2005 INDUCEMENT STOCK OPTION AND RESTRICTED STOCK PLAN OF STANDARD MICROSYSTEMS CORPORATION

 

                                                                    Exhibit 10.2

 

             2005 INDUCEMENT STOCK OPTION AND RESTRICTED STOCK PLAN

                                       OF

                        STANDARD MICROSYSTEMS CORPORATION

 

                           As Amended September 9, 2005

 

1.    Purpose of the Plan

 

     The purpose of this Standard Microsystems Corporation 2005 Inducement Stock

Option And   Restricted   Stock Plan (the   "Plan") is to promote the   interests of

Standard   Microsystems   Corporation,   a Delaware corporation   (together with its

subsidiaries,   "SMSC"   or the   "Company")   and   its   stockholders   by   providing

prospective   employees of SMSC (including   prospective   employees who would join

SMSC in   connection   with any corporate   transaction)   with an   appropriate   and

material incentive to accept employment with SMSC.   Accordingly,   SMSC may, from

time to time,   grant to such   prospective   employees   as may be   selected in the

manner hereinafter   provided,   options   ("Options") to purchase shares of common

stock,   $.10 par value, of Standard   Microsystems   Corporation   ("Common Stock")

and/or awards of restricted Common Stock   ("Awards"),   subject to the conditions

hereinafter provided.

 

2.    Administration of the Plan

 

     (a) This Plan   will be   administered   by the   Compensation   Committee   (the

"Committee")   of the   Board of   Directors   (the   "Board").   All   members   of the

Committee shall be both "Non-Employee Directors" within the meaning of paragraph

(b)(3)(i) of Rule 16b-3   promulgated   under the Securities   Exchange Act of 1934

(the   "Exchange   Act") and   "outside   directors"   within the   meaning of Section

162(m) of the   Internal   Revenue   Code of 1986,   as   amended   (the   "Code")   and

Treasury Regulations   promulgated   thereunder.   The Committee shall have and may

exercise all of the powers of the Board under the Plan,   other than the power to

appoint a director to Committee   membership.   A majority of the Committee   shall

constitute a quorum,   and acts of the majority of members present at any meeting

at which a quorum is   present   shall be deemed   the acts of the   Committee.   The

Committee may also act by instrument signed by all members of the Committee.

 

     (b) The Committee shall have plenary   authority in its discretion,   subject

to and consistent with the express   provisions of the Plan, to direct the grants

of Options or Awards; to determine the numbers of shares of Common Stock covered

by each Option or Award,   the purchase price of the Common Stock covered by each

Option, the individuals to whom and the time or times at which Options or Awards

shall be granted or Options may be exercised;   to   prescribe,   amend and rescind

rules and regulations relating to the Plan, including,   without limitation, such

rules and regulations as it shall deem advisable so that transactions   involving

Options or Awards may qualify for exemption   under such rules and regulations as

the   Securities   and   Exchange   Commission   may   promulgate   from   time   to time

exempting   transactions from Section 16(b) of the Exchange Act; to determine the

terms and provisions of, and to cause the Company to enter into, agreements with

Grantees   (as defined   below) in   connection   with Options or Awards that may be

granted   under   the Plan   ("Agreements"),   which   Agreements   may vary   from one

another,   as the Committee shall deem   appropriate;   to amend any such Agreement

from   time to time,   with the   consent   of the   Grantee;   and to make all   other

determinations    the   Committee    may   deem    necessary   or   advisable   for   the

administration of the Plan.

 

     (c) Each   Option   or Award   under   this   Plan   shall be deemed to have been

granted when the   determination   of the Committee with respect to such Option or

Award is made or, if so determined by the Committee,   at a specific future date.

Once an Option has been granted,   all conditions and   requirements   of this Plan

with respect to such Option shall be deemed to be   conditions   upon the exercise

of the Option but not upon the grant thereof.

 

     (d)   Every   action,   decision,    interpretation   or   determination   by   the

Committee or the Board with respect to the application or administration of this

Plan shall be final and binding   upon the   Company   and each   person   holding or

claiming   any right or interest   pursuant to any Option or Award   granted   under

this Plan.

 

     (e) No member of the   Committee or the Board shall be liable for any action

or   determination   made in good faith with respect to this Plan or any Option or

Award. To the full extent permitted by law, the Company shall indemnify and hold

harmless   each   person   made or   threatened   to be made a party to any   civil or

criminal   action or proceeding   by reason of the fact that such person,   or such

person's testator or intestate, is or was a member of the Committee.

 

     (f) In the event of a conflict between the terms of this Plan and the terms

of any Agreement,   the terms of this Plan, as determined by the Committee in its

discretion, shall govern.

 

3.    Stock Subject to this Plan

 

     (a) The shares of Common   Stock to be issued   upon   exercise   of Options or

constituting   Awards   granted   under this Plan shall be made   available,   at the

discretion   of the Board,   either from the   authorized   but   unissued   shares of

Common Stock or from shares of Common Stock reacquired by the Company, including

shares   purchased in the open market.   The aggregate   number of shares of Common

Stock for which   Options   and Awards   may be   granted   under this Plan shall not

exceed   1,960,000.   Such   aggregate   numbers   shall be subject to   adjustment as

provided in paragraph 12. If any Option   granted under this Plan shall expire or

terminate for any reason without having been exercised in full, or if any Common

Stock   subject to an Award shall be   forfeited,   the   unpurchased   or   forfeited

shares shall (unless this Plan shall have been terminated)   become available for

grant of Options or Awards to other individuals.

