Document:

<PAGE>   1

                                                                    EXHIBIT 10.5

                             SYNAPTICS INCORPORATED

                       2000 NONSTATUTORY STOCK OPTION PLAN

         1. PURPOSES OF THE PLAN. The purposes of this Nonstatutory Stock Option
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted hereunder shall be Nonstatutory Stock
Options.

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

                  (a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

                  (b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, the Code, any Stock
Exchange rules and regulations and the applicable laws of any other country or
jurisdiction where Options are granted under the Plan, as such laws, rules,
regulations and requirements shall be in place from time to time.

                  (c)      "BOARD" means the Board of Directors of the Company.

                  (d) "CODE" means the Internal Revenue Code of 1986, as
amended.

                  (e) "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

                  (f) "COMMON STOCK" means the Common Stock of the Company.

                  (g) "COMPANY" means Synaptics Incorporated, a California
corporation.

                  (h) "CONSULTANT" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services, provided that a Director of the
Company shall not be treated as a Consultant for purposes of the Plan.

                  (i) "CONTINUOUS SERVICE STATUS" means the absence of any
interruption or termination of service as an Employee or Consultant to the
Company or a Parent or Subsidiary. Continuous Service Status shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than 90 days, unless reemployment upon
the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
in the case of transfers between locations of the Company or between the
Company, its Parent, or any Subsidiariey or their respective
<PAGE>   2
successors. Unless otherwise determined by the Administrator, a change in status
from an Employee to a Consultant or from a Consultant to an Employee will not
constitute an interruption of Continuous Service Status.

                  (j)      "DIRECTOR" means a member of the Board.

                  (k) "EMPLOYEE" means any person who is employed by the Company
or any Parent or Subsidiary of the Company, with the status of employment
determined based upon such minimum number of hours or periods worked as shall be
determined by the Administrator in its discretion, subject to any requirements
of the Code. The payment of a director's fee to a Director shall not be
sufficient to constitute "employment" of such Director by the Company.

                  (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                  (m) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

                    (i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported), as quoted
on such system or exchange, or the exchange with the greatest volume of trading
in Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                    (ii) If the Common Stock is quoted on the Nasdaq System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock for the
last market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable; or

                    (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

                  (n) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable option
agreement. "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable option agreement.

                  (o) "OPTION" means a stock option granted pursuant to the
Plan.

                  (p) "OPTION AGREEMENT" means a written document, the form(s)
of which shall be approved from time to time by the Administrator, reflecting
the terms of an Option granted under the Plan and includes any documents
attached to or incorporated into such Option Agreement, including, but not
limited to, a notice of stock option grant and a form of exercise notice.

                                      -2-
<PAGE>   3
                  (q) "OPTIONED STOCK" means the Common Stock subject to an
Option.

                  (r) "OPTIONEE" means an Employee or Consultant who receives an
Option.

                  (s) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.

                  (t) "PLAN" means this 2000 Nonstatutory Stock Option Plan.

                  (u) "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to time, or any successor
provision.

                  (v) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

                  (w) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.

         3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 100,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

         If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Shares issued under the Plan and later repurchased
by the Company shall become available for future grant or sale under the Plan.

         4. ADMINISTRATION OF THE PLAN.

                  (a) COMPOSITION OF ADMINISTRATOR. The Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws. If a Committee has been appointed pursuant to this Section 4(a), such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of any
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
(however caused) and remove all members of a Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

                  (b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, the specific duties delegated by, or
limitations of authority imposed by, the Board to or on such Committee, the
Administrator shall have the authority, in its discretion:

                                      -3-
<PAGE>   4
                    (i) to grant Options under the Plan;

                    (ii) to determine, upon review of relevant information and
in accordance with Section 2(m) of the Plan, the Fair Market Value of the Common
Stock;

                    (iii) to determine the exercise price per share of Options
to be granted, which exercise price shall be determined in accordance with
Section 8(a) of the Plan;

                    (iv) to determine the Employees or Consultants to whom, and
the time or times at which, Options shall be granted and the number of shares to
be represented by each Option;

                    (v) to interpret the Plan;

                    (vi) to approve forms of agreement for use under the Plan;

                    (vii) to determine the terms and provisions of each Option
granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option;

                    (viii) to accelerate or defer (with the consent of the
Optionee) the exercise date of any Option;

                    (ix) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted by the Administrator; and

                    (x) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

                  (c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options granted under the
Plan.

         5. ELIGIBILITY.

                  (a) RECIPIENTS OF GRANTS. Options may be granted only to
Employees and Consultants. An Employee or Consultant who has been granted an
Option may, if he is otherwise eligible, be granted an additional Option or
Options.

                  (b) TYPE OF OPTION. Each Option shall be designated in the
Option Agreement as a Nonstatutory Stock Option.

                  (c) AT-WILL RELATIONSHIP. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his right
or the Company's right to terminate his employment or consulting relationship at
any time, with or without cause.

                                      -4-
<PAGE>   5
         6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 14 of the Plan.

         7. TERM OF OPTION. The term of each Option shall be ten (10) years from
the date of grant thereof or such shorter term as may be provided in the Option
Agreement.

         8. EXERCISE PRICE AND CONSIDERATION.

                  (a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator.

                  (b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator and may consist entirely of (1) cash, (2) check, (3)
promissory note, (4) other Shares of Common Stock which (i) either have been
owned by the Optionee for more than six (6) months on the date of surrender or
were not acquired, directly or indirectly, from the Company, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised, (5) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) any combination of such methods of
payment, or (7) such other consideration and method of payment for the issuance
of Shares to the extent permitted under the Applicable Laws. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

         9. EXERCISE OF OPTION.

                  (a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, consistent with the terms of the
Plan and reflected in the Option Agreement, including vesting requirements
and/or performance criteria with respect to the Company and/or the Optionee. In
the event that any of the Shares issued upon exercise of an Option should be
subject to a right of repurchase in the Company's favor, such repurchase right
shall lapse at the rate as determined by the Administrator.

                  An Option may not be exercised for a fraction of a Share.

                  An Option 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 Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Administrator, consist of
any consideration and method of payment allowable under Section 8(b) of the
Plan. 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 shareholder

                                      -5-
<PAGE>   6
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 upon exercise of the Option. 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 Section 11 of the Plan.

                  Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

                  (b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In
the event of termination of an Optionee's Continuous Service Status with the
Company, such Optionee may, but only within three (3) months (or such other
period of time, not less than 30 days, as is determined by the Administrator)
after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the Optionee does not
exercise the Option to the extent so entitled within the time specified above,
the Option shall terminate and the Optioned Stock underlying the unexercised
portion of the Option shall revert to the Plan. Unless otherwise determined by
the Administrator, no termination shall be deemed to occur and this Section 9(b)
shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or
(ii) the Optionee is an Employee who becomes a Consultant.

                  (c)      DISABILITY OF OPTIONEE.

                    (i) Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Service Status as a result of his or her
total and permanent disability (within the meaning of Section 22(e)(3) of the
Code), such Optionee may, but only within twelve months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the extent
that the Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

                    (ii) In the event of termination of an Optionee's Continuous
Service Status as a result of a disability which does not fall within the
meaning of total and permanent disability (as set forth in Section 22(e)(3) of
the Code), such Optionee may, but only within six months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the extent
that the Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee does not exercise such Option to the extent so
entitled within six months from the date of termination, the Option shall
terminate.

                                      -6-
<PAGE>   7
                  (d) DEATH OF OPTIONEE. In the event of the death of an
Optionee during the period of Continuous Service Status since the date of grant
of the Option, or within 30 days following termination of the Optionee's
Continuous Service Status, the Option may be exercised, at any time within six
months following the date of death (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), by such
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of death or, if earlier, the date of termination of the
Optionee's Continuous Service Status. To the extent that the Optionee was not
entitled to exercise the Option at the date of death or termination, as the case
may be, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified above, the Option shall terminate.

         10. TAXES.

                  (a) As a condition of the exercise of an Option granted under
the Plan, the Optionee (or in the case of the Optionee's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of an
Option and the issuance of Shares. The Company shall not be required to issue
any Shares under the Plan until such obligations are satisfied.

                  (b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.

                  (c) In the case of a Optionee other than an Employee (or in
the case of an Employee where the next payroll payment is not sufficient to
satisfy such tax obligations, with respect to any remaining tax obligations), in
the absence of any other arrangement and to the extent permitted under the
Applicable Laws, the Optionee shall be deemed to have elected to have the
Company withhold from the Shares to be issued upon exercise of the Option that
number of Shares having a Fair Market Value determined as of the applicable Tax
Date (as defined below) equal to the minimum statutory amount required to be
withheld. For purposes of this Section 10, the Fair Market Value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined under the Applicable Laws (the "Tax Date").

                  (d) If permitted by the Administrator, in its discretion, a
Optionee may satisfy his or her tax withholding obligations upon exercise of an
Option by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Optionee for more
than six months on the date of surrender, and (ii) have a Fair Market Value
determined as of the applicable Tax Date equal to the minimum statutory amount
required to be withheld.

                  (e) Any election or deemed election by a Optionee to have
Shares withheld to satisfy tax withholding obligations under Section 10(c) or
(d) above shall be irrevocable as to the

                                      -7-
<PAGE>   8
particular Shares as to which the election is made and shall be subject to the
consent or disapproval of the Administrator. Any election by an Optionee under
Section 10(d) above must be made on or prior to the applicable Tax Date.

                  (f) In the event an election to have Shares withheld is made
by a Optionee and the Tax Date is deferred under Section 83 of the Code because
no election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

         11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, CORPORATE TRANSACTION
AND OTHER TRANSACTION.

                  (a) ADJUSTMENTS. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, and the price per share of Common Stock covered by each
such outstanding Option, 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, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. 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 thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

                  (b) DISSOLUTION OR LIQUIDATION. In the event of the
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

                  (c) MERGER OR SALE OF ASSETS. In the event of a proposed sale
of all or substantially all of the Company's assets or a merger of the Company
with or into another corporation where the successor corporation issues its
securities to the Company's shareholders (a "Corporate Transaction"), each
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the successor corporation does not agree to assume
the outstanding Options or substitute equivalent options, in which case the
outstanding Options shall terminate upon the consummation of the transaction.

                  For purposes of this Section 11(c), an Option shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Corporate

                                      -8-
<PAGE>   9
Transaction, each Optionee would be entitled to receive upon exercise of an
Option the same number and kind of shares of stock or the same amount of
property, cash or securities as the Optionee would have been entitled to receive
upon the occurrence of such transaction if the Optionee had been, immediately
prior to the transaction, the holder of the number of Shares of Common Stock
covered by the Option at such time (after giving effect to any adjustments in
the number of Shares covered by the Option as provided for in this Section 11);
provided however that if such consideration received in the transaction is 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 exercise of the Option to be solely common
stock of the successor corporation or its Parent equal to the Fair Market Value
of the per Share consideration received by holders of Common Stock in the
transaction.

                  (d) CERTAIN DISTRIBUTIONS. In the event of any distribution to
the Company's shareholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without receipt
of consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

         12. NON-TRANSFERABILITY OF OPTIONS. Options 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 or purchased
during the lifetime of the Optionee only by the Optionee.

         13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.

         14.      AMENDMENT AND TERMINATION OF THE PLAN.

                  (a) AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable

                  (b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not adversely affect Options already granted
(except to the extent contemplated by such Options) and such Options shall
remain in full force and effect, unless mutually agreed otherwise between the
Optionee and the Board (or other body then administering the Plan), which
agreement must be in writing and signed by the Optionee and the Company.

         15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with the
Applicable Laws, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

                                      -9-
<PAGE>   10
         As a condition to the exercise of an Option, the Company may require
the person exercising such Option 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 of
the aforementioned relevant provisions of law.

         16. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. 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.

         17. OPTION AGREEMENTS. Options shall be evidenced by Option Agreements
in such forms as the Administrator shall from time to time approve.

         18. INFORMATION TO OPTIONEES. If required by the Applicable Laws, the
Company shall provide financial statements at least annually to each Optionee
during the period such Optionee has one or more Options outstanding, and in the
case of an individual who acquired Shares pursuant to the Plan, during the
period such individual owns such Shares. The Company shall not be required to
provide such information if the issuance of Options under the Plan is limited to
key employees whose duties in connection with the Company assure their access to
equivalent information. In addition, at the time of issuance of any securities
under the Plan, the Company shall provide to the Optionee a copy of the Plan and
any agreement(s) pursuant to which securities granted under the Plan are issued.

                                      -10-
<PAGE>   11
                             SYNAPTICS INCORPORATED

                       2000 NONSTATUTORY STOCK OPTION PLAN

                          NOTICE OF STOCK OPTION GRANT

((Optionee))

         You have been granted a nonstatutory stock option to purchase Common
Stock "Common Stock" of Synaptics Incorporated (the "Company") as follows:

<TABLE>
<S>                                                 <C>
        Board Approval Date:                        ((BoardApprovalDate))

        Date of Grant (Later of Board

        Approval Date or Commence-
        ment of Employment/Consulting):             ((GrantDate))

        Vesting Commencement Date:                  ((VestingCommenceDate))

        Type of Option:                              Nonstatutory Stock Option

        Exercise Price per Share:                    $((ExercisePrice))

        Total Number of Shares Granted:             ((NoofShares))

        Total Exercise Price:                        $((TotalExercisePrice))

        Term/Expiration Date:                       ((ExpirDate))

        Vesting Schedule:                            This Option may be exercised, in whole or in part, in
                                                     accordance with the following schedule: 25% of the Shares
                                                     subject to the Option shall vest on the twelve (12) month
                                                     anniversary of the Vesting Commencement Date and 1/48th of the
                                                     total number of Shares subject to the Option shall vest on the
                                                    ((MonthVestDate))of each month thereafter.

        Termination                                  Period: This Option may be
                                                     exercised for 90 days after
                                                     termination of employment
                                                     or consulting relationship
                                                     except as set out in
                                                     Sections 5 and 6 of the
                                                     Stock Option Agreement (but
                                                     in no event later than the
                                                     Expiration Date).
</TABLE>
<PAGE>   12
         By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the 2000 Nonstatutory Stock Option Plan and the
Stock Option Agreement, both of which are attached and made a part of this
document.

((OPTIONEE)):                             SYNAPTICS INCORPORATED

                                          By:
______________________________               ___________________________________
Signature

                                               Francis Lee, President & CEO
______________________________
Print Name

                                      -2-
<PAGE>   13
                              SYNAPTIC INCORPORATED

                       2000 NONSTATUTORY STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         1. GRANT OF OPTION. Synaptics Incorporated, a California corporation
(the "Company"), hereby grants to ((Optionee)) ("Optionee"), a nonstatutory
stock option (the "Option") to purchase a 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 Synaptics
Incorporated 2000 Nonstatutory Stock Option 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.

         2. EXERCISE OF OPTION. 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 provisions of Section 9 of the Plan as follows:

                  (a) RIGHT TO EXERCISE.

                    (i) This Option may not be exercised for a fraction of a
share.

