EXHIBIT 10.2
FREESCALE SEMICONDUCTOR
HOLDINGS
NONQUALIFIED STOCK OPTION
AGREEMENT
THIS AGREEMENT (the
“Agreement”), is made effective as of the date
indicated in the grant summary in the Freescale equity
recordkeeping system (the “Date of Grant”), between
Freescale Semiconductor Holdings I, Ltd., a Bermuda limited company
(the “Company”), and the recipient of the grant (the
“Participant”):
R E C I T A L S
:
WHEREAS, the Company has adopted the
Freescale Holdings 2006 Management Incentive Plan (the
“Plan”), which Plan is incorporated herein by reference
and made a part of this Agreement. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan;
and
WHEREAS, the Committee has
determined that it would be in the best interests of the Company
and its shareholders to grant the Stock Option provided for herein
to the Participant pursuant to the Plan and the terms set forth
herein in exchange for the option held by the Participant to
acquire shares of the Company pursuant to a previous award under
the Plan (the “Prior Option”).
NOW THEREFORE, in consideration of
the mutual covenants hereinafter set forth, the parties agree as
follows:
1. Grant of the Option . The
Company hereby grants (subject to the Participant’s execution
of the Investors Agreement) to the Participant the right and option
(the “Option”) to purchase, on the terms and
conditions hereinafter set forth, all or any part of an aggregate
number of shares of Common Stock (each a “Share” and
collectively, the “Shares”) as indicated in the grant
summary in the Freescale equity recordkeeping system. The purchase
price of the Shares subject to the Option shall be $1.24 per Share
(the “Option Price”). The Option is intended to be a
non-qualified stock option, and is not intended to be treated as an
option that complies with Section 422 of the Code. The Option
is granted to the Participant in substitution for the Prior Option
(which Prior Option is hereby cancelled).
2. Vesting .
(a) Subject to the
Participant’s continued Employment with the Company, or
except as otherwise provided below, the Option shall vest and
become exercisable with respect to twenty-five percent
(25%) of the Shares initially covered by the Option on each of
the first, second, third and fourth anniversaries of the Date of
Grant. At any time, the portion of the Option which has become
vested and exercisable as described above (or pursuant to Sections
2(b) or 4 below) is hereinafter referred to as the “Vested
Portion”.
(b) Notwithstanding any other
provisions of this Agreement to the contrary, in the event of a
Change of Control, the unvested portion of the Option shall become
vested and exercisable for an additional number of Shares where
that additional number of Shares equals the remaining unvested
Shares multiplied by the Change of Control Cash Consideration
Fraction. For purposes of this Agreement, “Change of Control
Cash Consideration Fraction” shall mean, with respect to a
Change of Control, the portion of the per Share consideration which
is paid in the form of cash, provided that if the Change of Control
Cash Consideration Fraction is .75 or higher, it shall be deemed to
be 1. Notwithstanding the above, in the event the
Participant’s Employment is terminated by the Company or any
successor thereto without Cause or by the Participant for Good
Reason, in each case following a Change of Control, the Option
shall immediately become fully vested and exercisable.
3. Exercise of Option
.
(a) Period of Exercise .
Subject to the provisions of the Plan and this Agreement, the
Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the earliest to occur
of:
(i) the tenth anniversary of the
Date of Grant;
(ii) one (1) year following the
date of the Participant’s termination of Employment due to
death or Disability;
(iii) ninety (90) days
following the date of the Participant’s termination of
Employment for any reason other than due to the Participant’s
death or Disability; and
(iv) the date of the
Participant’s termination of Employment for Cause.
(b) Method of Exercise
.
(i) Each election to exercise the
Vested Portion shall be subject to the terms and conditions of the
Plan and shall be in writing, signed by the Participant or by his
or her executor, administrator, or permitted transferee (subject to
any restrictions provided under the Plan and the Investors
Agreement), made pursuant to and in accordance with the terms and
conditions set forth in the Plan and received by the Company at its
principal offices, accompanied by payment in full as provided in
the Plan.
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(ii) The Option Price may be paid by
delivery of cash or check acceptable to the Committee, or by means
of withholding of Shares subject to the Vested Portion with an
aggregate Fair Market Value equal to (A) the aggregate
exercise price and (B) unless the Committee determines
otherwise under Section 11 of this Agreement or the Company is
precluded or restricted from doing so under debt covenants, minimum
statutory withholding taxes with respect to such exercise, or by
such other method provided under the Plan and explicitly approved
by the Committee. In the event that the Vested Portion is exercised
by a person other than the Participant, the Company shall ascertain
the authority of the Option holder to exercise the Vested Portion
and shall deliver the Shares hereunder to the Option holder after
it is satisfied as to such authority.
(iii) Notwithstanding any other
provision of the Plan or this Agreement to the contrary, the Vested
Portion may not be exercised prior to the completion of any
registration or qualification of the Option or the Shares under
applicable state and federal securities or other laws, or under any
ruling or regulation of any governmental body or national
securities exchange that the Committee shall in its sole discretion
determine to be necessary or advisable. The Committee shall use its
best efforts to cause any registration or qualification of the
Option or the Shares to be completed.
