Document:

exv10w1

 

Exhibit 10.1

SONICS, INC.

1997
STOCK INCENTIVE PLAN (as amended through August 20th)

     1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the success of the
Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any of the Committees appointed to administer
the Plan.

          (b) “Applicable Laws” means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal securities laws, California
corporate and securities laws, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents
therein.

          (c) “Award” means the grant of an Option, Restricted Stock, or other right or benefit
under the Plan.

          (d) “Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Code” means the Internal Revenue Code of 1986, as amended.

          (g) “Committee” means any committee appointed by the Board to administer the Plan.

          (h) “Common Stock” means the common stock of the Company.

          (i) “Company” means Sonics, Inc., a Delaware corporation.

          (j) “Consultant” means any person who is engaged by the Company or Related Entity to
render consulting or advisory services as an independent contractor and is compensated for such
services.

          (k) “Continuous Status as an Employee, Director or Consultant” means that the
provision of services to the Company or a Related Entity in any capacity of Employee,
Director or Consultant, is not interrupted or terminated. Continuous Status as an Employee,
Director or Consultant shall not be considered interrupted in the case of (i) any approved leave of
absence or (ii) transfers between locations of the Company or among the Company any Related Entity,
or any successor in any capacity of Employee, Director or Consultant. An approved leave of absence
shall include sick leave, military leave, or any other authorized personal leave.

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For purposes of
Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract.

          (l) “Corporate Transaction” means any of the following stockholder-approved
transactions to which the Company is a party:

               (i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;

               (ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company’s subsidiary corporations) in connection with
the complete liquidation or dissolution of the Company; or

               (iii) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger.

          (m) “Director” means a member of the Board.

          (n) “Employee” means any person, including an Officer or Director, who is an employee
of the Company or any Related Entity. The payment of a director’s fee by the Company shall not be
sufficient to constitute “employment” by the Company.

          (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (p) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

               (i) Where there exists a public market for the Common Stock, the Fair Market Value shall be
(A) the closing price for a Share for the last market trading day prior to the time of the
determination (or, if no closing price was reported on that date, on the last trading date on which
a closing price was reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is applicable or (B)
if the Common Stock is not traded on any such exchange or national market system, the average of
the closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the
time of the determination (or, if no such prices were reported on that date, on the last date on
which such prices were reported), in each case, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

               (ii) In the absence of an established market of the type described in (i), above, for the
Common Stock, the Fair Market Value thereof shall be determined by the Administrator in good faith
and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations.

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          (q) “Grantee” means an Employee, Director or Consultant who receives an Award under
the Plan.

          (r) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code

          (s) “Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (t) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

          (u) “Option” means a stock option granted pursuant to the Plan.

          (v) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (w) “Plan” means this 1997 Stock Incentive Plan.

          (x) “Registration Date” means the closing of the first sale of Common Stock to the
general public pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.

          (y) “Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Company, a Parent or a
Subsidiary holds an ownership interest, directly or indirectly.

          (z) “Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.

          (aa) “Share” means a share of the Common Stock.

          (bb) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 10(a), below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock
Options) is 2,815,019 Shares provided, however, that in no event shall the number of Shares
issued exceed the lower of (i) 99% of the then outstanding capital stock of the Company or (ii) the
sum of 214,424 and such number of Shares of Common Stock repurchased at cost pursuant to those
certain Restricted Stock Purchase Agreements dated March 10, 1997 by and between the Company and
Grant A. Pierce, Geert P. Rosseel and Drew E. Wingard, respectively. The Shares may be authorized,
but unissued, or reacquired Common Stock.

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          (b) If an Award expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Award exchange program, or if any unissued Shares are retained by the
Company upon exercise of an Award in order to satisfy the exercise price for such Award or any
withholding taxes due with respect to such Award, such unissued or retained Shares shall become
available for future grant or sale under the Plan (unless the Plan has terminated). Shares that
actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future distribution under the Plan, except that if unvested Shares
are forfeited, or repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.

     4. Administration of the Plan.

          (a) Plan Administrator. With respect to grants of Awards to Employees, Directors,
Officers or Consultants, the Plan shall be administered by (A) the Board or (B) a Committee (or a
subcommittee of the Committee) designated by the Board, which Committee shall be constituted in
such a manner as to satisfy Applicable Laws. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. The Board may authorize
one or more Officers to grant such Awards and may limit such authority as the Board determines from
time to time.

