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Exhibit 10.1
FIRST AMENDED
CHIPS AND TECHNOLOGIES, INC.
1988 NONQUALIFIED STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
(AS AMENDED THROUGH NOVEMBER 9, 1995)
1. Purpose. The Chips and Technologies, Inc. 1988 Nonqualified Stock
Option Plan for Outside Directors (the "Prior Plan") was established effective
as of March 1, 1988 (the "Effective Date"), to create additional incentive for
the outside directors of Chips and Technologies, Inc. and any successor
corporation thereto (collectively referred to as the "Company"), to promote the
financial success and progress of the Company. The Prior Plan is amended and
restated as the First Amended Chips and Technologies, Inc. 1988 Nonqualified
Stock Option Plan for Outside Directors (the "Plan") effective upon approval of
the Company's stockholders (the "Amendment Effective Date").
2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed committee of
the Board having such powers as shall be specified by the Board. Any subsequent
references to the Board shall also mean the committee if such committee has been
appointed. All questions of interpretation of the Plan or of any options granted
under the Plan (an "Option") shall be determined by the Board, and such
determinations shall be final and binding upon all persons having an interest in
the Plan and/or any Option. All Options shall be nonqualified stock options. Any
officer of the Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
3. Eligibility and Type of Option. The Options may be granted only to
directors of the Company who are not employees of the Company or any present
parent and/or subsidiary corporations of the Company. Options granted to
eligible directors of the Company ("Outside Directors") shall be nonqualified
stock options, that is, options which do not meet the requirements of section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). For
purposes of the Plan, a parent corporation and a subsidiary corporation shall be
as defined in sections 424(e) and 424(f) of the Code.
4. Shares Subject to Option. Options shall be options for the purchase of
the authorized but unissued common stock of the Company (the "Stock") subject to
adjustment as provided in Paragraph 8 below. The maximum number of shares of
Stock which may be issued under the Plan shall be 550,000 shares. In the event
that any outstanding Option for any reason expires or is terminated and/or
shares subject to repurchase are repurchased by the
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Company, the shares of Stock allocable to the unexercised portion of such Option
may again be subjected to an Option.
5. Time for Granting Options. All Options shall be granted, if at all,
within ten (10) years from the Effective Date.
6. Terms, Conditions and Form of Options. Options granted pursuant to the
Plan shall be evidenced by written agreements ("Stock Option Agreements")
specifying the number of shares of Stock covered thereby, in substantially the
form attached hereto as Exhibit A and incorporated herein by reference (the
"Option Agreement"), except as set forth herein, and shall comply with and be
subject to the following terms and conditions:
(a) Automatic Grant of Options.
(i) Each Outside Director shall be granted an Option for Twenty
Thousand (20,000) shares of Stock upon the later of the Effective Date or the
date said Outside Director is first elected to serve on the Board.
(ii) The Anniversary Date of an Outside Director who was elected
to the Board prior to the Effective Date shall be the date which is twelve (12)
months after the Effective Date, and successive anniversaries thereof. The
Anniversary Date of any Outside Director who is elected to the Board on or after
the Effective Date shall be the date which is twelve (12) months after such
election and successive anniversaries thereof. The Anniversary Date of a
director who is employed by the Company or a present parent and/or subsidiary
corporation of the Company and who subsequently terminates such employment while
remaining on the Board shall be the date following such termination of
employment.
(iii) Each Outside Director shall be granted on the Amendment
Effective Date an additional Option for the Ten Thousand (10,000) shares of
Stock for each odd Anniversary Date of such Outside Director which occurred
subsequent to the later of the Effective Date or such Outside Director's
election to the Board and prior to the Amendment Effective Date. For example, an
Outside Director elected to the Board prior to the Effective Date would be
granted an Option for Thirty Thousand (30,000) shares of Stock computed as
follows:
10,000 multiplied by 3 odd year Anniversary Dates (3-1-89, 3-1-91 and 3-1-93).
Vesting on each Ten Thousand (10,000) share Option granted pursuant to this
Paragraph 6(a)(iii) shall run from the odd Anniversary Date to which such grant
relates.
(iv) Each Outside Director shall be granted an additional Option
for Ten Thousand (10,000) shares of Stock upon every Anniversary Date occurring
on or after the Amendment Effective Date of said Outside Director's tenure as a
Director.
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(v) Each Outside Director shall be granted an additional Option
on the Amendment Effective Date and on every Anniversary Date thereafter on
which such Outside Director is a member of one or more Board Committees
("Committee Membership") for a number of shares of Stock determined as follows.
For each Committee Membership, the Outside Director shall be granted Two
Thousand Five Hundred (2,500) shares of Stock.
(vi) An Outside Director who is serving as Chairman of the Board
shall be granted an additional Option on the Amendment Effective Date and upon
every Anniversary Date thereafter on which the Outside Director is so serving as
Chairman of the Board for Five Thousand (5,000) shares of Stock.
(vii) Notwithstanding any other provision of the Plan, no Option
shall be granted to any individual who is no longer serving as an Outside
Director of the Company, Committee Member, or Chairman of the Board, as the case
may be, on an Anniversary Date which would otherwise be a date of grant.