                    (ii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 4, 5 and 6 below, subject to the limitation contained in Section
2(a)(i).

                    (iii) In no event may this Option be exercised after the
Expiration Date of this Option as set forth in the Notice of Stock Option Grant.

                  (b) METHOD OF EXERCISE. This Option shall be exercisable by
execution and delivery of the Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Exercise Agreement") or of any
other form of written notice approved for such purpose by the Company which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The written notice
shall be accompanied by payment of the Exercise Price. This Option shall be
deemed to be exercised upon receipt by the Company of such written notice
accompanied by the Exercise Price.
<PAGE>   14
         No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of
applicable law and the requirements of any stock exchange upon which the Shares
may then be listed. Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to Optionee on the date on which the Option is
exercised with respect to such Shares.

         3. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of Optionee:

                  (a) cash;

                  (b) check;

                  (c) surrender of other shares of Common Stock of the Company
which (i) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by Optionee for more than six months on the date of
surrender, and (ii) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

                  (d) if there is a public market for the Shares and they are
registered under the Exchange Act, delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds required to pay the Exercise
Price.

         4. TERMINATION OF RELATIONSHIP. In the event of termination of
Optionee's Continuous Status as an Employee or Consultant, 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 forth in the
Notice of Stock Option Grant. To the extent that Optionee was not entitled to
exercise this Option at such Termination Date, or if Optionee does not exercise
this Option within the Termination Period, the Option shall terminate.

         5. DISABILITY OF OPTIONEE.

                  (a) Notwithstanding the provisions of Section 4 above, in the
event of termination of Optionee's Continuous Status as an Employee or
Consultant as a result of Optionee's total and permanent disability (as defined
in Section 22(e)(3) of the Code), Optionee may, but only within twelve months
from the Termination Date (but in no event later than the Expiration Date set
forth in the Notice of Stock Option Grant), exercise this Option to the extent
Optionee was entitled to exercise it as of such Termination Date. To the extent
that Optionee was not entitled to exercise the Option as of the Termination
Date, or if Optionee does not exercise such Option (to the extent so entitled)
within the time specified in this Section 5(a), the Option shall terminate.

                                      -2-
<PAGE>   15
                  (b) Notwithstanding the provisions of Section 4 above, in the
event of termination of Optionee's consulting relationship or Continuous Status
as an Employee as a result of disability not constituting a total and permanent
disability (as set forth in Section 22(e)(3) of the Code), Optionee may, but
only within six months from the Termination Date (but in no event later than the
Expiration Date set forth in the Notice of Stock Option Grant), exercise the
Option to the extent Optionee was entitled to exercise it as of such Termination
Date. To the extent that Optionee was not entitled to exercise the Option at the
Termination Date, or if Optionee does not exercise such Option to the extent so
entitled within the time specified in this Section 5(b), the Option shall
terminate.

         6. DEATH OF OPTIONEE. In the event of the death of Optionee (a) during
the Term of this Option and while an Employee or Consultant of the Company and
having been in Continuous Status as an Employee or Consultant since the date of
grant of the Option, or (b) within 30 days after Optionee's Termination Date,
the Option may be exercised at any time within six months following the date of
death (but in no event later than the Expiration Date set forth in the Notice of
Stock Option Grant), by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the Termination Date.

         7. 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 Optionee only by him or her. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.

         8. TERM OF OPTION. This Option may be exercised only within the Term
set forth in the Notice of Stock Option Grant, subject to the limitations set
forth in Section 7 of the Plan.

         9. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
of this Option of certain of the federal and California tax consequences of
exercise of this Option and disposition of the Shares under the laws in effect
as of the Date of Grant. 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.

         There may be a regular federal (and state) income tax liability upon
the exercise of the Option. 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, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise. If Shares issued upon exercise of a
Nonstatutory Stock

                                      -3-
<PAGE>   16
Option are held for at least more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes.

         10. WITHHOLDING TAX OBLIGATIONS. Optionee understands that, upon
exercising a Nonstatutory Stock Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then Fair Market Value of the
Shares over the Exercise Price. If Optionee is an 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 equal to a percentage of this
compensation income. Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option by one or some combination
of the following methods: (a) by cash payment, (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares which (i) in the case of Shares previously
acquired from the Company, have been owned by Optionee for more than six months
on the date of surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the minimum statutory amount required to be withheld, or (d)
by electing to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value equal to
the minimum statutory amount required to be withheld. For this purpose, the Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").

         If Optionee is subject to Section 16 of the Exchange Act (an
"Insider"), any surrender of previously owned Shares to satisfy tax withholding
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3").

         All elections by Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

                  (a) the election must be made on or prior to the applicable
Tax Date;

                  (b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made; and

                  (c) all elections shall be subject to the consent or
disapproval of the Administrator.

         11. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing such underwritten offering of the Company's securities,
Optionee agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any securities of the Company (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time

                                      -4-
<PAGE>   17
(not to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters and to execute an
agreement reflecting the foregoing as may be requested by the underwriters at
the time of the Company's initial public offering.

         This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
document.

                               SYNAPTICS INCORPORATED

                               By:
                                  ______________________________________________

                                    Francis Lee, President & CEO

         OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY 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 STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, 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 or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.

Dated:
     _________________________________       ___________________________________
                                                      ((Optionee))

                                      -5-
<PAGE>   18
                                    EXHIBIT A

                             SYNAPTICS INCORPORATED

                       2000 NONSTATUTORY STOCK OPTION PLAN

             EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

         This Agreement ("Agreement") is made as of ______________, by and
between Synaptics Incorporated, a California corporation (the "Company"), and
((Optionee)) ("Purchaser"). To the extent any capitalized terms used in this
Agreement are not defined, they shall have the meaning ascribed to them in the
2000 Nonstatutory Stock Option Plan.

         1. EXERCISE OF OPTION. Subject to the terms and conditions hereof,
Purchaser hereby elects to exercise his or her option to purchase __________
shares of the Common Stock (the "Shares") of the Company under and pursuant to
the Company's 2000 Nonstatutory Stock Option Plan (the "Plan") and the Stock
Option Agreement granted ((GrantDate)), (the "Option Agreement"). The purchase
price for the Shares shall be $((ExercisePrice)) per Share for a total purchase
price of $_______________. The term "Shares" refers to the purchased Shares and
all securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.

         2. TIME AND PLACE OF EXERCISE. The purchase and sale of the Shares
under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement in accordance
with the provisions of Section 2(b) of the Option Agreement. On such date, the
Company will deliver to Purchaser a certificate representing the Shares to be
purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the exercise price therefor by Purchaser by (a) check made payable to
the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c)
delivery of shares of the Common Stock of the Company in accordance with Section
3 of the Option Agreement, or (d) a combination of the foregoing.

         3. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares except in compliance with the
provisions below and applicable securities laws.

                  (a) RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee of Purchaser (either being sometimes referred to
herein as the "Holder") may be sold or otherwise transferred (including transfer
by gift or operation of law), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth in
this Section 3(a) (the "Right of First Refusal").

                    (i) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide

                                      A-1
<PAGE>   19
intention to sell or otherwise transfer such Shares; (ii) the name of each
proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number
of Shares to be transferred to each Proposed Transferee; and (iv) the terms and
conditions of each proposed sale or transfer. The Holder shall offer the Shares
at the same price (the "Offered Price") and upon the same terms (or terms as
similar as reasonably possible) to the Company or its assignee(s).

                    (ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
30 days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection
(iii) below.

                    (iii) PURCHASE PRICE. The purchase price ("Purchase Price")
for the Shares purchased by the Company or its assignee(s) under this Section
3(a) shall be the Offered Price. If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.

                    (iv) PAYMENT. Payment of the Purchase Price shall be made,
at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

                    (v) HOLDER'S RIGHT TO TRANSFER. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section
3(a), then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 60 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 3 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
or if the Holder proposes to change the price or other terms to make them more
favorable to the Proposed Transferee, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

                    (vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section 3(a) notwithstanding, the transfer of any or
all of the Shares during Purchaser's lifetime or on Purchaser's death by will or
intestacy to Purchaser's Immediate Family (as defined below) or a trust for the
benefit of Purchaser's Immediate Family shall be exempt from the provisions of
this Section 3(a). "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the
transferee or other recipient shall receive and hold the Shares so transferred
subject to the provisions of this Section, and there shall be no further
transfer of such Shares except in accordance with the terms of this Section 3.

                                      A-2
<PAGE>   20
                  (b) INVOLUNTARY TRANSFER.

                    (i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY TRANSFER.
In the event, at any time after the date of this Agreement, of any transfer by
operation of law or other involuntary transfer (including divorce or death, but
excluding, in the event of death, a transfer to Immediate Family as set forth in
Section 3(a)(vi) above) of all or a portion of the Shares by the record holder
thereof, the Company shall have the right to purchase all of the Shares
transferred at the greater of the purchase price paid by Purchaser pursuant to
this Agreement or the Fair Market Value of the Shares on the date of transfer.
Upon such a transfer, the person acquiring the Shares shall promptly notify the
Secretary of the Company of such transfer. The right to purchase such Shares
shall be provided to the Company for a period of 30 days following receipt by
the Company of written notice by the person acquiring the Shares.

                    (ii) PRICE FOR INVOLUNTARY TRANSFER. With respect to any
stock to be transferred pursuant to Section 3(b)(i), the price per Share shall
be a price set by the Board of Directors of the Company that will reflect the
current value of the stock in terms of present earnings and future prospects of
the Company. The Company shall notify Purchaser or his or her executor of the
price so determined within 30 days after receipt by it of written notice of the
transfer or proposed transfer of Shares. However, if the Purchaser does not
agree with the valuation as determined by the Board of Directors of the Company,
the Purchaser shall be entitled to have the valuation determined by an
independent appraiser to be mutually agreed upon by the Company and the
Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.

                  (c) ASSIGNMENT. The right of the Company to purchase any part
of the Shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations; provided,
however, that an assignee, other than a corporation that is the Parent or a 100%
owned Subsidiary of the Company, must pay the Company, upon assignment of such
right, cash equal to the difference between the original purchase price and Fair
Market Value, if the original purchase price is less than the Fair Market Value
of the Shares subject to the assignment.

                  (d) RESTRICTIONS BINDING ON TRANSFEREES. All transferees of
Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are satisfied.

                  (e) TERMINATION OF RIGHTS. The Right of First Refusal and the
Company's right to repurchase the Shares in the event of an involuntary transfer
pursuant to Section 3(b) above shall terminate upon the first sale of Common
Stock of the Company 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 (the "Securities Act").

                  (f) MARKET STANDOFF AGREEMENT. In connection with the initial
public offering of the Company's securities and upon request of the Company or
the underwriters

                                      A-3
<PAGE>   21
managing such underwritten offering of the Company's securities, Purchaser
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters and to execute an
agreement reflecting the foregoing as may be requested by the underwriters at
the time of the Company's initial public offering.

         4. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with the
purchase of the Shares, Purchaser represents to the Company the following:

                  (a) Purchaser 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 Shares. Purchaser is
purchasing the Shares for investment for his or her 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.

                  (b) Purchaser understands that the Shares have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.

                  (c) Purchaser understands that the Shares are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, Purchaser must hold the Shares indefinitely unless they
are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. Purchaser acknowledges that the Company has no
obligation to register or qualify the Shares for resale. Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, and
requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.

                  (d) Purchaser understands that Purchaser may suffer adverse
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.

         5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a) LEGENDS. The certificate or certificates representing the
Shares shall bear the following legends (as well as any legends required by
applicable state and federal corporate and securities laws):

                    (i)  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                         BEEN REGISTERED UNDER THE

                                      A-4
<PAGE>   22
                         SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
                         INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
                         WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
                         DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
                         REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
                         COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
                         REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
                         OF 1933.

                    (ii) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
                         TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
                         AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A
                         COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
                         COMPANY.

                  (b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

                  (c) 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 Agreement 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.

                  (d) REMOVAL OF LEGEND. When all of the following events have
occurred, the Shares then held by Purchaser will no longer be subject to the
legend referred to in Section 5(a)(ii): (i) the termination of the Right of
First Refusal; and (ii) the expiration or termination of the market standoff
provisions of Section 3(f) (and of any agreement entered pursuant to Section
3(f)). After such time, and upon Purchaser's request, a new certificate or
certificates representing the Shares not repurchased shall be issued without the
legend referred to in Section 5(a)(ii), and delivered to Purchaser.

         6. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any
manner whatsoever the right or power of the Company, or a Parent or Subsidiary
of the Company, to terminate Purchaser's employment or consulting relationship,
for any reason, with or without cause.

         7. MISCELLANEOUS.

                  (a) GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.

                                      A-5
<PAGE>   23
                  (b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement
sets forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

                  (c) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

                  (d) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

                  (e) NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or 48 hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address as set forth below or as
subsequently modified by written notice.

                  (f) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

                  (g) SUCCESSORS AND ASSIGNS. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

                            [Signature Page Follows]

                                      A-6
<PAGE>   24
         The parties have executed this Exercise Notice and Restricted Stock
Purchase Agreement as of the date first set forth above.

                               COMPANY:

                               SYNAPTICS INCORPORATED

                               By:
                                 _______________________________________________

                               Name: MaryJo Visneski

                               Title: Corporate Controller

                               2381 Bering Drive
                               San Jose, CA 95131

                               PURCHASER:

                               ((OPTIONEE))

                               _________________________________________________
                               (Signature)

                               _________________________________________________
                               (Print Name)

                                Address:

                               _________________________________________________

                               _________________________________________________

I, ______________________, spouse of ((Optionee)), have read and hereby approve
the foregoing Agreement. In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Agreement, I hereby agree
to be bound irrevocably by the Agreement and further agree that any community
property or similar interest that I may have in the Shares shall hereby be
similarly bound by the Agreement. I hereby appoint my spouse as my
attorney-in-fact with respect to any amendment or exercise of any rights under
the Agreement.