          (b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:

               (i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;

               (ii) to determine whether and to what extent Awards are granted hereunder;

               (iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;

               (iv) to approve forms of Award Agreement for use under the Plan;

               (v) to determine the terms and conditions of any Award granted hereunder;

               (vi) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such
laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan;

               (vii) to amend the terms of any outstanding Award granted under the Plan, including a
reduction in the exercise price (or base amount on which appreciation is

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measured) of any Award to
reflect a reduction in the Fair Market Value of the Common Stock since the grant date of the Award,
provided that any amendment that would adversely affect the Grantee’s rights under an outstanding
Award shall not be made without the Grantee’s written consent;

               (viii) to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan; and

               (ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.

          (c) Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be conclusive and binding on all persons.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

          (a) Type of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an
Option, or similar right with an exercise or conversion privilege at a fixed or variable price
related to the Common Stock and/or the passage of time, the occurrence of one or more events, or
the satisfaction of performance criteria or other conditions, or (iii) any other security with the
value derived from the value of the Common Stock or securities issued by a Related Entity. Such
awards include, without limitation, Options, sales or bonuses of Restricted Stock, and an Award may
consist of one such security or benefit, or two or more of them in any combination or alternative.

          (b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by a Grantee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall
be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the date the Option with respect to such Shares is granted.

          (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to,

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the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total stockholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.

          (d) Early Exercise. The Award may, but need not, include a provision whereby the
Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all
of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such
exercise may be subject to a repurchase right in favor of the Company or to any other restriction
the Administrator determines to be appropriate.

          (e) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the
time the Option is granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Award Agreement.

          (f) Non-Transferability of Awards. Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Grantee, only by the
Grantee.

          (g) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7. Award Exercise or Purchase Price, Consideration, Taxes and Reload Options.

          (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:

               (i) In the case of an Incentive Stock Option:

                    (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.

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                    (B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.

               (ii) In the case of a Non-Qualified Stock Option:

                    (A) granted to a person who, at the time of the grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant.

                    (B) granted to any person other than a person described in the preceding paragraph, the per
Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

               (iii) In the case of the sale of Shares:

                    (A) granted to a person who, at the time of the grant of such Award, or at the time the
purchase is consummated, owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the per Share purchase price shall
be not less than one hundred percent (100%) of the Fair Market Value per share on the date of
grant.

                    (B) granted to any person other than a person described in the preceding paragraph, the per
Share purchase price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

               (iv) In the case of other Awards, such price as is determined by the Administrator.

          (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of
payment, shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant). In addition to any other types of consideration
the Administrator may determine, the Administrator is authorized to accept as consideration for
Shares issued under the Plan the following:

               (i) cash;

               (ii) check;

               (iii) delivery of Grantee’s promissory note with such recourse, interest, security, and
redemption provisions as the Administrator determines as appropriate;

               (iv) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery
of a properly executed form of attestation of ownership of Shares as the

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Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the Award) which have a
Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of
the Shares as to which said Award shall be exercised (but only to the extent that such exercise of
the Award would not result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);

               (v) if the exercise occurs on or after the Registration Date, delivery of a properly executed
exercise notice together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Award and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

               (vi) any combination of the foregoing methods of payment.

          (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

          (d) Reload Options. In the event the exercise price or tax withholding of an Option
is satisfied by the Company or the Grantee’s employer withholding Shares otherwise deliverable to
the Grantee, the Administrator may issue the Grantee an additional Option, with terms identical to
the Award Agreement under which the Option was exercised, but at an exercise price as determined by
the Administrator in accordance with the Plan.

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     8. Exercise of Award.

          (a) Procedure for Exercise; Rights as a Stockholder.

               (i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than 20% per year over five (5) years
from the date the Option is granted, subject to reasonable conditions such as continued employment.
However, in the case of an Option granted to an Officer, Director or Consultant, the Award
Agreement may provide that the Option may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period established in the Award
Agreement.

               (ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised has been
received by the Company. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder
shall exist with respect to Shares subject to an Award, notwithstanding the exercise of an Option
or other Award. The Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Award. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as provided in the Award
Agreement or Section 10(a), below.

