Exhibit 10.2

 

Notice of Grant of Stock Option

and Terms and Conditions of Stock Option

  

Exar Corporation

    ID: [                    ]

[Address]

[Address]

 

 

 

Grantee:

   [Name]       Option Number:    [                    ]    [Address]      
Plan:    Non-Plan Grant    [Address]       ID:    [                    ]

 

 

Effective [                    ] (the “Award Date”), you (the “Grantee”) have
been granted a nonqualified stock option (the “Option”) to buy [1,200,000]
shares1 of Common Stock of Exar Corporation (the “Corporation”) at a price of
$[            ] per share1 (the “Exercise Price”).

The aggregate Exercise Price of the shares subject to the Option is
$[            ].1

The Option is the stock option referred to in Section 3.3(a) of the Employment
Agreement between you and the Corporation dated [            , 201    ] (the
“Employment Agreement”). Sixty percent (60%) of the Option is subject to
time-based vesting as set forth in Section 3.3(a)(i) of the Employment
Agreement. Forty percent (40%) of the Option is subject to time-based and
performance-based vesting as set forth in Section 3.3(a)(ii) of the Employment
Agreement.1, 2]

The Option will expire on [                    ] (the “Expiration Date”). 1, 2

By your signature and the Corporation’s signature below, you and the Corporation
agree that the Option is governed by the Terms and Conditions of Nonqualified
Stock Option (the “Terms”), which are attached and incorporated herein by this
reference. This Notice of Grant of Stock Option, together with the Terms, will
be referred to as your Option Agreement. The Option has been granted to you in
addition to, and not in lieu of, any other form of compensation otherwise
payable or to be paid to you. Capitalized terms are defined in the Terms. The
Terms also include cross-references to certain provisions of the Corporation’s
2006 Equity Incentive Plan (the “Plan”). You acknowledge receipt of a copy of
the Terms and the Plan.

 

 

 

Exar Corporation

      Date   

[                    ]

      Date            

Date:

Time:

 

1 

Subject to adjustment under Section 7 of the Terms.

2 

Subject to early termination under Section 5 of the Terms.

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EXAR CORPORATION

TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION

 

1. General.

These Terms and Conditions of Nonqualified Stock Option (these “Terms”) apply to
a particular stock option (the “Option”) if incorporated by reference in the
Notice of Grant of Stock Option (the “Grant Notice”) corresponding to that
particular grant. The recipient of the Option identified in the Grant Notice is
referred to as the “Grantee.” The per share exercise price of the Option as set
forth in the Grant Notice is referred to as the “Exercise Price.” The effective
date of grant of the Option as set forth in the Grant Notice is referred to as
the “Award Date.”

The Option is a stand-alone option grant and was not granted under any of the
Corporation’s equity incentive plans, including the Exar Corporation 2006 Equity
Incentive Plan (the “Plan”). Any shares issued in respect of the Option shall
not count against the share limits of the Plan. The Option has been granted to
the Grantee in addition to, and not in lieu of, any other form of compensation
otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms
are collectively referred to as the “Option Agreement” applicable to the Option.

 

2. Vesting; Limits on Exercise; Incentive Stock Option Status.

The Option shall vest and become exercisable in percentage installments of the
aggregate number of shares subject to the Option as set forth on the Grant
Notice. The Option may be exercised only to the extent the Option is vested and
exercisable.

 

  •  

Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or
earlier termination of the Option.

 

  •  

No Fractional Shares. Fractional share interests shall be disregarded, but may
be cumulated.

 

  •  

Nonqualified Stock Option. The Option is a nonqualified stock option and is not,
and shall not be, an incentive stock option within the meaning of Section 422 of
the U.S. Internal Revenue Code.

 

3. Continuance of Employment/Service Required; No Employment/Service Commitment.

The vesting schedule applicable to the Option requires continued employment or
service through each applicable vesting date as a condition to the vesting of
the applicable installment of

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the Option and the rights and benefits under this Option Agreement. Employment
or service for only a portion of the vesting period, even if a substantial
portion, will not entitle the Grantee to any proportionate vesting or avoid or
mitigate a termination of rights and benefits upon or following a termination of
employment or services as provided in Section 5 below.

