTS.
(a) Scope of Limitation. This Section 18 shall apply to an Award unless
the Committee, at the time of making an Award under the Plan or at any time
thereafter, specifies in writing that such Award shall not be subject to this
Section 18. If this Section 18 applies to an Award, it shall supersede any
contrary provision of the Plan or of any Award granted under the Plan.
(b) Basic Rule. In the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer by
the Company under the Plan to or for the benefit of a Participant (a "Payment")
would be nondeductible by the Company for federal income tax purposes because of
the provisions concerning "excess parachute payments" in Section 280G of the
Code, then the aggregate present value of all Payments shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section 18, the "Reduced
Amount" shall be the amount, expressed as a present value, which maximizes the
aggregate present value of the Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code.
(c) Reduction of Payments. If the Auditors determine that any Payment
would be nondeductible by the Company because of Section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Section 18, present
value shall be determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Section 18 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
(d) Overpayments and Underpayments. As a result of uncertainty in the
application of Section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company that should not have been made (an "Overpayment") or that additional
Payments that will not have been made by the Company could have been made (an
"Underpayment"), consistent in each case with the calculation of the Reduced
Amount hereunder. In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the
Participant that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
-21-
<PAGE>
Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount subject to taxation under Section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by the Company to or for the
benefit of the Participant, together with interest at the applicable federal
rate provided in Section 7872(f)(2) of the Code.
(e) Related Corporations. For purposes of this Section 18, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with Section 280G(d)(5) of the Code.
SECTION 19. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason, with or without
notice.
SECTION 20. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall terminate
automatically on September 27, 2010 and may be terminated on any earlier date
pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially impaired
by such amendment, except with consent of the person to whom the Option was
granted. An amendment of the Plan shall be subject to the approval of the
Company's stockholders only to the extent required by applicable laws,
regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
-22-
<PAGE>
SECTION 21. EXECUTION.
To record the adoption of the Plan by the Board of Directors effective as
of __________ __, 2000, the Company has caused its authorized officer to execute
the same.
SIRF TECHNOLOGY, INC.
By _____________________________
Title __________________________
-23-
<PAGE>
NOTICE OF STOCK OPTION GRANT
THE SIRF TECHNOLOGY, INC. 2000 STOCK INCENTIVE PLAN
You have been granted the following option to purchase Common Stock of SiRF
Technology, Inc. (the "Company") under the SiRF Technology, Inc. 2000 Stock
Incentive Plan (the "Plan"):
Name of Optionee: _________________
Total Number of Option Shares Granted: _____________
Type of Option: [_] Incentive Stock Option [_] Nonstatutory Stock Option
Exercise Price Per Share: $________________
Grant Date: _____________
Vesting Commencement Date: _____________
Vesting Schedule: [Check only one box]
[_] Full vesting: This option is fully vested and exercisable as of the
date of grant.
[_] Two-Year Vesting: Subject to the following terms and conditions set
forth in this Notice of Stock Option Grant, this option shall vest as
to 12/24ths of the shares on the first anniversary of the Vesting
Commencement Date and 1/24ths of the shares each full month
thereafter.
[_] Three-Year Vesting: Subject to the following terms and conditions set
forth in this Notice of Stock Option Grant, this option shall vest as
to 12/36ths of the shares on the first anniversary of the Vesting
Commencement Date and 1/36th of the shares each full month thereafter.
[_] Four-Year Vesting: Subject to the following terms and conditions set
forth in this Notice of Stock Option Grant, this option shall vest as
to 12/48ths of the shares on the first anniversary of the Vesting
Commencement Date and 1/48th of the shares each full month thereafter.
Accelerated Vesting: [Check only one box]
[_] Your option is not subject to accelerated vesting.
<PAGE>
Your option will become fully vested and exercisable if:
[_] The Company is subject to a Change in Control (as defined in Section
2(b) of the Plan) prior to the date your service terminates.
[_] The Company involuntarily terminates your employment without good
cause.
[_] You experience a Total and Permanent Disability (as defined in Section
2(ii) of the Plan).
Post-Termination Exercise Period: [Check only one box]
If your service with the Company terminates for any reason other than Total and
Permanent Disability or death, then your option expires on:
[_] the date of your termination.
[_] the date 90 days after your termination date.
[_] the date 6 months after your termination date.
[_] the date 12 months after your termination date.
[_] the date 24 months after your termination date.