          (b) Exercise of Award Following Termination of Employment, Director or Consulting
Relationship. In the event of termination of an Grantee’s Continuous Status as an Employee,
Director or Consultant for any reason other than disability or death (but not in the event of an
Grantee’s change of status from Employee to Consultant or from Consultant to Employee), such
Grantee may, but only within thirty (30) days after the date of such termination (but in no event
later than the expiration date of the term of such Award as set forth in the Award Agreement),
exercise his or her Award to the extent that the Grantee was entitled to exercise it at the date of
such termination or to such other extent as may be determined by the Administrator. The Grantee’s
Award Agreement may provide that upon the event of termination of the Grantee’s Continuous Status
as an Employee, Director or Consultant for “Cause,” the Grantee’s right to exercise the Award shall
terminate concurrently with the termination of Grantee’s Continuous Status as an Employee, Director
or Consultant. The term “Cause” shall be as defined in the Award Agreement. If the Grantee should
die within three (3) months after the date of such termination, the Grantee’s estate or the person
who acquired the right to exercise the Award by bequest or inheritance may exercise the Award to
the extent that the Grantee was entitled to exercise it at the date of such termination within
twelve (12) months of the Grantee’s date of death, but in no event later than the expiration date
of the term of such Award as set forth in the Award Agreement. In the event of an Grantee’s change
of status from Employee to Consultant, an Employee’s Incentive Stock Option shall convert
automatically to a Non-Qualified Stock Option on the ninety-first (91) day following such change of
status. If the

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Grantee does not exercise such Award to the extent so entitled within the time specified herein, the Award
shall terminate.

          (c) Disability of Grantee. In the event of termination of an Grantee’s Continuous
Status as an Employee, Director or Consultant as a result of his or her disability, Grantee may,
but only within six (6) months from the date of such termination (and in no event later than the
expiration date of the term of such Award as set forth in the Award Agreement), exercise the Award
to the extent otherwise entitled to exercise it at the date of such termination; provided, however,
that if such disability is not a “disability” as such term is defined in Section 22(e)(3) of the
Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically
convert to a Non-Qualified Stock Option on the day three (3) months and one day following such
termination. To the extent that Grantee is not entitled to exercise the Award at the date of
termination, or if Grantee does not exercise such Award to the extent so entitled within the time
specified herein, the Award shall terminate.

          (d) Death of Grantee. In the event of the death of an Grantee, the Award may be
exercised at any time within twelve (12) months following the date of death (but in no event later
than the expiration of the term of such Award as set forth in the Award Agreement), by the
Grantee’s estate or by a person who acquired the right to exercise the Award by bequest or
inheritance, but only to the extent that the Grantee was entitled to exercise the Award at the date
of death. If, at the time of death, the Grantee was not entitled to exercise his or her entire
Award, the Shares covered by the unexercisable portion of the Award shall immediately revert to the
Plan. If, after death, the Grantee’s estate or a person who acquired the right to exercise the
Award by bequest or inheritance does not exercise the Award within the time specified herein, the
Award shall terminate.

          (e) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Award previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Grantee at the time that such offer is made.

     9. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.

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     10. Adjustments Upon Changes in Capitalization or Corporate Transaction.

          (a) Adjustments upon Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, as well as the price per share of Common
Stock covered by each such outstanding Award, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or any other similar
event resulting in an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to an Award.

          (b) Corporate Transaction. Except as provided otherwise in an individual Award
Agreement, in the event of any Corporate Transaction, the Award will terminate immediately prior to
the consummation of such proposed Corporate Transaction, unless the Award is assumed or an
equivalent Award is substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation. For the purposes of this subsection, the Award shall be considered assumed
if, following the Corporate Transaction, the Award confers, for each Share subject to the Award
immediately prior to the Corporate Transaction, (i) the consideration (whether stock, cash, or
other securities or property) received in the Corporate Transaction by holders of Common Stock for
each Share subject to the Award held on the effective date of the Corporate Transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding Shares), or (ii) the right to purchase such consideration in the case
of an Option or similar Award; provided, however, that if such consideration received in the
Corporate Transaction was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for the consideration to
be received upon the exercise or exchange of the Award for each Share subject to the Award to be
solely common stock of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the Corporate Transaction.