Nothing contained in this Option Agreement constitutes a continued employment or
service commitment by the Corporation or any corporation or other entity a
majority of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation (a “Subsidiary”), affects the
Grantee’s status, if he or she is an employee, as an employee at will who is
subject to termination without cause, confers upon the Grantee any right to
remain employed by or in service to the Corporation or any Subsidiary,
interferes in any way with the right of the Corporation or any Subsidiary at any
time to terminate such employment or service, or affects the right of the
Corporation or any Subsidiary to increase or decrease the Grantee’s other
compensation.

 

4. Method of Exercise of Option.

The Option shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Administrator may require pursuant to
such administrative exercise procedures as the Administrator may implement from
time to time) of:

 

  •  

a written notice stating the number of shares of the Corporation’s common stock
(“Common Stock”) to be purchased pursuant to the Option or by the completion of
such other administrative exercise procedures as the Administrator may require
from time to time,

 

  •  

payment in full for the Exercise Price of the shares to be purchased in cash,
check or by electronic funds transfer to the Corporation, or (subject to
compliance with all applicable laws, rules, regulations and listing requirements
and further subject to such rules as the Administrator may adopt as to any
non-cash payment) in shares of Common Stock already owned by the Grantee, valued
at their fair market value (as determined by the Administrator) on the exercise
date;

 

  •  

any written statements or agreements as the Administrator may deem necessary or
desirable to assure compliance with all applicable legal and accounting
requirements; and

 

  •  

satisfaction of the tax withholding provisions of Section 8 below.

The Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator, or, subject to such procedures as the
Administrator may adopt, authorize a “cashless exercise” with a third party who
provides simultaneous financing for the purposes of (or who otherwise
facilitates) the exercise of the Option. As used herein, the “Administrator”
means the Board of Directors of the Corporation (the “Board”) or one or more
committees appointed by the Board or another committee (within its delegated
authority) to administer all or certain aspects of this Option Agreement.

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5. Early Termination of Option.

5.1 Expiration Date. Subject to earlier termination as provided below in this
Section 5, the Option will terminate on the “Expiration Date” set forth in the
Grant Notice (the “Expiration Date”).

5.2 Possible Termination of Option upon Certain Corporate Events. The Option is
subject to termination in connection with certain corporate events in the same
manner as stock options granted generally under the Plan in accordance with the
provisions of Section 7.2 of the Plan.

5.3 Termination of Option upon a Termination of Grantee’s Employment or
Services. Subject to earlier termination on the Expiration Date of the Option or
pursuant to Section 5.2 above, if the Grantee ceases to be employed by or ceases
to provide services to the Corporation or a Subsidiary, the following rules
shall apply (the last day that the Grantee is employed by or provides services
to the Corporation or a Subsidiary is referred to as the Grantee’s “Severance
Date”):

 

  •  

other than as expressly provided below in this Section 5.3, (a) the Grantee will
have until the date that is 3 months after his or her Severance Date to exercise
the Option (or portion thereof) to the extent that it was vested on the
Severance Date, (b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date, and (c) the Option, to the extent
exercisable for the 3-month period following the Severance Date and not
exercised during such period, shall terminate at the close of business on the
last day of the 3-month period;

 

  •  

if the termination of the Grantee’s employment or services is the result of the
Grantee’s death or Disability (as defined in the Employment Agreement), (a) the
Grantee (or his beneficiary or personal representative, as the case may be) will
have until the date that is 12 months after the Grantee’s Severance Date to
exercise the Option, (b) the Option, to the extent not vested on the Severance
Date, shall terminate on the Severance Date, and (c) the Option, to the extent
exercisable for the 12-month period following the Severance Date and not
exercised during such period, shall terminate at the close of business on the
last day of the 12-month period;

 

  •  

if the Grantee’s employment or services are terminated by the Corporation or a
Subsidiary for Cause (as defined in the Employment Agreement), the Option
(whether vested or not) shall terminate on the Severance Date.

In the event the Grantee is providing services to the Corporation (other than as
an employee), the Administrator shall be the sole judge of whether the Grantee
continues to render services for purposes of this Option Agreement.

 

6. Non-Transferability.

The Option and any other rights of the Grantee under this Option Agreement are
subject to the same limitations on transferability as apply to stock options
granted generally under the Plan in accordance with the provisions of
Section 5.7 of the Plan.