 

     (b) A Grantee to whom an Award has been made shall have,   after delivery to

him of, or after   notification   that there is being   held in custody   for him, a

certificate   or   certificates   for the number of shares of Common Stock awarded,

absolute   ownership of such shares   including   the right to vote the same and to

receive   dividends   thereon,   subject   however,   to the   terms,   conditions   and

restrictions described in this Plan and in any Agreement relating to the Award.

 

4.    Eligibility of Grantees

 

     Options   and   Awards   may be   granted   under   this Plan only as a   material

inducement to any individual who has neither been employed by SMSC nor served on

the Board to become an employee of SMSC,   including   individuals   who may become

employees of SMSC in connection with a corporate transaction,   provided, that an

individual who has been employed by SMSC or served on the Board may also receive

inducement grants of Options and/or Awards under this Plan following a bona fide

break in employment   and Board   service,   as determined   under NASD Rule 4350(c)

(each individual receiving an Option or Award, a "Grantee").   Options and Awards

shall not become   effective   unless   and until the   Grantee   actually   commences

employment with SMSC. Eligible   individuals may receive grants of either or both

Options and Awards.

 

5.    Option Price

 

     The   purchase   price per share of Common   Stock under each Option   shall be

established by the   Committee,   but shall not be less than the fair market value

(as   hereinafter   defined) of a share of Common Stock on the date such Option is

granted.

 

6.    Restrictions

 

     (a) No Option granted under this Plan shall be transferable by the Grantee,

either   voluntarily   or by   operation   of law,   otherwise   than by last will and

testament   or by laws of descent   and   distribution,   and such   Option   shall be

exercised during the lifetime of the Grantee,   only by the Grantee, or by his or

her guardian or legal representative.

 

     (b) Until the   restrictions   set forth in this   paragraph   6(b) shall lapse

pursuant to paragraph 6(c) or 6(d),   shares of Common Stock awarded to a Grantee

pursuant to an Award:

 

         (i) shall not be sold, assigned, transferred,   pledged, hypothecated or

otherwise disposed of, and

 

         (ii) shall, if delivered to or to the order of the Grantee, be returned

to the Company   forthwith,   and all rights of the   Grantee to such shares   shall

immediately   terminate   without any payment of consideration by the Company,   if

the Grantee's continuous   employment with the Company or any of its subsidiaries

shall terminate for any reason,   except as provided in paragraph 6(d); provided,

however, that the Board shall have the right to waive such forfeiture,   in whole

or in   part,   and in   connection   with   such   waiver   to   impose   any   terms   or

restrictions on the continued   ownership of such shares by the Grantee under the

Plan. If the Grantee's   interests in the shares of Common Stock granted pursuant

to an Award shall be terminated   pursuant to this clause (ii), the Grantee shall

forthwith deliver to the Secretary or any Assistant Secretary of the Company the

certificates   for   shares of Common   Stock so   terminated,   accompanied   by such

instrument   of transfer as may be required   by the   Secretary   or any   Assistant

Secretary of the Company.

 

     (c) Unless the   Committee   shall fix a different   schedule in an   Agreement

relating to an Award,   except as set forth in paragraph   6(d), the   restrictions

set forth in   paragraph   6(b)   hereof   shall   lapse to the   extent of 25% of the

shares covered by the Award on each of the first and second anniversaries of the

date of grant of such Award and as to the remaining 50% on the third anniversary

of the date of grant.

 

     (d) Any provision of paragraph 6(b) hereof to the contrary notwithstanding,

if a Grantee who has been in the continuous   employment of the Company or of any

subsidiary   since the date on which an Award was granted to him shall,   while in

such employment, die, terminate employment by reason of disability as defined in

this   paragraph   6(d), or attain age 65, and any of such events shall occur more

than one year after the date on which an Award   shall have been   granted to him,

then the   restrictions set forth in paragraph 6(b) hereof shall lapse, as to all

shares of Common Stock   awarded to such Grantee   pursuant to such Award,   on the

date of such event. As used in this paragraph 6(d) the term   "disability"   shall

mean a condition that is within the meaning of Section 22(e)(3) of the Code.

 

     (e) Each   Grantee   granted   an   Award   shall   agree   that,   subject   to the

provisions of paragraph 6(f):

 

         (i) no later than the date of the lapse of the   restrictions   mentioned

in paragraph 6(b) hereof and in any Agreement   respecting the Award, the Grantee

will pay to the Company,   or make   arrangements   satisfactory   to the   Committee

regarding payment of, any federal,   state or local withholding taxes of any kind

required by law to be paid by the Company or its   subsidiaries   with   respect to

the shares of Common Stock subject to the Award, and

 

          (ii) the Company and its subsidiaries shall, to the extent permitted by

law, have the right to deduct from any payment of any kind   otherwise due to the

Grantee   any   federal,   state or local   taxes of any kind   required by law to be

withhe