     11. Term of Plan. The Plan shall become effective upon the earlier to occur of its
adoption by the Board or its approval by the stockholders of the Company. It shall continue in
effect for a term of ten (10) years unless sooner terminated.

     12. Amendment, Suspension or Termination of the Plan.

          (a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain stockeholder approval of any Plan amendment
in such a manner and to such a degree as required.

          (b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.

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          (c) Any amendment, suspension or termination of the Plan shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan had not been amended,
suspended or terminated, unless mutually agreed otherwise between the Grantee and the
Administrator, which agreement must be in writing and signed by the Grantee and the Company.

     13. Reservation of Shares.

          (a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

          (b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

     14. No Effect on Terms of Employment. The Plan shall not confer upon any Grantee any
right with respect to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company’s right to terminate his or her
employment or consulting relationship at any time, with or without cause.

     15. Stockholder Approval. Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such stockholder approval shall be obtained in the degree and manner required under Applicable
Laws. Any Award exercised before stockholder approval is obtained shall be rescinded if
stockholder approval is not obtained within the time prescribed, and Shares issued on the exercise
of any such Award shall not be counted in determining whether stockholder approval is obtained.

     16. Information to Grantees. The Company shall provide to each Grantee, during the
period for which such Grantee has one or more Awards outstanding, copies of financial statements at
least annually and all annual reports and other information which is provided to all stockholders
of the Company.

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Exhibit 10.2

STOCK OPTION AGREEMENT

SONICS, INC. 1997 STOCK INCENTIVE PLAN

I. NOTICE OF STOCK OPTION GRANT

	 	 	 	 	 
	 

	 	Optionee’s Name and Address:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

     You have been granted an option to purchase shares of Common Stock of the Company, subject to
the terms and conditions of this Notice of Stock Option Award (the “Notice”), the Plan and the
Stock Option Award Agreement (the “Option Agreement”) attached hereto, as follows:

	 	 	 	 	 	 	 
	 

	 	Grant Number	 	 	 	 
	 
	 

	 	Date of Grant	 	 	 	 
	 
	 

	 	Vesting Commencement Date	 	 	 	 
	 
	 

	 	Exercise Price per Share
	 	$	 
	 
	 

	 	Total Number of Shares Granted	 	 	 	 
	 
	 

	 	Total Exercise Price
	 	$	 
	 
	 

	 	Type of Option:
	 	 	Incentive Stock Option

	 

	 	 	 	 	 	 
	 

	 	 	 	 	Non-Qualified Stock Option

	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Expiration Date:	 	 	 	 

Vesting Schedule:

     Subject to other limitations set forth in this Agreement, this Option may be exercised, in
whole or in part, in accordance with the following schedule:

     1/8th of the Shares subject to the Option shall vest six months after the Vesting
Commencement Date, and as to 1/48th of the number of Shares covered by this Agreement,
monthly on the 1st day of each succeeding month thereafter until the option is fully
exercisable.

Termination Period:

     This Option may be exercised for 30 days after termination of the Optionee’s Continuous Status
as an Employee, Director or Consultant or such longer period as may be applicable upon death or
disability of Optionee as provided in the Agreement. In the event of the Optionee’s change in
status from Employee to Consultant or Consultant to Employee, this Option Agreement shall remain in
effect; provided, however, that in the event of a change in status from Employee to Consultant, the
Optionee’s Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall
be treated as a Non-Qualified Stock Option on the day three (3)

1

 

months and one day following such change in status. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.

II. AGREEMENT

     1. Grant of Option. Sonics, Inc., a Delaware corporation (the “Company”), hereby
grants to the Optionee named in the Notice of Stock Option Grant (the “Optionee”), an option (the
“Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the
Notice of Stock Option Grant, at the exercise price per share set forth in the Notice of Stock
Option Grant (the “Exercise Price”) subject to the terms, definitions and provisions of the
Company’s 1997 Stock Incentive Plan (the “Plan”) adopted by the Company, which is incorporated
herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

     If designated in the Notice of Stock Option Grant as an Incentive Stock Option, this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Section 422(d) of the Code, this
Option shall be treated as a Non-Qualified Stock Option.