(iv) Upon the Company’s
determination that the Vested Portion of the Option has been
validly exercised as to any of the Shares, the Company shall issue
certificates in the Participant’s name for such Shares.
However, the Company shall not be liable to the Participant for
damages relating to any reasonable delays in issuing the
certificates to such Participant, any loss of the certificates, or
any mistakes or errors in the issuance of the certificates or in
the certificates themselves which it promptly undertakes to
correct.
(v) In the event of the
Participant’s death, the Option shall remain exercisable by
the Participant’s executor or administrator, or the person or
persons to whom the Participant’s rights under this Agreement
shall pass by will or by the laws of descent and distribution as
the case may be, to the extent set forth in Section 3(a). Any
heir or legatee of the Participant shall take rights herein granted
subject to the terms and conditions hereof.
(vi) In no event may a Participant
or any other holder of an Option who has not executed the Investors
Agreement exercise any part of the Vested Portion.
4. Termination of Employment
.
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(a) General . If the
Participant’s Employment is terminated for any reason, the
Option shall, to the extent not then vested (after giving effect to
the provisions of Section 2(b) and this Section 4),
terminate upon such termination of Employment and the Vested
Portion of the Option shall remain exercisable for the period set
forth in Section 3(a) and shall thereafter
terminate.
(b) For Cause . The Option
(including any Vested Portion thereof) shall terminate upon the
Participant’s termination of Employment for Cause.
(c) Without Cause or for Good
Reason . Upon the Participant’s termination of Employment
without Cause or by the Participant for Good Reason, the Option
shall become vested and exercisable for an additional number of
Shares equal to the number of Shares subject to the Option (if any)
that would have vested on the next anniversary of the Date of Grant
if the Participant had remained employed until such date (the
“Subsequent Tranche”), multiplied by a fraction, the
numerator of which equals the number of days elapsed from the
vesting date immediately preceding termination of the
Participant’s Employment through the Participant’s
termination of Employment and the denominator of which equals 365
plus, if so determined in the sole discretion of the Chief
Executive Officer of the Company, the Subsequent Tranche; subject
in all circumstances to the maximum of the total number of Shares
subject to the Option as of the date of such termination of
Employment. Any portion of the Option that is not exercisable after
giving effect to the above provisions of this Section 4(c)
shall terminate immediately effective as of the termination of the
Participant’s Employment.
(d) Death . Upon the
Participant’s termination of Employment due to death, the
Option shall become fully vested and exercisable.
(e) Disability . Upon the
Participant’s termination of Employment due to Disability,
the Option shall become fully vested and exercisable.
(f) Retirement . Upon the
Participant’s termination of Employment due to Retirement and
solely to the extent so determined by the Company’s Chief
Executive Officer, the Option shall become vested and exercisable
for an additional number of Shares equal to the Subsequent Tranche
multiplied by a fraction, the numerator of which equals the number
of days elapsed from the vesting date immediately preceding
termination of Participant’s Employment through the
Participant’s termination of Employment and the denominator
of which equals 365; subject in all circumstances to the maximum of
the total number of Shares subject to the Option as of the date of
such termination of Employment. Any portion of the Option that is
not exercisable after giving effect to the above provisions of this
Section 4(f) shall terminate immediately effective as of the
termination of the Participant’s Employment.
(g) By the Participant other than
due to Disability or Good Reason . If the Participant’s
Employment is terminated on account of a termination of the
Participant’s Employment initiated by the Participant other
than due to Disability or Good Reason, then the unvested portion of
the Option then held by the Participant shall be automatically
forfeited.
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(h) Forfeiture .
Notwithstanding anything herein to the contrary, if the Participant
breaches any Restrictive Covenants applicable to the Participant
(including, without limitation, the Restrictive Covenants set forth
in Exhibit A hereto) following termination of the
Participant’s Employment by the Participant other than due to
Disability or Good Reason, then (x) any portion of the Option
that vested during the twelve-month period immediately preceding
the date of termination (the “Preceding Tranche”) shall
be automatically forfeited, (y) any Shares acquired pursuant
to the exercise of an Option in the Preceding Tranche shall be
subject to the call option set forth in Section 6 of the
Investors Agreement and (z) any proceeds from the sale of
Shares described in preceding clause (y), shall be immediately
repaid to the Company.
5. Certain Covenants . The
Participant hereby agrees and covenants to perform all of his
obligations set forth in Exhibit A hereto (which is incorporated by
reference hereby) and acknowledges that the Participant’s
obligations set forth in Exhibit A constitute a material inducement
for the Company’s grant of Options to the
Participant.
6. Share Restrictions, etc .
Except as expressly provided herein, the Participant’s rights
hereunder and with respect to Shares received upon exercise of the
Vested Portion are subject to the restrictions and other provisions
contained in the Investors Agreement.
7. Distributions, Redemptions,
etc . Upon the occurrence of an Adjustment Event, the Option
Price shall be reduced by an amount equal to the per-Share amount
paid in connection with the Adjustment Event; provided, however,
that any such reduction shall be limited to that portion of such
amount which would not cause