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7. Adjustments.

The exercise price and the number of shares subject to the Option are subject to
adjustment upon certain corporate transactions on the same terms as apply to
stock options granted under the Plan generally as set forth in Section 7.1 of
the Plan.

 

8. Tax Withholding.

Upon any exercise or payment of the Option, the Corporation or one of its
Subsidiaries shall have the right at its option to:

 

  (1) require the Grantee (or the Grantee’s personal representative or
beneficiary, as the case may be) to pay or provide for payment of at least the
minimum amount of any taxes which the Corporation or one of its Subsidiaries may
be required to withhold with respect to such exercise or payment; or

 

  (2) deduct from any amount otherwise payable in cash (whether related to the
Option or otherwise) to the Grantee (or the Grantee’s personal representative or
beneficiary, as the case may be) the minimum amount of any taxes which the
Corporation or one of its Subsidiaries may be required to withhold with respect
to such exercise or payment.

In any case where a tax is required to be withheld in connection with the
delivery of shares of Common Stock under the Option, the Administrator may in
its sole discretion (subject to compliance with all applicable laws and
regulations) require or grant to the Grantee the right to elect, pursuant to
such rules and subject to such conditions as the Administrator may establish,
that the Corporation reduce the number of shares to be delivered by (or
otherwise reacquire) the appropriate number of shares, valued in a consistent
manner at their fair market value or at the sales price in accordance with
authorized procedures for cashless exercises, necessary to satisfy the minimum
applicable withholding obligation on exercise, vesting or payment. In no event
shall the shares withheld exceed the minimum whole number of shares required for
tax withholding under applicable law.

 

9. Notices.

Any notice to be given under the terms of this Option Agreement shall be in
writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Grantee at the address last reflected on
the Corporation’s payroll records, or at such other address as either party may
hereafter designate in writing to the other. Any such notice shall be delivered
in person or shall be enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Grantee is no longer employed by the Corporation or a
Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 9.

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10. Entire Agreement.

This Option Agreement constitutes the entire agreement and supersede all prior
understandings and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof. Any amendment of this Option Agreement
must be in writing and signed by the Corporation, provided that no such
amendment shall, without written consent of the Grantee, affect in any manner
materially adverse to the Grantee any rights or benefits of the Grantee or
obligations of the Corporation under the Option. Changes, settlements and other
actions contemplated by Section 7 of these Terms shall not be deemed to
constitute changes or amendments for purposes of this Section 10. The
Corporation may unilaterally waive any provision hereof in writing to the extent
such waiver does not adversely affect the interests of the Grantee hereunder,
but no such waiver shall operate as or be construed to be a subsequent waiver of
the same provision or a waiver of any other provision hereof. For avoidance of
doubt, the Employment Agreement is outside the scope of this integration
provision, and nothing contained herein is intended to adversely affect any
independent contractual right of the Grantee under the Employment Agreement.

 

11. Governing Law.

This Option Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of
law principles thereunder.

 

12. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Option pursuant to
Section 5.2 of these Terms, this Option Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors to the
Corporation.

 

13. Counterparts.

This Option Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

14. Section Headings.

The section headings of this Option Agreement are for convenience of reference
only and shall not be deemed to alter or affect any provision hereof.

 

15. Clawback Policy.

The Option is subject to the terms of the Corporation’s recoupment, clawback or
similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances
require forfeiture of the Option and repayment or forfeiture of any shares of
Common Stock or other cash or property received with respect to the Option
(including any value received from a disposition of the shares acquired upon
exercise of the Option).

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16. No Advice Regarding Grant.

The Grantee is hereby advised to consult with his or her own tax, legal and/or
investment advisors with respect to any advice the Grantee may determine is
needed or appropriate with respect to the Option (including, without limitation,
to determine the foreign, state, local, estate and/or gift tax consequences with
respect to the Option and any shares that may be acquired upon exercise of the
Option). Neither the Corporation nor any of its officers, directors, affiliates
or advisors makes any representation (except for the terms and conditions
expressly set forth in this Option Agreement) or recommendation with respect to
the Option. Except for the withholding rights contemplated by Section 8 above,
the Grantee is solely responsible for any and all tax liability that may arise
with respect to the Option and any shares that may be acquired upon exercise of
the Option.