     2. Exercise of Option.

          (a) Right to Exercise. This Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable
provisions of the Plan and this Option Agreement. In the event of termination of Optionee’s
Continuous Status as an Employee, Director or Consultant, this Option shall be exercisable in
accordance with the applicable provisions of the Plan and this Option Agreement. This Option shall
be subject to the provisions of Section 11 of the Plan relating to the exercisability or
termination of the Option in the event of a Corporate Transaction. However, if as a result of, or
following, a Corporate Transaction Optionee’s Continuous Status as an Employee, Director or
Consultant with the Company or an Affiliate or a successor (for purposes of this section, the term
“Company” shall refer to the Company or an Affiliate or a successor as applicable) is terminated by
the Company other than for “Cause,” as defined below or Optionee terminates for “Good Reason,” as
defined below, within six (6) months of the Corporate Transaction, each Option shall automatically
shall become vested and exercisable as to that additional number of shares specified in the Vesting
Schedule as of the date Optionee is terminated to the extent such Option (i) was not otherwise
fully vested and (ii) had not otherwise expired. The Option shall vest and become exercisable as
to that number of additional shares equal to the lesser of (i) 25% of the number of shares covered
by the Option, or (ii) 1/48 of the Shares subject to the Option for each full month that Optionee
was in the service of the Company from the Grant Date by the Company prior to the Corporate
Transaction. For purposes of this Section, termination of the Optionee’s Continuous Status as an
Employee, Director or Consultant shall be for “Cause” if in the opinion of the Company, the
Optionee: (i) acts in bad faith and to the detriment of the Company; (ii) refuses or fails to act
in accordance with any specific direction or order of the Company; (iii) exhibits in regard to his
employment unfitness or unavailability for service, unsatisfactory performance, misconduct (but not
as a result of disability); (iv) exhibits dishonesty, habitual neglect, or incompetence, (but not
as a result of disability); or (v) is
convicted of a crime involving dishonesty, breach of trust, or physical or

2

 

emotional harm to
any person. At least 30 days prior to terminating Optionee’s Continuous Status as an Employee,
Director or Consultant pursuant to (ii) or (iii) above, the Company shall provide the Optionee with
notice of the Company’s intent to terminate, the Company’s reason therefor, and an opportunity for
the Optionee to cure such defects in his service to the Company’s satisfaction. Termination shall
be for “Good Reason” if: (i) there is a material and adverse change in the Optionee’s position,
duties, responsibilities, status, or location of employment with the Company; (ii) there is a
material reduction in the Optionee’s benefits, other than a reduction comparable to reductions
generally applicable to similarly situated employees of the Company; or (iii) the Company
materially breaches any written employment agreement between the Company and Optionee.

          (b) Method of Exercise. This Option shall be exercisable only by delivery of an
Exercise Notice (attached as Exhibit A) which shall state the election to exercise the Option, the
whole number of Shares in respect of which the Option is being exercised, and such other provisions
as may be required by the Administrator. Such Exercise Notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the Company accompanied by
payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the
Company of such written notice accompanied by the Exercise Price.

          No Shares will be issued pursuant to the exercise of the Option unless such issuance and such
exercise shall comply with all Applicable Laws. Assuming such compliance, for income tax purposes,
the Shares shall be considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.

          (c) Taxes. No Shares will be issued to the Optionee or other person pursuant to the
exercise of the Option until the Optionee or other person has made arrangements acceptable to the
Administrator for the satisfaction of foreign, federal, state and local income and employment tax
withholding obligations.

     3. Optionee’s Representations. In the event the Shares purchasable pursuant to the
exercise of the Option have not been registered under the Securities Act of 1933, as amended, at
the time the Option is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise or all or any portion the Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.

     4. Method of Payment. Payment of the Exercise Price shall be by any of the following,
or a combination thereof, at the election of the Optionee; provided, however, that such exercise
method does not then violate an Applicable Law:

          (a) cash;

          (b) check;

          (c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery
of a properly executed form of attestation of ownership of Shares as the
Administrator may require (including withholding of Shares otherwise deliverable upon exercise
of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the

3

 

aggregate Exercise Price of the Shares as to which the Option is being exercised (but only to the
extent that such exercise of the Option would not result in an accounting compensation charge with
respect to the Shares used to pay the exercise price); or

          (d) if the exercise occurs on or after the Registration Date, delivery of a properly executed
Exercise Notice together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the Exercise Price.