                             ___________________________________________________
                             Spouse of ((Optionee))

                                      A-7<PAGE>   1

                                                                    EXHIBIT 10.6

                             SYNAPTICS INCORPORATED

                        2001 INCENTIVE COMPENSATION PLAN
<PAGE>   2
                             SYNAPTICS, INCORPORATED

                        2001 INCENTIVE COMPENSATION PLAN

<TABLE>
<S> <C>                                                                              <C>
1.  Purpose...........................................................................1
2.  Definitions.......................................................................1
3.  Administration....................................................................5
    (a)  Authority of the Committee...................................................5
    (b)  Manner of Exercise of Committee Authority....................................6
    (c)  Limitation of Liability......................................................6
4.  Stock Subject to Plan.............................................................6
    (a)  Limitation on Overall Number of Shares Subject to Awards.....................6
    (b)  Limitation on Number of Incentive Stock Option Shares........................7
    (c)  Application of Limitations...................................................7
5.  Eligibility; Per-Person Award Limitations.........................................7
6.  Specific Terms of Awards..........................................................7
    (a)  General......................................................................7
    (b)  Options......................................................................8
    (c)  Stock Appreciation Rights...................................................10
    (d)  Restricted Stock............................................................10
    (e)  Deferred Stock..............................................................12
    (f)  Bonus Stock and Awards in Lieu of Obligations...............................13
    (g)  Dividend Equivalents........................................................13
    (h)  Other Stock-Based Awards....................................................13
7.  Performance and Annual Incentive Awards..........................................14
    (a)  Performance Conditions......................................................14
    (b)  Performance Awards Granted to Designated Covered Employees..................14
    (c)  Annual Incentive Awards Granted to Designated Covered Employees.............16
    (d)  Written Determinations......................................................17
    (e)  Status of Section 7(b) and Section 7(c) Awards Under Code Section 162(m)....17
8.  Certain Provisions Applicable to Awards or Sales.................................18
    (a)  Stand-Alone, Additional, Tandem, and Substitute Awards......................18
    (b)  Term of Awards..............................................................18
    (c)  Purchase Prices.............................................................17
    (d)  Form and Timing of Payment Under Awards; Deferrals..........................19
    (e)  Exemptions from Section 16(b) Liability.....................................19
9.  Change in Control................................................................19
    (a)  Effect of "Change in Control."..............................................19
    (b)  Definition of "Change in Control............................................20
    (c)  Definition of "Change in Control Price."....................................21
10. General Provisions...............................................................21
    (a)  Compliance With Legal and Other Requirements................................21
</TABLE>
<PAGE>   3
<TABLE>
<S>                                                                                 <C>
    (b)  Limits on Transferability; Beneficiaries....................................22
    (c)  Adjustments.................................................................22
    (d)  Taxes.......................................................................23
    (e)  Changes to the Plan and Awards..............................................23
    (f)  Reporting of Financial Information..........................................23
    (g)  Limitation on Rights Conferred Under Plan...................................24
    (h)  Unfunded Status of Awards; Creation of Trusts...............................24
    (i)  Nonexclusivity of the Plan..................................................24
    (j)  Payments in the Event of Forfeitures; Fractional Shares.....................25
    (k)  Governing Law...............................................................25
    (l)  Plan Effective Date and Stockholder Approval; Termination of Plan...........25
</TABLE>
<PAGE>   4
                             SYNAPTICS INCORPORATED

                        2001 INCENTIVE COMPENSATION PLAN

         1. Purpose. The purpose of this 2001 INCENTIVE COMPENSATION PLAN (the
"Plan") is to assist SYNAPTICS INCORPORATED, a California corporation (the
"Company") and its Related Entities in attracting, motivating, retaining and
rewarding high-quality executives and other Employees, officers, Directors and
independent Contractors by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. In the event that the
Company is or becomes a Publicly Held Corporation (as hereinafter defined), the
Plan is intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Committee (or any successor committee) of the
Board of Directors of the Company.

         2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.

                  (a) "Annual Incentive Award" means a conditional right granted
to a Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

                  (b) "Award" means any Option, Stock Appreciation Right
(including Limited Stock Appreciation Right), Restricted Stock, Deferred Stock,
Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award, together with
any other right or interest, granted to a Participant under the Plan.

                  (c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

                  (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

                  (e)      "Board" means the Company's Board of Directors.
<PAGE>   5
                  (f) "Cause" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "cause" or "for cause") set forth in
any employment agreement between the Participant and the Company or a Related
Entity or, in the absence of any such agreement, such term shall mean (i) the
failure by the Participant to perform his or her duties as assigned by the
Company (or a Related Entity) in a reasonable manner, (ii) any violation or
breach by the Participant of his or her employment agreement with the Company
(or a Related Entity), if any, (iii) any violation or breach by the Participant
of his or her non-competition and/or non-disclosure agreement with the Company
(or a Related Entity), if any, (iv) any act by the Participant of dishonesty or
bad faith with respect to the Company (or a Related Entity), (v) chronic
addiction to alcohol, drugs or other similar substances affecting the
Participant's work performance, or (vi) the commission by the Participant of any
act, misdemeanor, or crime reflecting unfavorably upon the Participant or the
Company. The good faith determination by the Committee of whether the
Participant's Continuous Service was terminated by the Company for "Cause" shall
be final and binding for all purposes hereunder.

                  (g) "Change in Control" means a Change in Control as defined
with related terms in Section 9 of the Plan.

                  (h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.

                  (i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (j) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist of at
least two directors, and, in the event the Company is or becomes a Publicly Held
Corporation (as hereinafter defined), each member of which shall be (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act,
unless administration of the Plan by "non-employee directors" is not then
required in order for exemptions under Rule 16b-3 to apply to transactions under
the Plan, and (ii) an "outside director" within the meaning of Section 162(m) of
the Code, unless administration of the Plan by "outside directors" is not then
required in order to qualify for tax deductibility under Section 162(m) of the
Code.

                  (k) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

                  (l) "Continuous Service" means uninterrupted provision of
services to the Company in any capacity of Employee, Director, or Consultant.
Continuous Service shall not be considered to be interrupted in the case of (i)
any approved leave of absence, (ii) transfers among the Company, any Related
Entities, or any successor entities, in any capacity of Employee Director, or
Consultant, or (iii) any change in status as long as the individual remains in
the service of the Company or a Related Entity in any capacity of Employee,
Director, or Consultant

                                       2
<PAGE>   6
(except as otherwise provided in the Option Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized
personal leave.

                  (m) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.

                  (n) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 7(e) of the Plan.

                  (o) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.

                  (p) "Director" means a member of the Board or the board of
directors of any Related Entity.

                  (q) "Disability" means a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Committee.

                  (r) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g) hereof, to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

                  (s) "Effective Date" means the effective date of the Plan,
which shall be March 7, 2001.

                  (t) "Eligible Person" means each Executive Officer of the
Company (as defined under the Exchange Act) and other officers, Directors and
Employees of the Company or of any Related Entity, and independent contractors
with the Company or any Related Entity. The foregoing notwithstanding, only
employees of the Company, the Parent, or any Subsidiary shall be Eligible
Persons for purposes of receiving any Incentive Stock Options. An Employee on
leave of absence may be considered as still in the employ of the Company or a
Related Entity for purposes of eligibility for participation in the Plan.

                  (u) "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 or a Related Entity shall not be sufficient
to constitute "employment" by the Company.

                  (v) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.

                  (w) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.

                  (x) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the

                                       3
<PAGE>   7
Fair Market Value of Stock as of any given date after which the Company is a
Publicly Held Corporation shall be the closing sale price per share reported on
a consolidated basis for stock listed on the principal stock exchange or market
on which Stock is traded on the date as of which such value is being determined
or, if there is no sale on that date, then on the last previous day on which a
sale was reported.

                  (y) "Good Reason" shall, with respect to any Participant, have
the equivalent meaning (or the same meaning as "good reason" or "for good
reason") set forth in any employment agreement between the Participant and the
Company or a Related Entity or, in the absence of any such agreement, such term
shall mean (i) the assignment to the Participant of any duties inconsistent in
any respect with the Participant's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as assigned
by the Company (or a Related Entity), or any other action by the Company (or a
Related Entity) which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company (or a Related Entity) promptly after receipt of notice
thereof given by the Participant; (ii) any failure by the Company (or a Related
Entity) to comply with its obligations to the Participant as agreed upon, other
than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (iii) the Company's (or
Related Entity's) requiring the Participant to be based at any office or
location outside of fifty miles from the location of employment as of the date
of Award, except for travel reasonably required in the performance of the
Participant's responsibilities; (iv) any purported termination by the Company
(or a Related Entity) of the Participant's Continuous Service otherwise than for
Cause as defined in Section 2(f), or by reason of the Participant's Disability
as defined in Section 2(o), prior to the Expiration Date. For purposes of this
Section 2(v), any good faith determination of "Good Reason" made by the Company
shall be conclusive.

                  (z) "Incentive Stock Option" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

                  (aa) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.

                  (bb) "Limited Stock Appreciation Right" means a right granted
to a Participant under Section 6(c) hereof.

                  (cc) "Option" means a right granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified price
during specified time periods.

                  (dd) "Optionee" means a person to whom an Option or Incentive
Stock Option is granted under this Plan or any person who succeeds to the rights
of such person under this Plan.

                  (ee) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.

                                       4
<PAGE>   8
                  (ff) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (gg) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.

                  (hh) "Performance Award" means a right, granted to an Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.

                  (ii) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.

                  (jj) "Publicly Held Corporation" shall mean a publicly held
corporation as that term is used under Section 162(m)(2) of the Code.

                  (kk) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (ll) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

                  (mm) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.

                  (nn) "Stock Appreciation Right" means a right granted to a
Participant under Section 6(c) hereof.

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

         3.       Administration.

                  (a) Authority of the Committee. The Plan shall be administered
by the Committee; provided, however, that except as otherwise expressly provided
in this Plan or, during the period that the Company is a Publicly Held
Corporation, in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the

                                       5
<PAGE>   9
administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

                  (b) Manner of Exercise of Committee Authority. In the event
that the Company is or becomes a Publicly Held Corporation, the Committee, and
not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its Related Entities, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any Related Entity, or committees
thereof, the authority, subject to such terms as the Committee or the Board
shall determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions
of the Committee or the Board as the Committee or the Board may determine to the
extent performance of such functions will not result in the loss of an exemption
under Rule 16b-3 otherwise available for transactions by such persons, in each
case to the extent permitted under applicable law and subject to the
requirements set forth in Section 7(d). The Committee or the Board may appoint
agents to assist it in administering the Plan.

                  (c) Limitation of Liability. The Committee and the Board, and
each member thereof, shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any Executive Officer,
other officer or Employee, the Company's independent auditors, Consultants or
any other agents assisting in the administration of the Plan. Members of the
Committee and the Board, and any officer or Employee acting at the direction or
on behalf of the Committee or the Board, shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action or determination.

         4.       Stock Subject to Plan.

                  (a) Limitation on Overall Number of Shares Subject to Awards.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 400,000, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto. In the event an Initial Public Offering ("IPO") of the shares of
the Company's Stock occurs, the

                                       6
<PAGE>   10
overall number of shares of the Company's Stock subject to Awards shall be
further increased by 6% of the total number of shares of the Company's Stock
outstanding immediately following the IPO, plus, on the first day of each
subsequent calendar quarter, an additional 1.5% of the total number of shares of
the Company's Stock outstanding on that day, provided, however, that at no time
shall the number of shares of the Company's Stock subject to Awards exceed 30%
of the then outstanding shares of the Company's Stock (counting convertible
preferred and convertible senior common shares as if converted), unless a
greater percentage is approved by a vote of at least two-thirds of the
securities entitled to vote, or a determination is made by counsel for the
Company that such restriction is not required by applicable federal or state
securities laws under the circumstances. Any shares of Stock delivered under the
Plan may consist, in whole or in part, of authorized and unissued shares or
treasury shares.

                  (b) Limitation on Number of Incentive Stock Option Shares.
Subject to adjustment as provided in Section 10(c) hereof, the number of shares
of Stock which may be issued pursuant to Incentive Stock Options shall be the
lesser of (i) the number of Shares that may be subject to Awards under Section
4(a), or (ii) 15,000,000.

                  (c) Application of Limitations. The limitation contained in
this Section 4 shall apply not only to Awards that are settleable by the
delivery of shares of Stock but also to Awards relating to shares of Stock but
settleable only in cash (such as cash-only Stock Appreciation Rights). The
Committee or the Board may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award.

         5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 1,000,000 shares of Stock, subject to adjustment as
provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f),
6(g), 6(h), 7(b) and 7(c). In addition, the maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be $2,000,000, and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Participant shall be $5,000,000.

         6.       Specific Terms of Awards.

                  (a) General. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee or the Board may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board
shall determine, including terms requiring forfeiture of Awards in the event of
termination of Continuous Service by the Participant and terms permitting a
Participant to make elections relating to his or her Award. The Committee or the
Board shall retain full power and discretion to accelerate, waive or modify, at
any time, any term or condition of an Award that is not mandatory under the
Plan. Except in cases in which the Committee or the Board is authorized to
require other forms of consideration under the Plan, or to the extent other
forms of consideration

                                       7
<PAGE>   11
must be paid to satisfy the requirements of California law, no consideration
other than services may be required for the grant (but not the exercise) of any
Award.

                  (b) Options. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:

                  (i) Stock Option Agreement. Each grant of an Option under the
         Plan shall be evidenced by a Stock Option Agreement. Such Stock Option
         Agreement shall be subject to all applicable terms and conditions of
         the Plan and may be subject to any other terms and conditions which are
         not inconsistent with the Plan and which the Committee or the Board
         deems appropriate for inclusion in a Stock Option Agreement. The
         provisions of the various Stock Option Agreements entered into under
         the Plan need not be identical.

                  (ii) Number of Shares. Each Stock Option Agreement shall
         specify the number of shares of Stock that are subject to the Option
         and shall provide for the adjustment of such number in accordance with
         Section 10(c) hereof. The Stock Option Agreement shall also specify
         whether the Stock Option is an Incentive Stock Option or a
         Non-Qualified Stock Option.

                  (iii) Exercise Price.

                                    (A) In General. Each Stock Option Agreement
                  shall state the price at which shares of Stock subject to the
                  Option may be purchased (the "Exercise Price"), which shall
                  be, with respect to Incentive Stock Options, not less than
                  100% of the Fair Market Value of the Stock on the date of
                  grant. In the case of Non-Qualified Stock Options, the
                  Exercise Price shall be determined in the sole discretion of
                  the Committee or the Board; provided, however, that the
                  Exercise Price shall be no less than 85% of the Fair Market
                  Value of the shares of Stock on the date of grant of the
                  Non-Qualified Stock Option.

                                    (B) Ten Percent Shareholder. If an
                  individual owns or is deemed to own (by reason of the
                  attribution rules applicable under Section 424(d) of the Code)
                  more than 10% of the combined voting power of all classes of
                  stock of the Company or any Related Entity, any Option granted
                  to such individual must comply with the following: (1) the
                  Exercise Price of a Non-Qualified Stock Option must be at
                  least 110% of the Fair Market Value of a share of Stock on the
                  date of grant, or (2) in the case of an Incentive Stock
                  Option, the Exercise Price must be at least 110% of the Fair
                  Market Value of a share of Stock on the date of grant and such
                  Incentive Stock Option by its terms is not exercisable after
                  the expiration of five years from the date of grant.

                                    (C) Non-Applicability. The Exercise Price
                  restriction applicable to Non-Qualified Stock Options required
                  by Sections 6(b)(iii)(A) and 6(b)(iii)(B) shall be inoperative
                  if (1) the offer and sale of the shares of Stock to be issued
                  upon payment of the Exercise Price have been registered under
                  a then currently effective registration statement under
                  applicable federal or state

                                       8
<PAGE>   12
                  securities laws, or (2) a determination is made by counsel for
                  the Company that such Exercise Price restrictions are not
                  required in the circumstances under applicable federal or
                  state securities laws.