[_] the Expiration Date of your option.
Form of Payment: [Check one or more boxes]
Payment may be made in the following form(s):
[_] Your personal check, a cashier's check or a money order.
[_] In shares of Company stock which have been owned by you or your
representative for more than 12 months and which are surrendered to
the Company in good form for transfer.
[_] By delivering on a form approved by the Committee of an irrevocable
direction to a securities broker approved by the Company to sell all
or part of your option shares and to deliver to the Company from the
sale proceeds in an amount sufficient to pay the option exercise price
and any withholding taxes. The balance of the sale proceeds, if any,
will be delivered to you.
Expiration Date: _____________
-2-
<PAGE>
By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
term and conditions of the Plan and this Stock Option Agreement, both of which
are attached to and made a part of this document.
OPTIONEE: SIRF TECHNOLOGY, INC.
______________________________ By: ____________________________
______________________________ Title: _________________________
Please Print Name
-3-
<PAGE>
STOCK OPTION AGREEMENT
FOR THE SIRF TECHNOLOGY, INC.
2000 STOCK INCENTIVE PLAN
Tax Treatment This option is intended to be an incentive stock option
under Section 422 of the Internal Revenue Code or a
nonstatutory option, as provided in the Notice of Stock
Option Grant.
Vesting This option becomes exercisable in accordance with the
vesting schedule set forth in the Notice of Stock
Option Grant
Term This option expires on the date shown in the Notice of
Stock Option Grant, but in no event later than the 10th
anniversary of the Grant Date.
Regular Termination If your service as an employee, consultant or director
of the Company or a subsidiary of the Company
terminates for any reason excluding death or total and
permanent disability, then this option will expire on
the date specified in the Notice of Stock Option Grant
under the heading "Post-Termination Exercise Period."
Death or Disability If you become Totally and Permanently Disabled (as
defined in Section 2(ii) of the Plan) or die as an
employee, consultant or director of the Company or a
subsidiary of the Company, then this option will expire
at the close of business at Company headquarters on the
date 12 months after the date of your termination of
employment.
Leaves of Absence For purposes of this option, your service does not
terminate when you go on a military leave, a sick leave
or another bona fide leave of absence, if the leave was
approved by the Company in writing and if continued
crediting of service is required by the terms of the
leave or by applicable law. But your service terminates
when the approved leave ends, unless you immediately
return to active work.
Restrictions on The Company will not permit you to exercise this option
Exercise if the issuance of shares at that time would violate
any law or regulation.
Notice of Exercise When you wish to exercise this option you must notify
the Company by completing the attached "Notice of
Exercise of Stock Option" form and filing it with the
Human Resources Department of the Company. The notice
will be effective when it is received by the Company.
If someone else wants to exercise this option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
-1-
<PAGE>
Form of Payment When you submit your notice of exercise, you must
include payment of the option exercise price for the
shares you are purchasing. Payment may be made in the
form specified on your Notice of Stock Option Grant.
Withholding Taxes and You will not be allowed to exercise this option unless
Stock Withholding you make arrangements acceptable to the Company to pay
any withholding taxes that may be due as a result of
the option exercise. These arrangements may include
withholding shares of Company stock that otherwise
would be issued to you when you exercise this option.
The value of these shares, determined as of the
effective date of the option exercise, will be applied
to the withholding taxes.
Restrictions on Resale By signing this Agreement, you agree not to sell any
option shares at a time when applicable laws, Company
policies or an agreement between the Company and its
underwriters prohibit a sale (e.g., a lock-up period
after the Company goes public). This restriction will
apply as long as you are an employee, consultant or
director of the Company or a subsidiary of the Company.
Transfer of Option Prior to your death, only you can exercise this option.
You cannot transfer or assign this option. For
instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these
things, this option will immediately become invalid.
You may in any event dispose of this option in your
will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your former spouse, nor is the
Company obligated to recognize your former spouse's
interest in your option in any other way.
Retention Rights Neither your option nor this Agreement give you the
right to be retained by the Company or a subsidiary of
the Company in any capacity. The Company and its
subsidiaries reserve the right to terminate your
service at any time, with or without cause.
Stockholder Rights You, or your estate or heirs, have no rights as a
stockholder of the Company until you have exercised
this option by giving the required notice to the
Company and paying the exercise price. No adjustments
are made for dividends or other rights if the
applicable record date occurs before you exercise this
option, except as described in the Plan.
