EXHIBIT 10.2

 

ALTERA CORPORATION

STOCK OPTION AWARD AGREEMENT

2005 EQUITY INCENTIVE PLAN

(Director Form)

 

Unless otherwise defined herein, the terms defined in Altera’s 2005 Equity
Incentive Plan (the “Plan”) shall have the same defined meanings in this Award
Agreement (the “Agreement”).

 

You have been granted an option to purchase Shares (the “Option”), subject to
the terms and conditions of the Plan, the Notice of Stock Option Grant (“Notice
of Grant”) and this Agreement.

 

1. Vesting Rights. Subject to the applicable provisions of the Plan and this
Agreement, this Option may be exercised, in whole or in part, in accordance with
the schedule set forth in the Notice of Grant.

 

2. Termination Period.

 

(a) General Rule. Except as provided below, and subject to Section 22.4 of the
Plan, this Option may be exercised for 90 days after termination of
Participant’s employment with the Company. In no event shall this Option be
exercised later than the Term/Expiration Date set forth in the Notice of Grant.

 

(b) Death; Disability. Upon the termination of Participant’s employment with the
Company by reason of his or her Disability or death, or if a Participant dies
within 30 days of the Termination Date, this Option may be exercised for twelve
months after the Termination Date, provided that in no event shall this Option
be exercised later than the Term/Expiration Date set forth in the Notice of
Grant.

 

3. Grant of Option. The Participant named in the Notice of Grant has been
granted an Option for the number of Shares set forth in the Notice of Grant at
the exercise price per Share set forth in the Notice of Grant (the “Exercise
Price”). Subject to Section 24 of the Plan, in the event of a conflict between
the terms and conditions of the Plan and the terms and conditions of this
Agreement, the terms and conditions of the Plan shall prevail.

 

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code. However, if this Option is intended to be an Incentive Stock Option,
to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall
be treated as a Nonstatutory Stock Option (“NSO”).

 

4. Exercise of Option.

 

(a) Right to Exercise. This Option is exercisable during its term in accordance
with the Vesting Schedule set forth in the Notice of Grant and the applicable
provisions of the Plan and this Agreement. In the event of Participant’s death,
Disability or other termination of Participant’s employment relationship, the
exercisability of the Option is governed by the applicable provisions of the
Plan and this Agreement.

 

(b) Method of Exercise. This Option is exercisable by delivery of an exercise
notice (the “Exercise Notice”), which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being exercised
(the “Exercised Shares”), and such other representations and agreements as may
be required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be delivered in person, by mail, via electronic mail or facsimile
or by other authorized

 

U.S. Award Agreement (Options)

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method to the Secretary of the Company or other person designated by the
Company. The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice
accompanied by such aggregate Exercise Price.

 

No Shares shall be issued pursuant to the exercise of this Option unless such
issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares
are then listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Participant on the date the Option
is exercised with respect to such Exercised Shares.

 

5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Participant:

 

(a) cash; or

 

(b) check; or

 

(c) “same day sale” (as described in Section 11(e)(1) of the Plan); or

 

(d) surrender of other Shares which (i) in the case of Shares acquired upon
exercise of an option, have been owned by the Participant for more than six (6)
months on the date of surrender, and (ii) have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the Exercised Shares; or

 

(e) other method authorized by the Company.

 

6. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution or court
order and may be exercised during the lifetime of Participant only by the
Participant. The terms of the Plan and this Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Participant.

 

7. Term of Option. This Option may be exercised only within the term set out in
the Notice of Grant, and may be exercised during such term only in accordance
with the Notice of Grant, the Plan and the terms of this Agreement.

 

8. U.S. Tax Consequences. For Participants subject to U.S. income tax, some of
the federal and California tax consequences relating to this Option, as of the
date of this Option, are set forth below. All other Participants should consult
a tax advisor for tax consequences relating to this Option in their respective
jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

(a) Exercising the Option.

 

(i) Nonstatutory Stock Option. The Participant may incur regular federal income
tax and California income tax liability upon exercise of a NSO. The Participant
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Participant is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from Participant
and pay to the applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

 

U.S. Award Agreement (Options)

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(ii) Incentive Stock Option. If this Option qualifies as an ISO, the Participant
will have no regular federal income tax or California income tax liability upon
its exercise, although the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price
will be treated as an adjustment to alternative minimum taxable income for
federal tax purposes and may subject the Participant to alternative minimum tax
in the year of exercise.

 

(b) Disposition of Shares.

 

(i) NSO. If the Participant holds NSO Shares for at least one year, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes.

 

(ii) ISO. If the Participant holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Participant disposes of ISO Shares within one year after
exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.

 

(c) Notice of Disqualifying Disposition of ISO Shares. If the Participant sells
or otherwise disposes of any of the Shares acquired pursuant to an ISO on or
before the later of (i) two years after the grant date, or (ii) one year after
the exercise date, the Participant shall immediately notify the Company in
writing of such disposition. The Participant agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Participant.

 

9. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan, the Notice of Grant, and this Agreement constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Participant with respect to the subject matter hereof, and may not be
modified adversely to the Participant’s interest except by means of a writing
signed by the Company and Participant. This agreement is governed by California
law except for that body of law pertaining to conflict of laws.

 

10. NO GUARANTEE OF EMPLOYMENT. PARTICIPANT UNDERSTANDS AND AGREES THAT HIS OR
HER EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES IS FOR AN UNSPECIFIED
DURATION AND CONSTITUTES “AT-WILL” EMPLOYMENT. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE AT THE WILL OF THE COMPANY OR
ITS SUBSIDIARY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION
OR PURCHASING SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR
AT ALL, AND SHALL NOT INTERFERE WITH PARTICIPANT’S RIGHT OR THE COMPANY’S AND/OR
SUBSIDIARY’S RIGHT TO TERMINATE PARTICIPANT’S EMPLOYMENT AT ANY TIME, WITH OR
WITHOUT CAUSE.

 

U.S. Award Agreement (Options)

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By your signature and the signature of the Company’s representative on the
Notice of Grant, you and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan, the Notice of Grant, and this
Agreement. Participant has reviewed the Plan, the Notice of Grant, and this
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing the Notice of Grant, and fully understands all
provisions of the Plan, the Notice of Grant, and this Agreement. Participant
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the
Notice of Grant, and the Agreement. Participant further agrees to notify the
Company upon any change in the residence address indicated on the Notice of
Grant.

 

U.S. Award Agreement (Options)