                           (iv) Time and Method of Exercise. The Committee or
                  the Board shall determine the time or times at which or the
                  circumstances under which an Option may be exercised in whole
                  or in part (including based on achievement of performance
                  goals and/or future service requirements), provided that in
                  the case of an Optionee who is not an officer, Director, or
                  Consultant of the Company or a Related Entity, his or her
                  Options shall become exercisable at least as rapidly as 20%
                  per year, over a 5 year period commencing on the date of the
                  grant, unless a determination is made by counsel for the
                  Company that such vesting requirements are not required in the
                  circumstances under applicable federal or state securities
                  laws. The Board or the Committee may also determine the time
                  or times at which Options shall cease to be or become
                  exercisable following termination of Continuous Service or
                  upon other conditions; provided, however, if the Optionee's
                  Continuous Service is terminated for any reason other than
                  Cause, [that portion of the Option that is exercisable as of
                  the date of termination shall remain exercisable for at least
                  6 months from the date of termination if by reason of death or
                  Disability, and for at least 30 days from the date of
                  termination if by reason other than the Optionee's death or
                  Disability.] The Board or the Committee may determine the
                  methods by which such exercise price may be paid or deemed to
                  be paid (including in the discretion of the Committee or the
                  Board a cashless exercise procedure), the form of such
                  payment, including, without limitation, cash, Stock, other
                  Awards or awards granted under other plans of the Company or a
                  Related Entity, or other property (including notes or other
                  contractual obligations of Participants to make payment on a
                  deferred basis), and the methods by or forms in which Stock
                  will be delivered or deemed to be delivered to Participants.

                           (v) Incentive Stock Options. The terms of any
                  Incentive Stock Option granted under the Plan shall comply in
                  all respects with the provisions of Section 422 of the Code.
                  Anything in the Plan to the contrary notwithstanding, no term
                  of the Plan relating to Incentive Stock Options (including any
                  Stock Appreciation Rights in tandem therewith) shall be
                  interpreted, amended or altered, nor shall any discretion or
                  authority granted under the Plan be exercised, so as to
                  disqualify either the Plan or any Incentive Stock Option under
                  Section 422 of the Code, unless the Participant has first
                  requested the change that will result in such
                  disqualification. Thus, if and to the extent required to
                  comply with Section 422 of the Code, Options granted as
                  Incentive Stock Options shall be subject to the following
                  special terms and conditions:

                                    (A) the Option shall not be exercisable more
                  than ten years after the date such Incentive Stock Option is
                  granted; provided, however, that if a Participant owns or is
                  deemed to own (by reason of the attribution rules of Section
                  424(d) of the Code) more than 10% of the combined voting power
                  of all classes

                                       9
<PAGE>   13
                  of stock of the Company or any Parent Corporation and the
                  Incentive Stock Option is granted to such Participant, the
                  term of the Incentive Stock Option shall be (to the extent
                  required by the Code at the time of the grant) for no more
                  than five years from the date of grant; and

                                    (B) The aggregate Fair Market Value
                  (determined as of the date the Incentive Stock Option is
                  granted) of the shares of stock with respect to which
                  Incentive Stock Options granted under the Plan and all other
                  option plans of the Company or its Parent Corporation during
                  any calendar year exercisable for the first time by the
                  Participant during any calendar year shall not (to the extent
                  required by the Code at the time of the grant) exceed
                  $100,000.

                           (vi) Repurchase Rights. The Committee and the Board
                  shall have the discretion to grant Options which are
                  exercisable for unvested shares of Common Stock. Should the
                  Optionee's Continuous Service cease while holding such
                  unvested shares, the Company shall have the right to
                  repurchase, at the exercise price paid per share, any or all
                  of those unvested shares. The terms upon which such repurchase
                  right shall be exercisable (including the period and procedure
                  for exercise and the appropriate vesting schedule for the
                  purchased shares) shall be established by the Committee or the
                  Board and set forth in the document evidencing such repurchase
                  right.

                  (c) Stock Appreciation Rights. The Committee and the Board
each is authorized to grant Stock Appreciation Rights to Participants on the
following terms and conditions:

                           (i) Right to Payment. A Stock Appreciation Right
                  shall confer on the Participant to whom it is granted a right
                  to receive, upon exercise thereof, the excess of (A) the Fair
                  Market Value of one share of stock on the date of exercise
                  (or, in the case of a "Limited Stock Appreciation Right" that
                  may be exercised only in the event of a Change in Control, the
                  Fair Market Value determined by reference to the Change in
                  Control Price, as defined under Section 9(c) hereof), over (B)
                  the grant price of the Stock Appreciation Right as determined
                  by the Committee or the Board. The grant price of a Stock
                  Appreciation Right shall not be less than the Fair Market
                  Value of a share of Stock on the date of grant except as
                  provided under Section 8(a) hereof.

                           (ii) Other Terms. The Committee or the Board shall
                  determine at the date of grant or thereafter, the time or
                  times at which and the circumstances under which a Stock
                  Appreciation Right may be exercised in whole or in part
                  (including based on achievement of performance goals and/or
                  future service requirements), the time or times at which Stock
                  Appreciation Rights shall cease to be or become exercisable
                  following termination of Continuous Service or upon other
                  conditions, the method of exercise, method of settlement, form
                  of consideration payable in settlement, method by or forms in
                  which Stock will be delivered or deemed to be delivered to
                  Participants, whether or not a Stock Appreciation Right shall
                  be in

                                       10
<PAGE>   14
                  tandem or in combination with any other Award, and any other
                  terms and conditions of any Stock Appreciation Right. Limited
                  Stock Appreciation Rights that may only be exercised in
                  connection with a Change in Control or other event as
                  specified by the Committee or the Board, may be granted on
                  such terms, not inconsistent with this Section 6(c), as the
                  Committee or the Board may determine. Stock Appreciation
                  Rights and Limited Stock Appreciation Rights may be either
                  freestanding or in tandem with other Awards.

                  (d) Restricted Stock. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

                           (i) Grant and Restrictions. Restricted Stock shall be
                  subject to such restrictions on transferability, risk of
                  forfeiture and other restrictions, if any, as the Committee or
                  the Board may impose, or as otherwise provided in this Plan.
                  The restrictions may lapse separately or in combination at
                  such times, under such circumstances (including based on
                  achievement of performance goals and/or future service
                  requirements), in such installments or otherwise, as the
                  Committee or the Board may determine at the date of grant or
                  thereafter. Except to the extent restricted under the terms of
                  the Plan and any Award agreement relating to the Restricted
                  Stock, a Participant granted Restricted Stock shall have all
                  of the rights of a stockholder, including the right to vote
                  the Restricted Stock and the right to receive dividends
                  thereon (subject to any mandatory reinvestment or other
                  requirement imposed by the Committee or the Board). During the
                  restricted period applicable to the Restricted Stock, subject
                  to Section 10(b) below, the Restricted Stock may not be sold,
                  transferred, pledged, hypothecated, margined or otherwise
                  encumbered by the Participant.

                           (ii) Forfeiture. Except as otherwise determined by
                  the Committee or the Board at the time of the Award, upon
                  termination of a Participant's Continuous Service during the
                  applicable restriction period, the Participant's Restricted
                  Stock that is at that time subject to restrictions shall be
                  forfeited and reacquired by the Company; provided that the
                  Committee or the Board may provide, by rule or regulation or
                  in any Award agreement, or may determine in any individual
                  case, that restrictions or forfeiture conditions relating to
                  Restricted Stock shall be waived in whole or in part in the
                  event of terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Restricted Stock.

                           (iii) Certificates for Stock. Restricted Stock
                  granted under the Plan may be evidenced in such manner as the
                  Committee or the Board shall determine. If certificates
                  representing Restricted Stock are registered in the name of
                  the Participant, the Committee or the Board may require that
                  such certificates bear an appropriate legend referring to the
                  terms, conditions and restrictions applicable to such
                  Restricted Stock, that the Company retain physical possession
                  of the certificates, and that the Participant deliver a stock
                  power to the Company, endorsed in blank, relating to the
                  Restricted Stock.

                                       11
<PAGE>   15
                           (iv) Dividends and Splits. As a condition to the
                  grant of an Award of Restricted Stock, the Committee or the
                  Board may require that any cash dividends paid on a share of
                  Restricted Stock be automatically reinvested in additional
                  shares of Restricted Stock or applied to the purchase of
                  additional Awards under the Plan. Unless otherwise determined
                  by the Committee or the Board, Stock distributed in connection
                  with a Stock split or Stock dividend, and other property
                  distributed as a dividend, shall be subject to restrictions
                  and a risk of forfeiture to the same extent as the Restricted
                  Stock with respect to which such Stock or other property has
                  been distributed.

                  (e) Deferred Stock. The Committee and the Board each is
authorized to grant Deferred Stock to Participants, which are rights to receive
Stock, cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:

                           (i) Award and Restrictions. Satisfaction of an Award
                  of Deferred Stock shall occur upon expiration of the deferral
                  period specified for such Deferred Stock by the Committee or
                  the Board (or, if permitted by the Committee or the Board, as
                  elected by the Participant). In addition, Deferred Stock shall
                  be subject to such restrictions (which may include a risk of
                  forfeiture) as the Committee or the Board may impose, if any,
                  which restrictions may lapse at the expiration of the deferral
                  period or at earlier specified times (including based on
                  achievement of performance goals and/or future service
                  requirements), separately or in combination, in installments
                  or otherwise, as the Committee or the Board may determine.
                  Deferred Stock may be satisfied by delivery of Stock, cash
                  equal to the Fair Market Value of the specified number of
                  shares of Stock covered by the Deferred Stock, or a
                  combination thereof, as determined by the Committee or the
                  Board at the date of grant or thereafter. Prior to
                  satisfaction of an Award of Deferred Stock, an Award of
                  Deferred Stock carries no voting or dividend or other rights
                  associated with share ownership.

                           (ii) Forfeiture. Except as otherwise determined by
                  the Committee or the Board, upon termination of a
                  Participant's Continuous Service during the applicable
                  deferral period thereof to which forfeiture conditions apply
                  (as provided in the Award agreement evidencing the Deferred
                  Stock), the Participant's Deferred Stock that is at that time
                  subject to deferral (other than a deferral at the election of
                  the Participant) shall be forfeited; provided that the
                  Committee or the Board may provide, by rule or regulation or
                  in any Award agreement, or may determine in any individual
                  case, that restrictions or forfeiture conditions relating to
                  Deferred Stock shall be waived in whole or in part in the
                  event of terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Deferred Stock.

                           (iii) Dividend Equivalents. Unless otherwise
                  determined by the Committee or the Board at date of grant, any
                  Dividend Equivalents that are granted with respect to any
                  Award of Deferred Stock shall be either (A) paid with

                                       12
<PAGE>   16
                  respect to such Deferred Stock at the dividend payment date in
                  cash or in shares of unrestricted Stock having a Fair Market
                  Value equal to the amount of such dividends, or (B) deferred
                  with respect to such Deferred Stock and the amount or value
                  thereof automatically deemed reinvested in additional Deferred
                  Stock, other Awards or other investment vehicles, as the
                  Committee or the Board shall determine or permit the
                  Participant to elect.

                  (f) Bonus Stock and Awards in Lieu of Obligations. The
Committee and the Board each is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Committee or the Board.

                  (g) Dividend Equivalents. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.

                  (h) Other Stock-Based Awards. The Committee and the Board each
is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. The
Committee or the Board shall determine the terms and conditions of such Awards.
Stock delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(h) shall be purchased for such consideration (including
without limitation loans from the Company or a Related Entity), paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. The Committee and the Board shall have the discretion to grant such
other Awards which are exercisable for unvested shares of Common Stock. Should
the Optionee's Continuous Service cease while holding such unvested shares, the
Company shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Committee or the Board and set forth in the document evidencing such

                                       13
<PAGE>   17
repurchase right. Cash awards, as an element of or supplement to any other Award
under the Plan, may also be granted pursuant to this Section 6(h).

         7.       Performance and Annual Incentive Awards.

                  (a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the
Committee or the Board. The Committee or the Board may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 7(b) and 7(c) hereof in the case of a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). At such times as the Company is a Publicly Held Corporation, if
and to the extent required under Code Section 162(m), any power or authority
relating to a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the Committee and not the
Board.

                  (b) Performance Awards Granted to Designated Covered
Employees. If and to the extent that the Committee determines that a Performance
Award to be granted to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Performance Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section
7(b).

                           (i) Performance Goals Generally. The performance
                  goals for such Performance Awards shall consist of one or more
                  business criteria and a targeted level or levels of
                  performance with respect to each of such criteria, as
                  specified by the Committee consistent with this Section 7(b).
                  Performance goals shall be objective and shall otherwise meet
                  the requirements of Code Section 162(m) and regulations
                  thereunder including the requirement that the level or levels
                  of performance targeted by the Committee result in the
                  achievement of performance goals being "substantially
                  uncertain." The Committee may determine that such Performance
                  Awards shall be granted, exercised and/or settled upon
                  achievement of any one performance goal or that two or more of
                  the performance goals must be achieved as a condition to
                  grant, exercise and/or settlement of such Performance Awards.
                  Performance goals may differ for Performance Awards granted to
                  any one Participant or to different Participants.

                           (ii) Business Criteria. One or more of the following
                  business criteria for the Company, on a consolidated basis,
                  and/or specified Related Entities or business units of the
                  Company (except with respect to the total stockholder return
                  and earnings per share criteria), shall be used exclusively by
                  the Committee in establishing performance goals for such
                  Performance Awards: (1) total stockholder return; (2) such
                  total stockholder return as compared to total return (on a
                  comparable basis) of a publicly available index such as, but
                  not limited to, the Standard & Poor's 500 Stock Index or the
                  S&P Specialty Retailer Index; (3)

                                       14
<PAGE>   18
                  net income; (4) pretax earnings; (5) earnings before interest
                  expense, taxes, depreciation and amortization; (6) pretax
                  operating earnings after interest expense and before bonuses,
                  service fees, and extraordinary or special items; (7)
                  operating margin; (8) earnings per share; (9) return on
                  equity; (10) return on capital; (11) return on investment;
                  (12) operating earnings; (13) working capital or inventory;
                  and (14) ratio of debt to stockholders' equity. One or more of
                  the foregoing business criteria shall also be exclusively used
                  in establishing performance goals for Annual Incentive Awards
                  granted to a Covered Employee under Section 7(c) hereof that
                  are intended to qualify as "performanced-based compensation
                  under Code Section 162(m).

                           (iii) Performance Period; Timing For Establishing
                  Performance Goals. Achievement of performance goals in respect
                  of such Performance Awards shall be measured over a
                  performance period of up to ten years, as specified by the
                  Committee. Performance goals shall be established not later
                  than 90 days after the beginning of any performance period
                  applicable to such Performance Awards, or at such other date
                  as may be required or permitted for "performance-based
                  compensation" under Code Section 162(m).