     5. Restrictions on Exercise. This Option may be exercised prior to the time that the
Plan has been approved by the stockholders of the Company; provided, however, that all Shares
issued upon any such exercise shall be rescinded if stockholder approval is not obtained within the
time prescribed, and Shares issued on any such exercise shall not be counted in determining
whether stockholder approval is obtained. In addition, this Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute a violation of any
Applicable Laws.

     6. Termination of Relationship. In the event the Optionee’s Continuous Status as an
Employee, Director or Consultant terminates, the Optionee may, to the extent otherwise so entitled
at the date of such termination (the “Termination Date”), exercise this Option during the
Termination Period set out in the Notice of Stock Option Grant. Except as provided in Sections 7
and 8, below, to the extent that the Optionee was not entitled to exercise this Option on the
Termination Date, or if the Optionee does not exercise this Option within the Termination Period,
the Option shall terminate.

     7. Disability of Optionee. In the Optionee’s Continuous Status as an Employee,
Director or Consultant terminates as a result of his or her disability, the Optionee may, but only
within twelve (12) months from the Termination Date (and in no event later than the Term/Expiration
Date), exercise the Option to the extent otherwise entitled to exercise it on the Termination Date;
provided, however, that if such disability is not a “disability” as such term is defined in Section
22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall
cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock
Option on the day three (3) months and one day following the Termination Date. To the extent that
the Optionee was not entitled to exercise the Option on the Termination Date, or if the Optionee
does not exercise such Option to the extent so entitled within the time specified herein, the
Option shall terminate.

     8. Death of Optionee. In the event of the Optionee’s death, the Option may be
exercised at any time within twelve (12) months following the date of death (and in no event later
than the Term/Expiration Date), by the Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the Optionee could exercise
the Option at the date of death.

     9. 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 and may be exercised during the
lifetime of the Optionee only by the Optionee. The terms of this Option shall be binding upon the
executors, administrators, heirs and successors of the Optionee.

4

 

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

     11. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer referred to in the legends placed upon certificates evidencing ownership of the Shares,
the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and,
if the Company transfers its own securities, it may make appropriate notations to the same effect
in its own records.

     12. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Option Agreement or the Bylaws of the Company or (ii) to treat as owner of such Shares or
to accord the right to vote or pay dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.

     13. Tax Consequences. Set forth below is a brief summary as of the date of this
Option Agreement of some of the federal and California tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES.

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

          (b) Exercise of Incentive Stock Option Following Disability. If the Optionee’s
Continuous Status as an Employee, Director or Consultant terminates as a result of disability that
is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent
permitted on the date of termination, the Optionee must exercise an Incentive Stock Option within
three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive
Stock Option.

          (c) Exercise of Non-Qualified Stock Option. There may be a regular federal income tax
liability and California income tax liability upon the exercise of a Non-Qualified Stock Option.
The Optionee 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 Shares on the date of exercise over the Exercise Price. If Optionee is an Employee or a former
Employee, the Company will be required to withhold from Optionee’s compensation or collect from
Optionee 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.

5

 

          (d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares are
held for at least one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal and California income tax purposes. In the case of an Incentive
Stock Option, if Shares transferred pursuant to the Option are held for at least one year after
receipt of the Shares and are disposed of at least two years after the Date of Grant, any gain
realized on disposition of the Shares also will be treated as long-term capital gain for federal
and California income tax purposes. If Shares purchased under an Incentive Stock Option are
disposed of within such one-year or two-year periods, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of
exercise, or (ii) the sale price of the Shares.

     14. Lock-Up Agreement.

          (a) Agreement. Optionee, if requested by the Company and the lead underwriter of any
public offering of the Common Stock or other securities of the Company (the “Lead Underwriter”),
hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or exchangeable or exercisable
for or any other rights to purchase or acquire Common Stock (except Common Stock included in such
public offering or acquired on the public market after such offering) during the 180-day period
following the effective date of a registration statement of the Company filed under the Securities
Act of 1933, as amended, or such shorter period of time as the Lead Underwriter shall specify.
Optionee further agrees to sign such documents as may be requested by the Lead Underwriter to
effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect
to such Common Stock subject until the end of such period. The Company and Optionee acknowledge
that each Lead Underwriter of a public offering of the Company’s stock, during the period of such
offering and for the 180-day period thereafter, is an intended beneficiary of this Section 14.

