INTERNATIONAL RECTIFIER CORPORATION
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is between INTERNATIONAL
RECTIFIER CORPORATION, a Delaware corporation (the "Company"),
and (the "Optionee"). Pursuant to the
International Rectifier Corporation Stock Incentive Plan
identified below (the "Plan"),* the Company grants a
nonqualified stock option to purchase authorized but unissued or
treasury shares of Common Stock, $1 par value, of the Company on
the Terms and Conditions attached and in the Plan:
PLAN*: ______________________
GRANT DATE: __________
NUMBER OF SHARES: __________1
EXERCISE PRICE PER SHARE: $_________1
VESTING SCHEDULE: 20% PER YEAR ON EACH OF
THE FIRST FIVE
ANNIVERSARIES DATES OF
GRANT DATE2
EXPIRATION DATE: __________2
_______________________________
1Subject to adjustment under Section 8 of the Plan and Sections 6 and 7
of the Terms and Conditions.
2Subject to early termination if the Optionee ceases to be employed by
the Company or a subsidiary or in certain other circumstances. See the Terms
and Conditions and the Plan for exceptions and additional details regarding
early termination of the Option.
INTERNATIONAL RECTIFIER CORPORATION OPTIONEE
(a Delaware Corporation)
By: _______________________________ _________________________
(Signature)
Its: ____________________________
_________________________
Address
_________________________
(City, State, Zip Code)
_______________________________
*Note: This form may be used with the Amended and Restated Stock
Incentive Plan of 1992 ("1992 Plan") or the 1997 Employee Stock Incentive Plan
("1997 Plan").
TERMS AND CONDITIONS
1. Exercisability of Option. The Option shall
vest and become exercisable in installments of 20% of the
aggregate number of shares set forth on the facing page (subject
to adjustment). Subject to earlier termination of the Option as
provided in this Agreement or the Plan, the first installment
shall vest on the 1st anniversary of the Grant Date, and
thereafter, installments of 20% of the shares shall vest on each
of the 2nd, 3rd, 4th and 5th anniversaries of the Grant Date.
The Option may be exercised only to the extent the Option is
exercisable.
- Cumulative Exercisability. To the extent the
Optionee does not in any year purchase all the
shares that the Optionee may then exercise, the
Optionee has the right cumulatively thereafter
to purchase any shares not so purchased until
the Option terminates or expires.
- No Fractional Shares. Fractional share
interests shall be disregarded, but may be
cumulated.
- Minimum Exercise. No fewer than 100 shares may
be purchased at any one time, unless the number
purchased is the total number at the time
exercisable under the Option.
2. Method of Exercise of Option. To the extent
exercisable, the Option may be exercised by the delivery to the
Company of a written notice stating the number of shares to be
purchased pursuant to the Option and accompanied by payment made
in cash or by check payable to the order of the Company in the
full amount of the purchase price of the shares and amounts
required to satisfy applicable withholding taxes. Other payment
methods may be permitted only if expressly authorized by the
Administrator with respect to this option or all options under
the Plan.
3. Continuance of Employment Required. The
vesting schedule requires continued service through each
applicable vesting date as a condition to the vesting of the
applicable installment and rights and benefits under this
Agreement. Partial service, even if substantial, during any
vesting period will not entitle the Optionee to any proportionate
vesting or avoid or mitigate a termination of rights and benefits
upon or following a termination of employment or service as
provided in Section 4 below or under the Plan.
4. Effect of Termination of Employment or Death;
Change in Subsidiary Status. If the Optionee's employment by
either the Company or any subsidiary terminates, the Option and
all other rights and benefits under this Agreement terminate
except that the Optionee may at any time within the following
periods after termination exercise the Option to the extent the
Option was exercisable at the date of termination of employment
and has not otherwise expired.
- permanent and total disability --- one year
- voluntary retirement with the consent of the Company or a
subsidiary --- 30 days
- termination by the Company or a subsidiary other than
pursuant to a Dismissal for Cause --- 30 days
- voluntary resignation (other than pursuant to a Dismissal
for Cause (as defined below) or in anticipation of a
Dismissal for Cause (as determined by the Committee)) ---
30 days
- death of Optionee --- one year
5. Change in Subsidiary's Status; Leaves of
Absence. If the Optionee is employed by an entity that ceases to
be a subsidiary, this event is deemed for purposes of this
Agreement to be a termination of the Optionee's employment by the
Company other than a Dismissal for Cause. Absence from work
caused by military service, authorized sick leave or other leave
approved in writing by the Committee shall not be considered a
termination of employment by the Company for purposes of Section
4.
6. Adjustment and/or Termination of Option Under
Certain Circumstances. In addition to adjustments contemplated
by Section 8 of the Plan, upon the occurrence or in contemplation
of an Event (as defined in Section 13 below), the Company may
provide for the assumption, substitution, conversion, exchange,
or other settlement and/or adjustment of the Option, whether
exercisable or not, or may terminate the Option. If the Company
terminates an Option, the Company shall make provision for a cash
payment for the Option or shall provide for the assumption,
conversion or substitution of other options or rights, in either
case based on the distribution or consideration payable to
holders of the Common Stock of the Company or the difference
between the exercise price and the fair market value of the
shares on the applicable measurement date in respect of the
Event. In such circumstances, the Company may but is not
required to make provision for the unexercisable portion of the
Option.