                           (iv) Performance Award Pool. The Committee may
                  establish a Performance Award pool, which shall be an unfunded
                  pool, for purposes of measuring Company performance in
                  connection with Performance Awards. The amount of such
                  Performance Award pool shall be based upon the achievement of
                  a performance goal or goals based on one or more of the
                  business criteria set forth in Section 7(b)(ii) hereof during
                  the given performance period, as specified by the Committee in
                  accordance with Section 7(b)(iii) hereof. The Committee may
                  specify the amount of the Performance Award pool as a
                  percentage of any of such business criteria, a percentage
                  thereof in excess of a threshold amount, or as another amount
                  which need not bear a strictly mathematical relationship to
                  such business criteria.

                           (v) Settlement of Performance Awards; Other Terms.
                  Settlement of such Performance Awards shall be in cash, Stock,
                  other Awards or other property, in the discretion of the
                  Committee. The Committee may, in its discretion, reduce the
                  amount of a settlement otherwise to be made in connection with
                  such Performance Awards. The Committee shall specify the
                  circumstances in which such Performance Awards shall be paid
                  or forfeited in the event of termination of Continuous Service
                  by the Participant prior to the end of a performance period or
                  settlement of Performance Awards.

                  (c) Annual Incentive Awards Granted to Designated Covered
Employees. The Committee may, within its discretion, grant one or more Annual
Incentive Awards to any Eligible Person, subject to the terms and conditions set
forth in this Section 7(c).

                           (vi) Annual Incentive Award Pool. The Committee may
                  establish an Annual Incentive Award pool, which shall be an
                  unfunded pool, for purposes of

                                       15
<PAGE>   19
                  measuring Company performance in connection with Annual
                  Incentive Awards. In the case of Annual Incentive Awards
                  intended to qualify as "performance-based compensation" for
                  purposes of Code Section 162(m), the amount of such Annual
                  Incentive Award pool shall be based upon the achievement of a
                  performance goal or goals based on one or more of the business
                  criteria set forth in Section 7(b)(ii) hereof during the given
                  performance period, as specified by the Committee in
                  accordance with Section 7(b)(iii) hereof. The Committee may
                  specify the amount of the Annual Incentive Award pool as a
                  percentage of any such business criteria, a percentage thereof
                  in excess of a threshold amount, or as another amount which
                  need not bear a strictly mathematical relationship to such
                  business criteria.

                           (vii) Potential Annual Incentive Awards. Not later
                  than the end of the 90th day of each fiscal year, or at such
                  other date as may be required or permitted in the case of
                  Awards intended to be "performance-based compensation" under
                  Code Section 162(m), the Committee shall determine the
                  Eligible Persons who will potentially receive Annual Incentive
                  Awards, and the amounts potentially payable thereunder, for
                  that fiscal year, either out of an Annual Incentive Award pool
                  established by such date under Section 7(c)(i) hereof or as
                  individual Annual Incentive Awards. In the case of individual
                  Annual Incentive Awards intended to qualify under Code Section
                  162(m), the amount potentially payable shall be based upon the
                  achievement of a performance goal or goals based on one or
                  more of the business criteria set forth in Section 7(b)(ii)
                  hereof in the given performance year, as specified by the
                  Committee; in other cases, such amount shall be based on such
                  criteria as shall be established by the Committee. In all
                  cases, the maximum Annual Incentive Award of any Participant
                  shall be subject to the limitation set forth in Section 5
                  hereof.

                           (viii) Payout of Annual Incentive Awards. After the
                  end of each fiscal year, the Committee shall determine the
                  amount, if any, of (A) the Annual Incentive Award pool, and
                  the maximum amount of potential Annual Incentive Award payable
                  to each Participant in the Annual Incentive Award pool, or (B)
                  the amount of potential Annual Incentive Award otherwise
                  payable to each Participant. The Committee may, in its
                  discretion, determine that the amount payable to any
                  Participant as an Annual Incentive Award shall be reduced from
                  the amount of his or her potential Annual Incentive Award,
                  including a determination to make no Award whatsoever. The
                  Committee shall specify the circumstances in which an Annual
                  Incentive Award shall be paid or forfeited in the event of
                  termination of Continuous Service by the Participant prior to
                  the end of a fiscal year or settlement of such Annual
                  Incentive Award.

                  (d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under Section
7(b), and the amount of any Annual Incentive Award pool or potential individual
Annual Incentive Awards and the amount of final Annual Incentive Awards

                                       16
<PAGE>   20
under Section 7(c), shall be made in writing in the case of any Award intended
to qualify under Code Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards if
and to the extent required to comply with Code Section 162(m).

                  (e) Status of Section 7(b) and Section 7(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 7(b) and 7(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 7(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.

         8.       Certain Provisions Applicable to Awards or Sales.

                  (a) Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee or the
Board, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any Related Entity, or any business entity to be acquired
by the Company or a Related Entity, or any other right of a Participant to
receive payment from the Company or any Related Entity. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an Award is
granted in substitution or exchange for another Award or award, the Committee or
the Board shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted
in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any Related Entity, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).

                  (b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee or the Board; provided that in no
event shall the term of any Option or Stock Appreciation Right exceed a period
of ten years (or such shorter term as may be required in respect of an Incentive
Stock Option under Section 422 of the Code).

                                       17
<PAGE>   21
                  (c)      Purchase Prices.

                           (i) In General. In the case of an Award under this
                  Plan, other than an Option, which grants an Employee,
                  Director, or Consultant of the Company the right to purchase
                  Stock, the Board or the Committee shall have discretion to set
                  the purchase price, provided that in no event shall the
                  purchase price per share of Stock be less than 85% of the Fair
                  Market Value of such share on the date of the Award or the
                  date of the purchase, and in the case of an Award made to an
                  Employee who owns or is deemed to own (by reason of the
                  attribution rules applicable under Section 424(d) of the Code)
                  more than 10% of the combined voting power of all classes of
                  Stock of the Company, the Parent Corporation or a Subsidiary,
                  the purchase price of such Stock shall be no less than 100% of
                  the Fair Market Value of the Stock on the date of such award
                  or the date of the purchase.

                           (ii) Non-Applicability of Restrictions. The Purchase
                  Price restrictions contained in Section 8(c)(i) applicable to
                  Awards under this Plan, other than Options, which grant an
                  Employee, Director, or Consultant of the Company the right to
                  purchase Stock, shall be inoperative if (A) the offer and sale
                  of the shares of Stock to be issued upon payment of the
                  Exercise Price have been registered under a then currently
                  effective registration statement under applicable federal or
                  state securities laws, or (B) a determination is made by
                  counsel for the Company that such Exercise Price restrictions
                  are not required in the circumstances under applicable federal
                  or state securities laws.

                  (d) Form and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made by the Company or a Related Entity upon the exercise of an Option or
other Award or settlement of an Award may be made in such forms as the Committee
or the Board shall determine, including, without limitation, cash, other Awards
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

                  (e) Exemptions from Section 16(b) Liability. If and to the
extent that the Company is or becomes a Publicly Held Corporation, it is the
intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure
that neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be
non-exempt by such

                                       18
<PAGE>   22
Participant). Accordingly, if any provision of this Plan or any Award agreement
does not comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then
applicable to any such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability
under Section 16(b). In addition, the purchase price of any Award conferring a
right to purchase Stock shall be not less than any specified percentage of the
Fair Market Value of Stock at the date of grant of the Award then required in
order to comply with Rule 16b-3.

         9.       Change in Control.

                  (a) Effect of "Change in Control." If and to the extent
provided in the Award, in the event of a "Change in Control," as defined in
Section 9(b):

                           (i) The Committee may, within its discretion,
                  accelerate the vesting and exercisability of any Award
                  carrying a right to exercise that was not previously vested
                  and exercisable as of the time of the Change in Control,
                  subject to applicable restrictions set forth in Section 10(a)
                  hereof;

                            (ii) The Committee may, within its discretion,
                  accelerate the exercisability of any limited Stock
                  Appreciation Rights (and other Stock Appreciation Rights if so
                  provided by their terms) and provide for the settlement of
                  such Stock Appreciation Rights for amounts, in cash,
                  determined by reference to the Change in Control Price;

                           (iii) The Committee may, within its discretion, lapse
                  the restrictions, deferral of settlement, and forfeiture
                  conditions applicable to any other Award granted under the
                  Plan and such Awards may be deemed fully vested as of the time
                  of the Change in Control, except to the extent of any waiver
                  by the Participant and subject to applicable restrictions set
                  forth in Section 10(a) hereof; and

                           (iv) With respect to any such outstanding Award
                  subject to achievement of performance goals and conditions
                  under the Plan, the Committee may, within its discretion, deem
                  such performance goals and other conditions as having been met
                  as of the date of the Change in Control.

                  (b) Definition of "Change in Control. A "Change in Control"
shall be deemed to have occurred upon:

                           (i) Approval by the shareholders of the Company of a
                  reorganization, merger, consolidation or other form of
                  corporate transaction or series of transactions, in each case,
                  with respect to which persons who were the shareholders of the
                  Company immediately prior to such reorganization, merger or
                  consolidation or other transaction do not, immediately
                  thereafter, own more than 50% of the combined voting power
                  entitled to vote generally in the election of directors of the
                  reorganized, merged or consolidated company's then outstanding

                                       19
<PAGE>   23
                  voting securities, or a liquidation or dissolution of the
                  Company or the sale of all or substantially all of the assets
                  of the Company (unless such reorganization, merger,
                  consolidation or other corporate transaction, liquidation,
                  dissolution or sale (any such event being referred to as a
                  "Corporate Transaction") is subsequently abandoned);

                           (ii) Individuals who, as of the date on which the
                  Award is granted, constitute the Board (the "Incumbent Board")
                  cease for any reason to constitute at least a majority of the
                  Board, provided that any person becoming a director subsequent
                  to the date on which the Award was granted whose election, or
                  nomination for election by the Company's shareholders, was
                  approved by a vote of at least a majority of the directors
                  then comprising the Incumbent Board (other than an election or
                  nomination of an individual whose initial assumption of office
                  is in connection with an actual or threatened election contest
                  relating to the election of the Directors of the Company)
                  shall be, for purposes of this Agreement, considered as though
                  such person were a member of the Incumbent Board; or

                           (iii) the acquisition (other than from the Company)
                  by any person, entity or "group", within the meaning of
                  Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act,
                  of more than 50% of either the then outstanding shares of the
                  Company's Common Stock or the combined voting power of the
                  Company's then outstanding voting securities entitled to vote
                  generally in the election of directors (hereinafter referred
                  to as the ownership of a "Controlling Interest") excluding,
                  for this purpose, any acquisitions by (1) the Company or a
                  Related Entity, (2) any person, entity or "group" that as of
                  the date on which the Award is granted owns beneficial
                  ownership (within the meaning of Rule 13d-3 promulgated under
                  the Securities Exchange Act) of a Controlling Interest or (3)
                  any employee benefit plan of the Company or a Related Entity.

                  (c) Definition of "Change in Control Price." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.

         10.      General Provisions.

                  (a) Compliance With Legal and Other Requirements. The Company
may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or

                                       20
<PAGE>   24
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.

                  (b)      Limits on Transferability; Beneficiaries.

                           (i) General. Except as provided herein, a Participant
                  may not assign, sell, transfer, or otherwise encumber or
                  subject to any lien any Award or other right or interest
                  granted under this Plan, in whole or in part, including any
                  Award or right which constitutes a derivative security as
                  generally defined in Rule 16a-1(c) under the Exchange Act,
                  other than by will or by operation of the laws of descent and
                  distribution, and such Awards or rights that may be
                  exercisable shall be exercised during the lifetime of the
                  Participant only by the Participant or his or her guardian or
                  legal representative.

                           (ii) Permitted Transfer of Option. The Committee or
                  Board, in its sole discretion, may permit the transfer of an
                  Option (but not an Incentive Stock Option, or any other right
                  to purchase Stock other than an Option) as follows: (A) by
                  gift to a member of the Participant's Immediate Family or (B)
                  by transfer by instrument to a trust providing that the Option
                  is to be passed to beneficiaries upon death of the Optionee.
                  For purposes of this Section 10(b)(ii), "Immediate Family"
                  shall mean the Optionee's spouse (including a former spouse
                  subject to terms of a domestic relations order); child,
                  stepchild, grandchild, child-in-law; parent, stepparent,
                  grandparent, parent-in-law; sibling and sibling-in-law, and
                  shall include adoptive relationships. If a determination is
                  made by counsel for the Company that the restrictions
                  contained in this Section 10(b)(ii) are not required by
                  applicable federal or state securities laws under the
                  circumstances, then the Committee or Board, in its sole
                  discretion, may permit the transfer of Awards (other than
                  Incentive Stock Options and Stock Appreciation Rights in
                  tandem therewith) to one or more Beneficiaries or other
                  transferees during the lifetime of the Participant, which may
                  be exercised by such transferees in accordance with the terms
                  of such Award, but only if and to the extent permitted by the
                  Committee or the Board pursuant to the express terms of an
                  Award agreement (subject to any terms and conditions which the
                  Committee or the Board may impose thereon, and further subject
                  to any prohibitions and restrictions on such transfers
                  pursuant to Rule 16b-3). A Beneficiary, transferee, or other
                  person claiming any rights under the Plan from or through any
                  Participant shall be subject to all terms and

                                       21
<PAGE>   25
                  conditions of the Plan and any Award agreement applicable to
                  such Participant, except as otherwise determined by the
                  Committee or the Board, and to any additional terms and
                  conditions deemed necessary or appropriate by the Committee or
                  the Board.

                  (c)      Adjustments.

                    (i) Adjustments to Awards. In the event that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
and/or such other securities of the Company or any other issuer such that a
substitution, exchange, or adjustment is determined by the Committee or the
Board to be appropriate, then the Committee or the Board shall, in such manner
as it may deem equitable, substitute, exchange, or adjust any or all of (A) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (B) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (C) the
number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards, (E) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award, and (F) any other aspect of any
Award that the Committee or the Board determines to be appropriate.

                  (ii) Adjustments in Case of Certain Corporate Transactions. In
the event of a proposed sale of all or substantially all of the Company's assets
or any reorganization, merger, consolidation, or other form of corporate
transaction in which the Company does not survive, or in which the shares of
Stock are exchanged for or converted into securities issued by another entity,
then the successor or acquiring entity or an affiliate thereof may, with the
consent of the Committee or the Board, assume each outstanding Option or
substitute an equivalent option or right. If the successor or acquiring entity
or an affiliate thereof, does not cause such an assumption or substitution, then
each Option shall terminate upon the consummation of sale, merger,
consolidation, or other corporate transaction. The Committee or the Board shall
give written notice of any proposed transaction referred to in this Section
10(c)(ii) a reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after the approval of
such transaction), in order that Optionees may have a reasonable period of time
prior to the closing date of such transaction within which to exercise any
Options that are then exercisable (including any Options that may become
exercisable upon the closing date of such transaction). An Optionee may
condition his exercise of any Option upon the consummation of the transaction.