          (b) Permitted Transfers. Notwithstanding the foregoing, Section 14(a) shall not
prohibit Optionee from transferring any shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Company’s Common Stock to the extent such transfer is not
otherwise prohibited by this Agreement, either during Optionee’s lifetime or on death by will or
intestacy to Optionee’s immediate family or to a trust the beneficiaries of which are exclusively
Optionee and/or a member or members of Optionee’s immediate family; provided, however, that prior
to any such transfer, each transferee shall execute an agreement pursuant to which each transferee
shall agree to receive and hold such securities subject to the provisions of Section 14 hereof.
For the purposes of this subsection, the term “immediate family” shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor.

          (c) No Amendment Without Consent of Underwriter. During the period from
identification as a Lead Underwriter in connection with any public offering of the Company’s Common
Stock until the earlier of (i) the expiration of the lock-up period specified in Section 14(a) in
connection with such offering or (ii) the abandonment of such offering by the

6

 

Company and the Lead
Underwriter, the provisions of this Section 14 may not be amended or waived except with the consent
of the Lead Underwriter.

     15. Entire Agreement: Governing Law. The Plan and this Option 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 the Optionee with respect
to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except
by means of a writing signed by the Company and Optionee. This agreement is governed by California
law except for that body of law pertaining to conflict of laws.

     16. Headings. The captions used in this Agreement are inserted for convenience and
shall not be deemed a part of this Agreement for construction or interpretation.

     17. Interpretation. Any dispute regarding the interpretation of this Option Agreement
shall be submitted by the Optionee or by the Company forthwith to the Board or the Administrator
that administers the Plan, which shall review such dispute at its next regular meeting. The
resolution of such dispute by the Board or the Administrator shall be final and binding on all
persons.

	 	 	 	 	 
	 	Sonics, Inc.

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	 	 
	 
	 	Its:  	 	 
	 	 	 
	 	 	 
	 	 	 
	 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED
ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 1997 STOCK INCENTIVE
PLAN, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR
CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with
the terms and provisions thereof, and hereby accepts this Option Agreement subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to executing this
Option Agreement and fully understands all provisions of the Option Agreement. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or interpretations of the Board or
Administrator upon any questions arising under the Plan or this Option Agreement.

7

 

Optionee further
agrees to notify the Company upon any change in the residence address indicated below.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signed:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Optionee,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Residence Address:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

8

 

EXHIBIT A

SONICS, INC. 1997 STOCK INCENTIVE PLAN

EXERCISE NOTICE

Sonics, Inc.

2440 W. El Camino Real, Suite 620

Mountain View, CA 94040

Attention: Secretary

     1. Exercise of Option. Effective as of today,                    ,                                
        , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to
purchase                      shares of the Common Stock (the “Shares”) of Sonics, Inc., a Delaware
corporation (the “Company”) under and pursuant to the Company’s 1997 Stock Incentive Plan (the
“Plan”) and the [ ] Incentive [ ] Non-Qualified Stock Option Agreement dated                     ,
                    (the “Option Agreement”).

     2. Representations of Optionee. Optionee acknowledges that Optionee has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and
conditions.

     3. Rights as Stockholder. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided in the Plan.

          Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the
Shares. Upon such exercise, Optionee shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the
Shares so purchased to be surrendered to the Company for transfer or cancellation.

     4. Delivery of Payment. Optionee herewith delivers to the Company the full Exercise
Price for the Shares.

     5. Tax Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee

9

 

represents that Optionee has consulted with any tax consultants Optionee deems advisable in
connection with the purchase or disposition of the Shares and that Optionee is not relying on
the Company for any tax advice.

     6. Taxes. Optionee agrees to satisfy all applicable federal, state and local income
and employment tax withholding obligations and herewith delivers to the Company the full amount of
such obligations or has made arrangements acceptable to the Company to satisfy such obligations.
In the case of an Incentive Stock Option, Optionee also agrees, as partial consideration for the
designation of the Option as an Incentive Stock Option, to notify the Company in writing within
thirty (30) days of any disposition of any shares acquired by exercise of the Option if such
disposition occurs within two (2) years from the Grant Date or within one (1) year from the date
the Shares were transferred to Optionee. If the Company is required to satisfy any federal, state
or local income or employment tax withholding obligations as a result of such an early disposition,
Optionee agrees to satisfy the amount of such withholding in a manner that the Administrator
prescribes.