7. Possible Acceleration and Termination of Awards
Upon Change in Control. Without limiting the generality of
Section 6 or the authority of the Administrator under the Plan,
upon the occurrence of (or, as the circumstances may require,
immediately prior to) a Change in Control, the Option will become
immediately exercisable, unless prior to the Change in Control
the Administrator determines that benefits under this or all
Options will not accelerate upon occurrence of the Change in
Control or determines that only certain or limited benefits under
any or all Options will be accelerated and the extent to which
they will be accelerated, and/or establishes a different time in
respect of such Event for such acceleration. The Administrator
may accord the Optionee a right to refuse any acceleration
pursuant to this Agreement, in such circumstances as the
Administrator may approve.
If any Option has been fully accelerated as
contemplated by this Section, but is not exercised prior to an
Event (as defined in Section 13) involving a Change of Control
approved by the Board, the Administrator acting prior to the
Event may provide that the Option terminates, subject to any
provision by the Administrator, in its sole discretion through a
plan of reorganization approved by the Board or otherwise, for
the survival, substitution, assumption, exchange or other
reasonable settlement of the Option.
8. Notices. Any notice to be given under the
terms of this Agreement shall be in writing and addressed to the
Company at its principal office, to the attention of the
Corporate Secretary and to the Optionee at the address given
beneath the Optionee's signature, or at such other address as
either party may hereafter designate in writing to the other.
9. Optionee not a Stockholder. Neither the
Optionee nor any other person entitled to exercise the Option
shall have any of the rights or privileges of a stockholder of
the Company as to any shares of Common Stock not actually issued
and delivered to Optionee prior to delivery of the exercise price
and satisfaction of all other conditions precedent to the due
exercise of the Option and delivery of shares.
10. No Employment Commitment by Company. Nothing
contained in this Agreement or the Plan constitutes an employment
commitment by the Company, affects Optionee's status as an
employee at will who is subject to termination without cause,
confers upon Optionee any right to remain employed by the Company
or any subsidiary, interferes in any way with the right of the
Company or any subsidiary at any time to terminate such
employment, or affects the right of the Company or any subsidiary
to increase or decrease Optionee's other compensation.
11. Effect of Award Agreement. This Agreement
shall be binding upon and inure to the benefit of any successor
or successors of the Company except to the extent the Committee
determines otherwise.
12. Choice of Law. The constructive
interpretation, performance and enforcement of the Option and
this Agreement shall be governed by the laws of the State of
California.
13. Defined Terms. Capitalized terms used herein
and not otherwise defined herein shall have the meaning assigned
to such terms in the Plan.
"Change in Control" means any of the following:
- Approval by the stockholders of the Company of
the dissolution or liquidation of the Company;
- Approval by the stockholders of the Company of
an agreement to merge or consolidate, or
otherwise reorganize, with or into one or more
entities that are not majority-owned
subsidiaries of the Company, as a result of
which 50% or less of the outstanding voting
securities of the surviving or resulting entity
are, or are to be, owned by former stockholders
of the Company.
- Approval by the stockholders of the Company of
the sale or transfer of substantially all of
the Company's business and/or assets to a
person or entity that is not a subsidiary of
the Company; or
- The occurrence of any of the following:
- any "person," alone or together with all
"affiliates" and "associates" of such
person, without the prior approval of the
Board of Directors, becomes the
"beneficial owner" of more than 50% of the
outstanding voting securities of the
Company (the terms "person", "affiliates",
"associates" and "beneficial owner" are
used as such terms are used in the
Securities Exchange Act of 1934 and the
General Rules and Regulations thereunder;
provided, however, that a "Change in
Control" shall not be deemed to have
occurred if such "person" is the Company,
any subsidiary of the Company or any
employee benefit plan or employee stock
plan of the Company or of any subsidiary
of the Company, or any trust or other
entity organized, established or holding
shares of such voting securities by, for,
or pursuant to the terms of any such plan,
or any member of or entity or group
affiliated with the Lidow family; or
- individuals who at the beginning of any
period of two consecutive calendar years
constitute a majority of the Board cease
for any reason, during such period, to
constitute at least a majority thereof,
unless the election, or the nomination for
election by the Company's shareholders, of
each new Board member was approved by a
vote of at least two-thirds of the Board
members then still in office who were
Board members at the beginning of such
period.
"Dismissal for Cause" means the Company or a
subsidiary has terminated Optionee's employment because of any of
the following:
- any act that has resulted in the Optionee's
personal gain at the expense of the Company or
any of its subsidiaries;
- Optionee's refusal to perform assigned duties;
- Optionee's incompetence, insubordination, gross
negligence, willful misconduct, breach of
fiduciary duty, or conviction of a crime (other
than minor traffic violations or similar
offenses);
- Optionee's violation of any policy or rule of
the Company; or
- Other conduct that results in a substantial
detriment to the business or reputation of the
Company or any of its subsidiaries.
Each case shall be determined by the Committee in its sole
discretion, whether before or after the date of termination of
employment.
"Event" means a liquidation, dissolution, Change in
Control, merger, consolidation, or other combination or
reorganization, or a recapitalization, reclassification,
extraordinary dividend or other distribution (including a split
up or a spin off of the Company or any significant subsidiary),
or a sale or other distribution of substantially all the assets
of the Company as an entirety.
14. Plan. The Option and all rights of Optionee
thereunder are subject to, and the Optionee agrees to be bound
by, all of the terms and conditions of the provisions of the
Plan, including, but not limited to Section 8 (Adjustments and
Settlement of Awards) and Section 12 (Legal Issues). The
Optionee acknowledges receipt of a copy of the Plan, which is
made a part hereof by this reference, and agrees to be bound by
the terms thereof. Unless otherwise expressly provided in other
Sections of this Agreement, provisions of the Plan that confer
discretionary authority on the Committee do not (and shall not be
deemed to) create any additional rights in the Optionee not
expressly set forth above.