                  (iii) Other Adjustments. In addition, the Committee (and the
Board if and only to the extent such authority is not required to be exercised
by the Committee to comply with Code Section 162(m)) is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
(including Performance Awards and performance goals, and Annual Incentive Awards
and any Annual Incentive Award pool or performance goals relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business

                                       22
<PAGE>   26
unit, or the financial statements of the Company or any Related Entity, or in
response to changes in applicable laws, regulations, accounting principles, tax
rates and regulations or business conditions or in view of the Committee's
assessment of the business strategy of the Company, any Related Entity or
business unit thereof, performance of comparable organizations, economic and
business conditions, personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights, Performance
Awards granted under Section 8(b) hereof or Annual Incentive Awards granted
under Section 8(c) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-based compensation" under Code
Section 162(m) and the regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder.

                  (d) Taxes. The Company and any Related Entity are authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

                  (e) Changes to the Plan and Awards. The Board may amend,
alter, suspend, discontinue or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right
so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.

                                       23
<PAGE>   27
                  (f) Reporting of Financial Information. The Company shall
provide to the recipient of any Award under this Plan, no less frequently than
annually, the financial statements of the Company, until such time as a
determination is made by counsel for the Company that such reports are not
required by applicable federal or state securities laws under the circumstances.

                  (g) Limitation on Rights Conferred Under Plan. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to
terminate any Eligible Person's or Participant's Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and Employees,
or (iv) conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award.

                  (h) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.

                  (i) Nonexclusivity of the Plan. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

                  (j) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

                  (k) Governing Law. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award agreement
shall be determined in

                                       24
<PAGE>   28
accordance with the laws of the State of California without giving effect to
principles of conflicts of laws, and applicable federal law.

                  (l) Plan Effective Date and Stockholder Approval; Termination
of Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable NASDAQ
requirements, and other laws, regulations, and obligations of the Company
applicable to the Plan. Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the event stockholder approval
is not obtained. The Plan shall terminate no later than 10 years from the date
the Plan is adopted by the Board or 10 years from the date the Plan is approved
by the Shareholders, whichever is earlier.

                                       25
<PAGE>   29
                             SYNAPTICS INCORPORATED

                        INCENTIVE STOCK OPTION AGREEMENT

         1. Grant of Option. SYNAPTICS INCORPORATED (the "Company") hereby
grants, as of _________________________, 20___ (the "Date of Grant"), to
____________________________________ (the "Optionee") an option (the "Option")
to purchase up to ________ shares of the Company's Common Stock, $_________ par
value per share (the "Shares"), at an exercise price per share equal to
$_________ . The Option shall be subject to the terms and conditions set forth
herein. The Option was issued pursuant to the Company's 2001 Executive Incentive
Compensation Plan (the "Plan"), which is incorporated herein for all purposes.
The Option is an Incentive Stock Option, and not a nonqualified stock option.
The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all of the terms and conditions hereof and thereof and all applicable
laws and regulations.

         2. Definitions. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.

         3. Exercise Schedule. Except as otherwise provided in Sections 6 or 12
of this Agreement, or in the Plan, the Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to a percentage of Shares as provided below, the
Option may thereafter be exercised by the Optionee, in whole or in part, at any
time or from time to time prior to the expiration of the Option as provided
herein. The following table indicates each date (the "Vesting Date") upon which
the Optionee shall be entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date, provided that the
Continuous Service of the Optionee continues through and on the applicable
Vesting Date:

          Percentage of Shares                        Vesting Date

         Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon the
termination of the Optionee's Continuous Service with the Company and its
Subsidiaries, any unvested portion of the Option shall terminate and be null and
void.

         4. Method of Exercise. The vested portion of this Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by the
Company pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and
<PAGE>   30
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price. This Option shall be deemed to be exercised after both (a) receipt by the
Company of such written notice accompanied by the exercise price and (b)
arrangements that are satisfactory to the Committee or the Board in its sole
discretion have been made for Optionee's payment to the Company of the amount,
if any, that is necessary to be withheld in accordance with applicable Federal
or state withholding requirements. No Shares will be issued pursuant to the
Option unless and until such issuance and such exercise shall comply with all
relevant provisions of applicable law, including the requirements of any stock
exchange upon which the Shares then may be traded.

         5. 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: (a)
cash; (b) check; or (c) such other consideration or in such other manner as may
be determined by the Board or the Committee in its absolute discretion.

         6. Termination of Option.

                  (a) Any unexercised portion of the Option shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of the following:

                    (ix) three months after the date on which the Optionee's
Continuous Service is terminated other than by reason of (A) Cause, which,
solely for purposes of this Agreement, shall mean the termination of the
Optionee's Continuous Service by reason of the Optionee's willful misconduct or
gross negligence, (B) a mental or physical disability (within the meaning of
Internal Revenue Code Section 22(e)) of the Optionee as determined by a medical
doctor satisfactory to the Committee or the Board, or (C) the death of the
Optionee;

                    (ii) immediately upon the termination of the Optionee's
Continuous Service for Cause;

                    (iii) twelve months after the date on which the Optionee's
Continuous Service is terminated by reason of a mental or physical disability
(within the meaning of Section 22(e) of the Code) as determined by a medical
doctor satisfactory to the Committee or the Board;

                    (iv) (A) twelve months after the date of termination of the
Optionee's Continuous Service by reason of the death of the Optionee, or, if
later, (B) three months after the date on which the Optionee shall die if such
death shall occur during the one year period specified in Subsection 6(a)(iii)
hereof; or

                    (v) the tenth anniversary of the date as of which the Option
is granted.

                  (b) To the extent not previously exercised, (i) the Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive or the shares of
Stock are converted into or exchanged for securities issued by another entity,
unless the successor or acquiring entity, or an affiliate of such successor or
acquiring entity, assumes the Option or substitutes an equivalent option or
right pursuant to

                                       2
<PAGE>   31
Section 10(c) of the Plan, and (ii) the Committee or the Board in its sole
discretion may by written notice ("cancellation notice") cancel, effective upon
the consummation of any corporate transaction described in Subsection 9(b)(i) of
the Plan in which the Company does survive, the Option (or portion thereof) that
remains unexercised on such date. The Committee or the Board shall give written
notice of any proposed transaction referred to in this Section 6(b) a reasonable
period of time prior to the closing date for such transaction (which notice may
be given either before or after approval of such transaction), in order that the
Optionee may have a reasonable period of time prior to the closing date of such
transaction within which to exercise the Option if and to the extent that it
then is exercisable (including any portion of the Option that may become
exercisable upon the closing date of such transaction). The Optionee may
condition his exercise of the Option upon the consummation of a transaction
referred to in this Section 6(b).

                  (c) The Company in its sole discretion may at any time during
the Restricted Period, as defined in Section 7(a) hereof, by giving written
notice to the Optionee, cancel the Option and instead pay to the Optionee, or
his estate if the Optionee is deceased, an amount equal to the excess, if any,
of (i) the fair market value, determined by the Board as of any date determined
by the Board that is not more than one year prior to the date of the
cancellation, of the shares of Stock with respect to which the Option otherwise
would have been exercisable, over (ii) the Option Price for such shares. Any
determination of fair market value by the Board shall be binding and conclusive
on all parties unless shown to have been made in an arbitrary and capricious
manner. The purchase price shall, at the option of the Company be payable in
cash or in the form of the Company's promissory note, payable in up to three
equal annual installments commencing twelve months after the acquisition by the
Company (the "Acquisition Date") of the shares of Stock, together with interest
on the unpaid balance thereof at the rate equal to the prime rate of interest as
quoted in the Wall Street Journal for the Acquisition Date.

         7.       Restrictions While Stock is Not Registered.

                  (a) Restricted Shares. Any shares of Stock acquired upon
exercise of the Option specified in Section 1 and (i) all shares of the
Company's capital stock received as a dividend or other distribution upon such
shares, and (ii) all shares of capital stock or other securities of the Company
into which such shares may be changed or for which such shares shall be
exchanged, whether through reorganization, recapitalization, stock split-ups or
the like, shall be subject to the provisions of this Section 7 at all times, and
only at those times, that shares of the Company's Common Stock are not
registered under the Securities Exchange Act of 1934, as amended (such times
during which the Stock is not so registered sometimes hereinafter being referred
to as the "Restricted Period") and are during the Restricted Period hereinafter
referred to as "Restricted Shares."

                  (b) No Sale or Pledge of Restricted Shares. Except as
otherwise provided herein, Optionee agrees and covenants that during the
Restricted Period he or she will not sell, pledge, encumber or otherwise
transfer or dispose of, and will not permit to be sold, encumbered, attached or
otherwise disposed of or transferred in any manner, either voluntarily or by
operation of law (all hereinafter collectively referred to as "transfers"), all
or any portion of the Restricted Shares or any interest therein except in
accordance with and subject to the terms of this Section 7.

                                       3
<PAGE>   32
                  (c) Voluntary Transfer Repurchase Option. If Optionee desires
to effect a voluntary transfer of any of the Restricted Shares during the
Restricted Period, Optionee shall first give written notice to the Company of
such intent to transfer (the "Offer Notice") specifying (i) the number of the
Restricted Shares (the "Offered Shares") and the date of the proposed transfer
(which shall not be less than fifty (50) days after the giving of the Offer
Notice), (ii) the name, address, and principal business of the proposed
transferee (the "Transferee"), and (iii) the price and other terms and
conditions of the proposed transfer of the Offered Shares to the Transferee. The
Offer Notice by Optionee shall constitute an offer to sell all, but not less
than all, of the Offered Shares, at the price and on the terms specified in such
Offer Notice, to the Company and/or its designated purchaser. If the Company
desires to accept Optionee's offer to sell, either for itself or on behalf of
its designated purchaser, the Company shall signify such acceptance by written
notice to Optionee within fifty (50) days following the giving of the Option
Notice. Failing such acceptance, Optionee's offer shall lapse on the fifty-first
day following the giving of the Option Notice. With such written acceptance, the
Company shall designate a day not later than ten days following the date of
giving its notice of acceptance on which the Company or its designated purchaser
shall deliver the purchase price of the Offered Shares (in the same form as
provided in the Offer Notice) and Optionee shall deliver to the Company or its
designated Purchaser, as applicable, all certificates evidencing the Offered
Shares endorsed in blank for transfer or with separate stock powers endorsed in
blank for transfer. The Company may in its sole and absolute discretion, notify
the Optionee within fifty-one days following the giving of the Option Notice
that it does not permit the transfer of the Offered Shares to the Transferee
pursuant to the terms and conditions set forth in the Option Notice in which
event any such transfer or attempted transfer by the Optionee to the Transferee
shall be null and void. Upon the lapse without acceptance by the Company of
Optionee's offer to sell the Offered Shares, and unless the Company shall
provide written notice to the Optionee within fifty-one days following the
giving of the Option Notice that it will not permit the transfer of the Offered
Shares to the Transferee pursuant to the terms and conditions set forth in the
Option Notice, Optionee shall be free to transfer the Offered Shares not
purchased by the Company or the designated purchaser to the Transferee (and no
one else), for a price and on terms and conditions which are no more favorable
to the Transferee than those set forth in the Offer Notice, for a period of
thirty days thereafter, but after such period the restrictions of this Section 7
shall again apply to the Restricted Shares. The Offered Shares so transferred by
Optionee to the Transferee shall continue to be subject to all of the terms and
conditions of this Section 7 (including without limitation paragraph (f) of this
Section 7) and the Company shall have the right to require, as a condition of
such transfer, than the Transferee execute an agreement substantially in the
form and content of the provisions of this Section 7, as well as any voting
agreement and/or shareholders agreement required by the Company.

                  (d) Involuntary Transfer Repurchase Option. Whenever, during
the Restricted Period, Optionee has any notice or knowledge of any attempted,
pending, or consummated involuntary transfer or lien or charge upon any of the
Restricted Shares, whether by operation of law or otherwise, Optionee shall give
immediate written notice thereof to the Company. Whenever the Company has any
other notice or knowledge of any such attempted, impending, or consummated
involuntary transfer, lien, or charge, it shall give written notice thereof to
the Optionee. In either case, Optionee agrees to disclose forthwith to the
Company all pertinent information in his possession relating thereto. If during
the Restricted Period any of the

                                       4
<PAGE>   33
Restricted Shares are subjected to any such involuntary transfer, lien, or
charge, the Company and its designated purchaser shall at all times have the
immediate and continuing option to purchase such of the Restricted Shares upon
notice by the Company to Optionee or other record holder at a price and on terms
determined according to Section 7(g) below, and any of the Restricted Shares so
purchased by the Company or its designated purchaser shall in every case be free
and clear of such transfer, lien, or charge.

                  (e) Excepted Transfers. The provisions of Sections 7(b) and
(c) shall not apply to transfers by Optionee to his or her spouse, lineal
descendants or trustee of trusts for their benefit, provided, however, that
during the Restricted Period Optionee shall continue to be subject to all of the
terms and provisions of this Section 7 with respect to any remaining present or
future interest whatsoever he or she may have in the transferred Restricted
Shares, and, further provided that during the Restricted Period any shares
transferred pursuant to this subsection (e) shall continue to be treated as
Restricted Shares and the transferee of any such Restricted Shares shall
likewise be subject to all such terms and conditions of this Section 7 as though
such transferee were a party hereto.

                  (f) Repurchase Option After Termination of Continuous Service.
Anything set forth in this Agreement to the contrary notwithstanding, the
Company shall have the right (but not the obligation) to purchase or designate a
purchaser of all, but not less than all, of the Restricted Shares (including,
without limitation, any Restricted Shares transferred pursuant to Section 7(e))
during the Restricted Period and after termination of the Optionee's Continuous
Service for any reason, for the purchase price and on terms specified in Section
7(g) hereof. The Company may exercise its right to purchase or designate a
purchaser of the Restricted Shares at any time (without any time limitation)
after the Optionee's termination of Continuous Service and during the Restricted
Period. If the Company chooses to exercise its right to purchase the Restricted
Shares hereunder, the Company shall give its notice of its exercise of this
right to Optionee or his or her legal representative specifying in such notice a
date not later than ten (10) days following the date of giving such notice on
which the Company or its designated purchaser shall deliver, or be prepared to
deliver, the check or promissory note for the purchase price and Optionee or his
or her legal representative shall deliver all stock certificates evidencing such
Restricted Shares duly endorsed in blank for transfer or with separate stock
powers endorsed in blank for transfer.