     7. Restrictive Legends. Optionee understands and agrees that the Company shall cause
the legends set forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
FIRST REFUSAL HELD BY THE ISSUER AS SET FORTH IN THE BYLAWS OF THE
ISSUER. A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
THE ISSUER. SUCH RIGHT OF FIRST REFUSAL IS BINDING ON TRANSFEREES
OF THESE SHARES.

     8. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Agreement shall inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on transfer herein set
forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

     9. Headings. The captions used in this Agreement are inserted for convenience and
shall not be deemed a part of this Agreement for construction or interpretation.

10

 

     10. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Optionee or by the Company forthwith to the Company’s Board of Directors or
the Administrator that administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Board or Administrator shall be final and binding
on all persons.

     11. Governing Law; Severability. This Agreement shall be governed by and construed in
accordance with the laws of the State of California excluding that body of law pertaining to
conflicts of law. Should any provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable.

     12. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail
by certified mail, with postage and fees prepaid, addressed to the other party at its address as
shown below beneath its signature, or to such other address as such party may designate in writing
from time to time to the other party.

     13. Further Instruments. The parties agree to execute such further instruments and to
take such further action as may be reasonably necessary to carry out the purposes and intent of
this agreement.

     14. Entire Agreement. The Plan and the Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation
Statement 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 Optionee
with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee.

	 	 	 	 	 
	Submitted by:	 	Accepted by:
	 
	 	 	 	 
	OPTIONEE:	 	SONICS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:	 	Address:
	 
	 	 	 	 
	 	 	Sonics, Inc.
	 

	 	 	 	 
	 	 	2440 W. El Camino Real, Suite 620
	 

	 	 	 	 
	 	 	Mountain View, CA 94040

11

 

EXHIBIT B

SONICS, INC. 1997 STOCK INCENTIVE PLAN

INVESTMENT REPRESENTATION STATEMENT

	 	 	 	 	 
	OPTIONEE

	 	:	 	 
	 
	 	 	 	 
	 

	 	:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	COMPANY

	 	:
	 	Sonics, Inc.
	 
	 	 	 	 
	SECURITY

	 	:
	 	COMMON STOCK
	 
	 	 	 	 
	AMOUNT

	 	:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	DATE

	 	:	 	 
	 
	 	 	 	 
	 

	 	 	 	 

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents
to the Company the following:

     (a) Optionee is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and knowledgeable decision
to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s
own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

     (b) Optionee acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends upon among other things, the
bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee
understands that, in the view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee’s representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the market price of the
Securities, or for a period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register the Securities.
Optionee understands that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.

     (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under
the Securities Act, which, in substance, permit limited public resale of

1

 

“restricted securities”
acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701
at the time of the grant of the Option to the Optionee, the exercise will be exempt from
registration under the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited
“broker’s transaction” or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability
of certain public information about the Company, (3) the amount of Securities being sold during any
three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time of grant of the
Option, then the Securities may be resold in certain limited circumstances subject to the
provisions of Rule 144, which requires the resale to occur not less than one year after the later
of the date the Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than
two years, the satisfaction of the conditions set forth in paragraphs (a), (b) and (c) of the
paragraph immediately above.

     (d) Optionee hereby agrees that if so requested by the Company or any representative of the
underwriters in connection with any registration of the offering of any securities of the Company
under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other
securities of the Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that such restriction
shall only apply to public offerings which include securities to be sold on behalf of the Company
to the public in an underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing restrictions until
the end of such 180-day period.

     (e) Optionee further understands that in the event all of the applicable requirements of Rule
701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A,
or some other registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden
of proof in establishing that an exemption from registration is available for such offers or sales,
and that such persons and their respective brokers who participate in such transactions do so at
their own risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.

2

 

	 	 	 	 	 
	 	Signature of Optionee:

 	 
	
 	 	 
	 	

Date:        
                  
      ,              	
 	 
	 	 	 	 
	 	 	 	 
	 

3

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