Adjustments In the event of a stock split, a stock dividend or a
similar change in Company stock, the number of shares
covered by this option and the exercise price per share
may be adjusted pursuant to the Plan.
Applicable Law This Agreement will be interpreted and enforced under
the laws of the State of California (without regard to
their choice-of-law provisions).
-2-
<PAGE>
The Plan and Other The text of the Plan is incorporated in this Agreement
Agreements by reference. This Agreement and the Plan constitute
the entire understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option are
superseded. This Agreement may be amended only by
another written agreement, signed by both parties.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT,
YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.
-3-
<PAGE>
NOTICE OF EXERCISE
(exercise by check)
SiRF Technology, Inc.
148 E. Brokaw Road
San Jose, CA 95112
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Stock Option Agreement dated __________, 200__ (the "Stock
Option Agreement") and the Company's 2000 Stock Incentive Plan (the "Plan"), I
hereby elect to purchase _____________ shares of the Common Stock of the Company
at aggregate exercise price of $__________. I enclose payment and other
documents (check all that are applicable):
[_] My check in the amount of $___________.
The Common Stock is to be issued and registered in the name(s) of:
__________________________
__________________________
I understand that there may be tax consequences as a result of the purchase or
disposition of the Common Stock, and I have consulted with any tax consultants I
wished to consult and I am not relying on the Company for any tax advice. I
understand that my exercise is governed by my Stock Option Agreement and the
Plan and agree to abide by and be bound by their terms and conditions. I
represent that the Common Stock is being acquired solely for my own account and
not as a nominee for any other party, or for investment, and that I will not
offer, sell or otherwise dispose of any such Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
Dated: __________, _____.
______________________________
(Signature)
______________________________
(Please Print Name)
______________________________
______________________________
(Address)
<PAGE>
TAX CONSEQUENCES RELATED TO YOUR INCENTIVE STOCK OPTION
-------------------------------------------------------
This memorandum is provided to you merely as a service and is not meant to
advise you as to your personal tax situation. You should contact your personal
legal or tax advisers with respect to the state and federal income tax treatment
of purchasing and disposing of your stock.
Internal Revenue Code Sections
Section 421 of the Internal Revenue Code (the "Code") provides rules for
the tax treatment of "incentive stock options"("ISOs"), as that term is defined
by Section 422 of the Code.
ISO Tax Treatment - Usually No Tax Until You Sell Your Stock
Your option is intended to be an ISO. If you hold the stock you are
purchasing under your option for more than two (2) years from the date of grant
and more than one (1) year from the date of exercise, upon any subsequent sale
---
or other disposition of such shares you will have capital gains or loss. Capital
gains are taxed at reduced rates if you held the shares for more than 1 year
(20% federal rate).
If you sell or dispose of the stock within two (2) years from the date of
grant or within 1 year from the date of exercise (a "disqualifying
--
disposition"), the special capital gains tax treatment of Code Section 421 will
not apply. Generally, in that event, you will recognize taxable ordinary income
in an amount equal to the lesser of: (i) the excess of the fair market value of
the shares at the time of exercise over the exercise price of the option, or
(ii) your actual gain on the purchase and sale. The gain (if any) in excess of
the amount of ordinary income recognized, or the loss (if any) will be a capital
gain or loss. An exception to this general rule applies if your stock is
subject to the company's repurchase right (see "Early Exercise" below).
Alternative Minimum Tax - Potential Tax at Exercise
The alternative minimum tax is a separately computed tax that is imposed
only if and to the extent it exceeds your regular tax for the taxable year.
Basically, the alternative minimum tax is an amount equal to twenty-six percent
(26%) of your "alternative minimum taxable income" for the year of up to
$175,000 and twenty-eight percent (28%) of any excess ($87,500 in the case of a
married individual filing a separate return). "Alternative minimum taxable
income" generally is determined by (i) reducing adjusted gross income by an
exemption amount ($45,000 for joint declarations and $33,750 for single
taxpayers, less $0.25 for each dollar of alternative minimum taxable income in
excess of $150,000 or $112,500, respectively) and certain specifically defined
deductions, and (ii) by adding to the amount so calculated certain tax
preference items and other adjustments.
As a general rule, when you exercise an ISO, the excess of the (1) fair
market value of the stock acquired on the date of exercise over (2) the exercise
price (the "spread") is added to your alternative minimum taxable income.