                  (g) Repurchase Price. For purposes of Sections 7(d) and (f)
hereof, the per share purchase price of Restricted Shares shall be an amount
equal to the fair market value of such share, determined by the Board as of any
date determined by the Board that is not more than one year prior to the date of
the event giving rise to the Company's right to purchase such Restricted Shares.
Notwithstanding the foregoing, if the event that gives rise to the Company's
right to repurchase the Restricted Shares is the termination of Optionee's
Continuous Service by the Company for Cause, (as defined in Section 6(a)(i)
hereof), the per share purchase price of the Restricted Shares shall be an
amount equal to the lesser of (1) the fair market value of such share (as
determined in accordance with the previous sentence), and (2) the original
purchase price per share the Optionee paid for such Restricted Shares. Any
determination of fair market value made by the Board shall be binding and
conclusive on all parties unless shown to have been made in an arbitrary and
capricious manner. The purchase price shall, at the option of the

                                       5
<PAGE>   34
Company, be payable in cash or in the form of the Company's promissory note
payable in up to three equal annual installments commencing 12 months after the
acquisition by the Company (the "Restricted Share Acquisition Date") of the
Restricted Shares, together with interest on the unpaid balance thereof at the
rate equal to the prime rate of interest as quoted in the Wall Street Journal on
the Restricted Share Acquisition Date.

                  (h) Voting Rights. As a condition to Optionee's exercise of
any Option pursuant to this Agreement, the Company may in its discretion require
that Optionee enter into a voting agreement that grants the Company the voting
rights for all shares of Stock acquired pursuant to the exercise of such
Options, until the earlier of (i) 10 years from the date of exercise of the
Option, or (ii) the end of the Restricted Period, such voting agreement to be in
such form as the Company reasonably may request.

                  (i) Legends. The certificate or certificates representing any
Shares acquired pursuant to the exercise of an Option prior to the last day of
the Restricted Period shall bear the following legends (as well as any legends
required by applicable state and federal corporate and securities laws):

                           (A) "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 IN FORM AND SUBSTANCE SATISFACTORY TO
                  THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
                  PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."

                           (B) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
                  SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST
                  REFUSAL AND REPURCHASE OPTIONS HELD BY THE ISSUER OR ITS
                  ASSIGNEE(S) AS SET FORTH IN AN INCENTIVE STOCK OPTION
                  AGREEMENT DATED ______________________, AS MAY BE AMENDED FROM
                  TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
                  OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF
                  FIRST REFUSAL AND REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES
                  OF THESE SHARES."

         8. Transferability. The Option is not transferable otherwise than by
will or the laws of descent and distribution, and during the lifetime of the
Optionee the Option shall be exercisable only by the Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

         9. No Rights of Stockholders. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the

                                       6
<PAGE>   35
Company with respect to any shares of Stock purchasable or issuable upon the
exercise of the Option, in whole or in part, prior to the date of exercise of
the Option.

         10. Market Stand-Off Agreement. In the event of an initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, the
Optionee agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any shares of Stock (other than those
included in the registration) acquired pursuant to the exercise of the Option,
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 180 days) from the effective
date of such registration as may be requested by the Company or such managing
underwriters.

         11. Optionee's Representations. In the event the Company's issuance of
the shares of Stock purchasable pursuant to the exercise of this Option has not
been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, Optionee shall, if required by the Company, concurrently
with the exercise of all or any portion of this Option, deliver to the Company
his Investment Representation Statement in the form attached to this Agreement
as Exhibit A or in such other form as the Company may request.

         12. Acceleration of Exercisability of Option. This Option [shall]
[shall not] become immediately fully exercisable in the event that, prior to the
termination of the Option pursuant to Section 6 hereof, (a) there is a "Change
in Control", as defined in Section 8(b) of the Plan, that occurs while the
Optionee is employed by the Company or any of its subsidiaries, (b) the
Committee or the Board exercises its discretion to provide a cancellation notice
with respect to the Option pursuant to Section 6(b)(ii) hereof, or (c) the
Option is terminated pursuant to Section 6(b)(i) hereof.

         13. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.

         14. Law Governing. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of California.

         15. Incentive Stock Option Treatment. The terms of this Option shall be
interpreted in a manner consistent with the intent of the Company and the
Optionee that the Option qualify as an Incentive Stock Option under Section 422
of the Code. If any provision of the Plan or this Agreement shall be
impermissible in order for the Option to qualify as an Incentive Stock Option,
then the Option shall be construed and enforced as if such provision had never
been included in the Plan or the Option. If and to the extent that the number of
Options granted pursuant to this Agreement exceeds the limitations contained in
Section 4(b) of the Plan on the value of Shares with respect to which this
Option may qualify as an Incentive Stock Option, this Option shall be a
Non-Qualified Stock Option.

         16. Interpretation / Provisions of Plan Control. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee or
the Board as may be in effect from time to time. If and to the extent that this

                                       7
<PAGE>   36
Agreement conflicts or is inconsistent with the terms, conditions and provisions
of the Plan, the Plan shall control, and this Agreement shall be deemed to be
modified accordingly. The Optionee accepts the Option subject to all the terms
and provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of the
Committee or the Board upon any questions arising under the Plan and this
Agreement.

         17. Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Secretary at:

               --------------------------------------------------
               --------------------------------------------------
               --------------------------------------------------
               --------------------------------------------------

or if the Company should move its principal office, to such principal office,
and, in the case of the Optionee, to the Optionee's last permanent address as
shown on the Company's records, subject to the right of either party to
designate some other address at any time hereafter in a notice satisfying the
requirements of this Section.

         18. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal 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 Option. There will be no regular federal
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) Disposition of Shares. If Shares transferred pursuant to
the Option are held for at least one year after exercise and are disposed of at
least two years after the date of grant, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal income tax
purposes. If Shares purchased under an Option are disposed of within such
one-year period or within two years after the Date of Grant, 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 (1) the fair market value of the Shares on the date of exercise, or
(2) the sale price of the Shares.

                  (c) Notice of Disqualifying Disposition of Option Shares. If
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
the Option on or before the later of (1) the date two years after the date of
grant, (2) the date one year after the date of exercise, the Optionee shall
immediately notify the Company in writing of such disposition. Optionee agrees

                                       8
<PAGE>   37
that Optionee may be subject to the income tax withholding by the Company on the
compensation income recognized by the Optionee from the early disposition by
payment in cash or out of the current earnings paid to the Optionee.

         If and to the extent that the number of Options granted hereunder
exceeds the limitations contained in Section 4(b) of the Plan on the value of
Shares with respect to which this Option may qualify as an Incentive Stock
Option, this Option shall be a Non-Qualified Stock Option. The holder of a
Non-Qualified Stock Option will be treated as having received compensation
income (taxable at ordinary income tax rates) at the time the Option is
exercised equal to the excess, if any, of the fair market value of the shares of
Stock on the date of exercise over the exercise price. If the shares of Stock
transferred pursuant to the Non-Qualified Stock Option are held for at least one
year after the Option is exercised, any gain realized on disposition of the
shares of Stock will be treated as long-term capital gain for federal income tax
purposes.

         The foregoing discussion assumes that, and only is applicable if, the
fair market value of the Shares as of the date on which the Option is granted is
not less than the exercise price. The Company believes that it has made a good
faith effort to determine the fair market value of the Shares and does not
believe that the exercise price is less than the fair market value of the Shares
on the Date of Grant. No assurances can be given, however, that the Internal
Revenue Service would not take a contrary position, or that the Internal Revenue
Service would not treat the Option as an Incentive Stock Option for some other
reason. If the exercise price is determined to be less than the fair market
value of a Share on the Date of Grant, then the Option may be taxable as a
Non-Qualified Stock Option. It is also possible that if the fair market value is
determined to be significantly greater than the exercise price, the Internal
Revenue Service may take the position that the Option is not in effect a stock
option but should be treated as a restricted stock for tax purposes. The
Optionee should consult with his or her own tax advisors as to whether any
action should be taken to minimize these risks.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the ________ day of ______________, 20____.

                                  COMPANY:

                                  SYNAPTICS INCORPORATED, A
                                  CALIFORNIA CORPORATION

                                  By:
                                     ___________________________________________
                                  Name:
                                  Title:

         Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.

                                       9
<PAGE>   38
Dated:                                      OPTIONEE:
      ____________________________________

                                            By:
                                              __________________________________
                                            Name:

                                       10
<PAGE>   39
                                    EXHIBIT A

                       INVESTMENT REPRESENTATION STATEMENT

PURCHASER:

COMPANY:

SECURITY:      COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:

         (a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").

         (b) I understand that the Company's issuance of the Securities has 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 my investment intent as expressed herein. In this connection, I
understand that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable if my
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.

         (c) I further understand that the Securities must be held indefinitely
unless the transfer is subsequently registered under the Securities Act or
unless an exemption from registration is otherwise available. Moreover, I
understand that the Company is under no obligation to register any transfer of
the Securities. In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless registered or such registration is not required in the opinion
of counsel for the Company.

         (d) I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "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 issuance of the Securities, such issuance will be exempt from

                                       11
<PAGE>   40
registration under the Securities Act. In the event the Company later becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter the securities exempt under
Rule 701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including among other things: (1) the sale 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, and the amount of securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), if applicable. Notwithstanding this paragraph (d), I acknowledge
and agree to the restrictions set forth in paragraph (e) hereof.

         In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the availability of certain public information about the
Company, (2) the resale occurring not less than one year after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than two years, (3) the sale 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 the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.

         (e) I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 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 Rule 144 and
Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or Rule 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.

                                         Signature of Purchaser:

                                         _______________________________________

Date: _____________________

                                       12
<PAGE>   41
                             SYNAPTICS INCORPORATED

                      NON-QUALIFIED STOCK OPTION AGREEMENT

         1. Grant of Option. SYNAPTICS INCORPORATED (the "Company") hereby
grants, as of the _________ day of _________________, 20____ ("Date of Grant"),
to ________________________________________ (the "Optionee") an option (the
"Option") to purchase up to _________ shares of the Company's Common Stock,
$_______ par value per share (the "Shares"), at an exercise price per share
equal to $_______. The Option shall be subject to the terms and conditions set
forth herein. The Option was issued pursuant to the Company's 2001 Incentive
Compensation Plan (the "Plan"), which is incorporated herein for all purposes.
The Option is a nonqualified stock option, and not an Incentive Stock Option.
The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all of the terms and conditions hereof and thereof and all applicable
laws and regulations.

         2. Definitions. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.

         3. Exercise Schedule. Except as otherwise provided in Sections 6 or 12
of this Agreement, or in the Plan, the Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to a percentage of Shares as provided below, the
Option may thereafter be exercised by the Optionee, in whole or in part, at any
time or from time to time prior to the expiration of the Option as provided
herein. The following table indicates each date (the "Vesting Date") upon which
the Optionee shall be entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date, provided that the
Continuous Service of the Optionee continues through and on the applicable
Vesting Date:

         Percentage of Shares                        Vesting Date

         Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon the
termination of an Optionee's Continuous Service, any unvested portion of the
Option shall terminate and be null and void.

         4. Method of Exercise. The vested portion of this Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by the
Company pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written
<PAGE>   42
notice shall be accompanied by payment of the exercise price. This Option shall
be deemed to be exercised after both (a) receipt by the Company of such written
notice accompanied by the exercise price and (b) arrangements that are
satisfactory to the Committee or the Board in its sole discretion have been made
for Optionee's payment to the Company of the amount that is necessary to be
withheld in accordance with applicable Federal or state withholding
requirements. No Shares will be issued pursuant to the Option unless and until
such issuance and such exercise shall comply with all relevant provisions of
applicable law, including the requirements of any stock exchange upon which the
Shares then may be traded.

         5. 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: (a)
cash; (b) check; or (c) such other consideration or in such other manner as may
be determined by the Board or the Committee in its absolute discretion.

         6. Termination of Option.

                  (a) Any unexercised portion of the Option shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of:

                    (i) three months after the date on which the Optionee's
Continuous Service is terminated other than by reason of (A) Cause, which,
solely for purposes of this Plan, shall mean the termination of the Optionee's
Continuous Service by reason of the Optionee's willful misconduct or gross
negligence, (B) a mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) of the Optionee as determined by a medical doctor
satisfactory to the Committee or the Board, or (C) the death of the Optionee;

                    (ii) immediately upon the termination of the Optionee's
Continuous Service for Cause;

                    (iii) twelve months after the date on which the Optionee's
Continuous Service is terminated by reason of a mental or physical disability
(within the meaning of Section 22(e) of the Code) as determined by a medical
doctor satisfactory to the Committee or the Board;

                    (iv) (A) twelve months after the date of termination of the
Optionee's Continuous Service by reason of the death of the Optionee, or , if
later, (B) three months after the date on which the Optionee shall die if such
death shall occur during the one year period specified in Subsection 6(a)(iii)
hereof; or

                    (v) the tenth anniversary of the date as of which the Option
is granted.

                  (b) To the extent not previously exercised, (i) the Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive or the shares of
Stock are converted into or exchanged for securities issued by another entity,
unless the successor or acquiring entity, or an affiliate of such successor or
acquiring entity, assumes the Option or substitutes an equivalent option or
right pursuant to Section 10(c) of the Plan, and (ii) the Committee or the Board
in its sole discretion may by

                                       2
<PAGE>   43
written notice ("cancellation notice") cancel, effective upon the consummation
of any corporate transaction described in Subsection 9(b)(i) of the Plan in
which the Company does survive, the Option (or portion thereof) that remains
unexercised on such date. The Committee or the Board shall give written notice
of any proposed transaction referred to in this Section 6(b) a reasonable period
of time prior to the closing date for such transaction (which notice may be
given either before or after approval of such transaction), in order that the
Optionee may have a reasonable period of time prior to the closing date of such
transaction within which to exercise the Option if and to the extent that it
then is exercisable (including any portion of the Option that may become
exercisable upon the closing date of such transaction). The Optionee may
condition his exercise of the Option upon the consummation of a transaction
referred to in this Section 6(b).

                  (c) The Company in its sole discretion may at any time during
the Restricted Period, as defined in Section 7(a) hereof, by giving written
notice to the Optionee, cancel the Option and instead pay to the Optionee, or
his estate if the Optionee is deceased, an amount equal to the excess, if any,
of (i) the fair market value, determined by the Board as of any date determined
by the Board that is not more than one year prior to the date of the
cancellation, of the shares of Stock with respect to which the Option otherwise
would have been exercisable, over (ii) the Option Price for such shares. Any
determination of fair market value made by the Board shall be binding and
conclusive on all parties unless shown to have been made in an arbitrary and
capricious manner. The purchase price shall, at the option of the Company, be
payable in cash or in the form of the Company's promissory note payable in up to
3 equal annual installments commencing 12 months after the acquisition by the
Company (the "Acquisition Date") of the shares of Stock, together with interest
on the unpaid balance thereof at the rate equal to the prime rate of interest
quoted in the Wall Street Journal for the Acquisition Date.

         7. Restrictions While Stock is Not Registered.

                  (a) Restricted Shares. Any shares of Stock acquired upon
exercise of the Option specified in Section 1 and (i) all shares of the
Company's capital stock received as a dividend or other distribution upon such
shares, and (ii) all shares of capital stock or other securities of the Company
into which such shares may be changed or for which such shares shall be
exchanged, whether through reorganization, recapitalization, stock split-ups or
the like, shall be subject to the provisions of this Section 7 at all times, and
only at those times, that shares of the Company's Common Stock are not
registered under the Securities Exchange Act of 1934, as amended (such times
during which the Stock is not so registered sometimes hereinafter being referred
to as the "Restricted Period") and are during the Restricted Period hereinafter
referred to as "Restricted Shares."

                  (b) No Sale or Pledge of Restricted Shares. Except as
otherwise provided herein, Optionee agrees and covenants that during the
Restricted Period he or she will not sell, pledge, encumber or otherwise
transfer or dispose of, and will not permit to be sold, encumbered, attached or
otherwise disposed of or transferred in any manner, either voluntarily or by
operation of law (all hereinafter collectively referred to as "transfers"), all
or any portion of the Restricted Shares or any interest therein except in
accordance with and subject to the terms of this Section 7.

                                       3
<PAGE>   44
                  (c) Voluntary Transfer Repurchase Option. If Optionee desires
to effect a voluntary transfer of any of the Restricted Shares during the
Restricted Period, Optionee shall first give written notice to the Company of
such intent to transfer (the "Offer Notice") specifying (i) the number of the
Restricted Shares (the "Offered Shares") and the date of the proposed transfer
(which shall not be less than fifty (50) days after the giving of the Offer
Notice), (ii) the name, address, and principal business of the proposed
transferee (the "Transferee"), and (iii) the price and other terms and
conditions of the proposed transfer of the Offered Shares to the Transferee. The
Offer Notice by Optionee shall constitute an offer to sell all, but not less
than all, of the Offered Shares, at the price and on the terms specified in such
Offer Notice, to the Company and/or its designated purchaser. If the Company
desires to accept Optionee's offer to sell, either for itself or on behalf of
its designated purchaser, the Company shall signify such acceptance by written
notice to Optionee within fifty (50) days following the giving of the Option
Notice. Failing such acceptance, Optionee's offer shall lapse on the fifty-first
day following the giving of the Option Notice. With such written acceptance, the
Company shall designate a day not later than ten days following the date of
giving its notice of acceptance on which the Company or its designated purchaser
shall deliver the purchase price of the Offered Shares (in the same form as
provided in the Offer Notice) and Optionee shall deliver to the Company or its
designated Purchaser, as applicable, all certificates evidencing the Offered
Shares endorsed in blank for transfer or with separate stock powers endorsed in
blank for transfer. The Company may in its sole and absolute discretion, notify
the Optionee within fifty-one days following the giving of the Option Notice
that it does not permit the transfer of the Offered Shares to the Transferee
pursuant to the terms and conditions set forth in the Option Notice in which
event any such transfer or attempted transfer by the Optionee to the Transferee
shall be null and void. Upon the lapse without acceptance by the Company of
Optionee's offer to sell the Offered Shares, and unless the Company shall
provide written notice to the Optionee within fifty-one days following the
giving of the Option Notice that it will not permit the transfer of the Offered
Shares to the Transferee pursuant to the terms and conditions set forth in the
Option Notice, Optionee shall be free to transfer the Offered Shares not
purchased by the Company or the designated purchaser to the Transferee (and no
one else), for a price and on terms and conditions which are no more favorable
to the Transferee than those set forth in the Offer Notice, for a period of
thirty days thereafter, but after such period the restrictions of this Section 7
shall again apply to the Restricted Shares. The Offered Shares so transferred by
Optionee to the Transferee shall continue to be subject to all of the terms and
conditions of this Section 7 (including without limitation paragraph (f) of this
Section 7) and the Company shall have the right to require, as a condition of
such transfer, that the Transferee execute an agreement substantially in the
form and content of the provisions of this Section 7, as well as any voting
agreement and/or shareholders agreement required by the Company.

                  (d) Involuntary Transfer Repurchase Option. Whenever, during
the Restricted Period, Optionee has any notice or knowledge of any attempted,
pending, or consummated involuntary transfer or lien or charge upon any of the
Restricted Shares, whether by operation of law or otherwise, Optionee shall give
immediate written notice thereof to the Company. Whenever the Company has any
other notice or knowledge of any such attempted, impending, or consummated
involuntary transfer, lien, or charge, it shall give written notice thereof to
the Optionee. In either case, Optionee agrees to disclose forthwith to the
Company all pertinent information in his possession relating thereto. If during
the Restricted Period any of the

                                       4
<PAGE>   45
Restricted Shares are subjected to any such involuntary transfer, lien, or
charge, the Company and its designated purchaser shall at all times have the
immediate and continuing option to purchase such of the Restricted Shares upon
notice by the Company to Optionee or other record holder at a price and on terms
determined according to Section 7(g) below, and any of the Restricted Shares so
purchased by the Company or its designated purchaser shall in every case be free
and clear of such transfer, lien, or charge.

                  (e) Excepted Transfers. The provisions of Sections 7(b) and
(c) shall not apply to transfers by Optionee to his or her spouse, lineal
descendants or trustee of trusts for their benefit, provided, however, that
during the Restricted Period Optionee shall continue to be subject to all of the
terms and provisions of this Section 7 with respect to any remaining present or
future interest whatsoever he or she may have in the transferred Restricted
Shares, and, further provided that during the Restricted Period any shares
transferred pursuant to this subsection (e) shall continue to be treated as
Restricted Shares and the transferee of any such Restricted Shares shall
likewise be subject to all such terms and conditions of this Section 7 as though
such transferee were a party hereto.

                  (f) Repurchase Option After Termination of Continuous Service.
Anything set forth in this Agreement to the contrary notwithstanding, the
Company shall have the right (but not the obligation) to purchase or designate a
purchaser of all, but not less than all, of the Restricted Shares (including,
without limitation, any Restricted Shares transferred pursuant to Section 7(e))
during the Restricted Period and after termination of the Optionee's Continuous
Service for any reason, for the purchase price and on terms specified in Section
7(g) hereof. The Company may exercise its right to purchase or designate a
purchaser of the Restricted Shares at any time (without any time limitation)
after the Optionee's termination of Continuous Service and during the Restricted
Period. If the Company chooses to exercise its right to purchase the Restricted
Shares hereunder, the Company shall give its notice of its exercise of this
right to Optionee or his or her legal representative specifying in such notice a
date not later than ten (10) days following the date of giving such notice on
which the Company or its designated purchaser shall deliver, or be prepared to
deliver, the check or promissory note for the purchase price and Optionee or his
or her legal representative shall deliver all stock certificates evidencing such
Restricted Shares duly endorsed in blank for transfer or with separate stock
powers endorsed in blank for transfer.

                  (g) Repurchase Price. For purposes of Sections 7(d) and (f)
hereof, the per share purchase price of Restricted Shares shall be an amount
equal to the fair market value of such share, determined by the Board as of any
date determined by the Board that is not more than one year prior to the date of
the event giving rise to the Company's right to purchase such Restricted Shares.
Notwithstanding the foregoing, if the event that gives rise to the Company's
right to repurchase the Restricted Shares is the termination of the Optionee's
Continuous Service by the Company for Cause, (as defined in Section 6(a)(i)
hereof), the per share purchase price of the Restricted Shares shall be an
amount equal to the lesser of (1) the fair market value of such share (as
determined in accordance with the previous sentence), and (2) the original
purchase price per share the Optionee paid for such Restricted Shares. Any
determination of fair market value made by the Board shall be binding and
conclusive on all parties unless shown to have been made in an arbitrary and
capricious manner. The purchase price shall, at the option of the

                                       5
<PAGE>   46
Company, be payable in cash or in the form of the Company's promissory note
payable in up to 3 equal annual installments commencing 12 months after the (the
"Restricted Share Acquisition Date") of the Restricted Shares, together with
interest on the unpaid balance thereof at the rate equal to the prime rate of
interest quoted in the Wall Street Journal for the Restricted Share Acquisition
Date.

                  (h) Voting Rights. As a condition to Optionee's exercise of
any Option pursuant to this Agreement, the Company may in its discretion require
that Optionee enter into a voting agreement that grants the Company the voting
rights for all shares of Stock acquired pursuant to the exercise of such
Options, until the earlier of (i) 10 years from the date of exercise of the
Option, or (ii) the end of the Restricted Period, such voting agreement to be in
such form as the Company reasonably may request.

                  (i) Legends. The certificate or certificates representing any
Shares acquired pursuant to the exercise of an Option prior to the last day of
the Restricted Period shall bear the following legends (as well as any legends
required by applicable state and federal corporate and securities laws):

                           (A) "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 IN FORM AND SUBSTANCE SATISFACTORY TO
                  THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
                  PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."

                           (B) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
                  SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, RIGHT OF FIRST
                  REFUSAL, AND REPURCHASE OPTIONS HELD BY THE ISSUER OR ITS
                  ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION AGREEMENT DATED
                  __________________, AS MAY BE AMENDED FROM TIME TO TIME, A
                  COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
                  ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL AND
                  REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES."

         8.       Transferability

                  (a) General. Except as provided herein, a Participant may not
assign, sell, transfer, or otherwise encumber or subject to any lien any Award
or other right or interest granted under this Plan, in whole or in part,
including any Award or right which constitutes a derivative security as
generally defined in Rule 16a-1(c) under the Exchange Act, other than by will or
by operation of the laws of descent and distribution, and such Awards or rights
that may

                                       6
<PAGE>   47
be exercisable shall be exercised during the lifetime of the Participant only by
the Participant or his or her guardian or legal representative.

                  (b) Permitted Transfer of Option. The Committee or Board, in
its sole discretion, may permit the transfer of an Option granted under this
Agreement as follows: (A) by gift to a member of the Participant's Immediate
Family or (B) by transfer by instrument to a trust providing that the Option is
to be passed to beneficiaries upon death of the Optionee. For purposes of this
Section 8(b), "Immediate Family" shall mean the Optionee's spouse (including a
former spouse subject to terms of a domestic relations order); child, stepchild,
grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law;
sibling and sibling-in-law, and shall include adoptive relationships. If a
determination is made by counsel for the Company that the restrictions contained
in this Section 8(b) are not required by applicable federal or state securities
laws under the circumstances, then the Committee or Board, in its sole
discretion, may permit the transfer of Options granted under this Agreement to
one or more Beneficiaries or other transferees during the lifetime of the
Participant, which may be exercised by such transferees in accordance with the
terms of this Agreement, but only if and to the extent permitted by the
Committee or the Board pursuant to the express terms of this Agreement (subject
to any terms and conditions which the Committee or the Board may impose thereon,
and further subject to any prohibitions and restrictions on such transfers
pursuant to Rule 16b-3). A Beneficiary, transferee, or other person claiming any
rights under the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award agreement applicable to such
Participant, except as otherwise determined by the Committee or the Board, and
to any additional terms and conditions deemed necessary or appropriate by the
Committee or the Board.

         9. Acceleration of Exercisability of Option. This Option [shall] [shall
not] become immediately fully exercisable in the event that, prior to the
termination of the Option pursuant to Section 6 hereof, (a) there is a "Change
in Control", as defined in Section 8(b) of the Plan, that occurs while the
Optionee is employed by the Company or any of its subsidiaries, (b) the
Committee or the Board exercises its discretion to provide a cancellation notice
with respect to the Option pursuant to Section 6(b)(ii) hereof, or (c) the
Option is terminated pursuant to Section 6(b)(i) hereof.

         10. No Rights of Stockholders. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.

         11. Market Stand-Off Agreement. In the event of an initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, the
Optionee agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any shares of Stock (other than those
included in the registration) acquired pursuant to the exercise of the Option,
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 180 days) from the effective
date of such registration as may be requested by the Company or such managing
underwriters.

                                       7
<PAGE>   48
         12. Optionee's Representations. In the event the Company's issuance of
the shares of Stock purchasable pursuant to the exercise of this Option has not
been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, Optionee shall, if required by the Company, concurrently
with the exercise of all or any portion of this Option, deliver to the Company
his Investment Representation Statement in the form attached to this Agreement
as Exhibit A or in such other form as the Company may request.

         13. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.

         14. Law Governing. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of California.

         15. Interpretation / Provisions of Plan Control. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee or
the Board as may be in effect from time to time. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and provisions
of the Plan, the Plan shall control, and this Agreement shall be deemed to be
modified accordingly. The Optionee accepts the Option subject to all the terms
and provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of the
Committee or the Board upon any questions arising under the Plan and this
Agreement.

         16. Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Secretary at:

                             ----------------------
                             ----------------------
                             ----------------------
                             ----------------------

or if the Company should move its principal office, to such principal office,
and, in the case of the Optionee, to the Optionee's last permanent address as
shown on the Company's records, subject to the right of either party to
designate some other address at any time hereafter in a notice satisfying the
requirements of this Section.

         17. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal 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 Option. There may be a regular federal income
tax liability upon the exercise of the Option. The Optionee will be treated as
having received compensation

                                       8
<PAGE>   49
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, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

                  (b) Disposition of Shares. 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 income tax purposes.

         The foregoing discussion assumes that, and only is applicable if, the
fair market value of the Shares as of the date on which the Option is granted is
not significantly less than the exercise price. The Company believes that it has
made a good faith effort to determine the fair market value of the Shares and
does not believe that the exercise price is significantly less than the fair
market value of the Shares on the Date of Grant. No assurances can be given,
however, that the Internal Revenue Service would not take a contrary position.
It is possible that if the fair market value is determined to be significantly
greater than the exercise price, the Internal Revenue Service may take the
position that the Option is not in effect a stock option but should be treated
as a restricted stock for tax purposes. The Optionee should consult with his or
her own tax advisors as to whether any action should be taken to minimize these
risks.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the _______ day of ________________, 20_____.

                                   COMPANY:

                                   SYNAPTICS INCORPORATED, A
                                   CALIFORNIA CORPORATION

                                   By:
                                      __________________________________________
                                   Name:
                                   Title:

         Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.

                                       9
<PAGE>   50
Dated:                                   OPTIONEE:
     _______________________________

                                         By:
                                           _____________________________________
                                         Name:

                                       10
<PAGE>   51
                                    EXHIBIT A

                       INVESTMENT REPRESENTATION STATEMENT

PURCHASER:

COMPANY:

SECURITY:      COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:

         (a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").

         (b) I understand that the Company's issuance of the Securities has 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 my investment intent as expressed herein. In this connection, I
understand that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable if my
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.

         (c) I further understand that the Securities must be held indefinitely
unless the transfer is subsequently registered under the Securities Act or
unless an exemption from registration is otherwise available. Moreover, I
understand that the Company is under no obligation to register any transfer of
the Securities. In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless registered or such registration is not required in the opinion
of counsel for the Company.

         (d) I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "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 issuance of the Securities, such issuance will be exempt from

                                       11
<PAGE>   52
registration under the Securities Act. In the event the Company later becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter the securities exempt under
Rule 701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including among other things: (1) the sale 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, and the amount of securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), if applicable. Notwithstanding this paragraph (d), I acknowledge
and agree to the restrictions set forth in paragraph (e) hereof.

         In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the availability of certain public information about the
Company, (2) the resale occurring not less than one year after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than two years, (3) the sale 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 the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.

         (e) I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 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 Rule 144 and
Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or Rule 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.

                                          Signature of Purchaser:

                                          ______________________________________

Date: _____________________

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}]]