(viii) For purposes of determining the number of Option shares
under Paragraphs 6(a)(v) and (vi), only service while an Outside Director shall
be counted.
(b) Option Price. The option price per share for an Option shall be the
fair market value, as determined by the closing price of the Company's common
stock on the National Association of Securities Dealers Automated Quotation
System (the "NASDAQ System") as reported in the Wall Street Journal on the date
of the granting of the Option. If the such date prior to the date of the
granting of the Option does not fall on a day on which the Company's Stock is
trading on the NASDAQ System or a national securities exchange, the date on
which the Option price per share shall be established shall be the last day on
which the Company's Stock was so traded prior to the date of the granting of the
Option. Notwithstanding the foregoing, an Option may be granted with an exercise
price lower than the minimum exercise price set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a manner
qualifying with the provisions of section 424(a) of the Code.
(c) Exercise Period of Options. Any Option granted hereunder shall be
exercisable for a term of ten (10) years.
(d) Payment of Option Price. Payment of the option price for the number of
shares of Stock being purchased pursuant to any Option shall be made:
(i) in cash;
(ii) by check, or
(iii) by the assignment of the proceeds of a sale of some or all
of the shares being acquired upon the exercise of the Option (including, without
limitation, through
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an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System).
7. Authority to Vary Terms. The Board shall have the authority from time
to time to vary the terms of the Option Agreement either in connection with the
grant of an individual Option or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of such
revised or amended stock option agreements shall be in accordance with the terms
of the Plan.
8. Effect of Change in Stock Subject to the Plan. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan and
to any outstanding Options and in the option price of any outstanding Options in
the event of a stock dividend, stock split, reverse stock split, combination,
reclassification, or like change in the capital structure of the Company.
9. Ownership Change and Transfer of Control. For the purposes hereof, the
"Control Company" shall mean Chips and Technologies, Inc. An "Ownership Change"
shall be deemed to have occurred in the event of any of the following
occurrences with respect to the Control Company:
(a) the direct or indirect sale or exchange by the stockholders of the
Control Company of all or substantially all of the stock of the Control Company;
(b) a merger in which the Control Company is a party; or
(c) the sale, exchange, or transfer of all or substantially all of the
Control Company's assets.
A "Transfer of Control" shall mean an Ownership Change in which the
stockholders of the Control Company before such Ownership Change do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Control Company.
In the event of a Transfer of Control, the Board, in its sole discretion,
shall either (i) provide that any unvested portion of the Option shall be
immediately exercisable and vested as of a date prior to the Transfer of
Control, as the Board so determines, or (ii) arrange with the surviving,
continuing, successor, or purchasing corporation, as the case may be, that such
corporation either assume the Company's rights and obligations under outstanding
stock option agreements or substitute options for such corporation's stock for
such outstanding options. Any Options which are neither exercised as of the date
of the Transfer of Control nor assumed by the surviving, continuing, successor,
or purchasing corporation, as the case may be, shall terminate effective as of
the date of the Transfer of Control.
10. Options Non-Transferable. During the lifetime of the Optionee, an
Option shall be exercisable only by said Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution.
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11. Termination or Amendment of Plan. The Board, including any duly
appointed committee of the Board, may terminate or amend the Plan at any time;
provided, however, that without the approval of the Company's stockholders,
there shall be (i) no increase in the total number of shares covered by the Plan
(except by operation of the provisions of Paragraph 8, above), and (ii) no
expansion in the class of persons eligible to receive nonqualified stock
options. Notwithstanding the foregoing, the Plan may not be amended more
frequently than once every six (6) months, other than to comport with changes in
the Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. In any event, no amendment may adversely affect any then
outstanding Option or any unexercised portion thereof, without the consent of
the Optionee.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing First Amended Chips and Technologies, Inc. 1988 Nonqualified
Stock Option Plan for Outside Directors was duly adopted by the Board of
Directors of the Company on the October 1, 1993, approved by a majority of the
stockholders of the Company on November 10, 1993, and as subsequently amended
through November 9, 1995.
Jeffery Anne Tatum,
Secretary
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EXHIBIT A
NONQUALIFIED STOCK OPTION AGREEMENT
FOR OUTSIDE DIRECTORS
Between
CHIPS AND TECHNOLOGIES, INC.
and
[firstname] [lastname]
Grant Number [grantnumber]
You have been granted an option under the First Amended Chips and
Technologies, Inc. 1988 Nonqualified Stock Option Plan for Outside Directors
(the "Plan"). This Agreement describes the terms and conditions of your option
(the "Agreement").
Number of Shares Your option is for [shares] shares of the common
stock of Chips and Technologies, Inc., a Delaware
corporation ("Chips"). Chips will make appropriate
adjustments in the number, option price, and class of
your shares if there is a stock dividend, stock split,
or like change in the capital structure of Chips. If a
majority of Chips' shares which are of the same class
as your shares are converted into the shares of
another corporation ("New Shares"), Chips may make
your option exercisable for New Shares but shall
adjust the number of shares and the exercise price for
the New Shares in a fair and equitable manner.
Option Price You may purchase your option shares for [optionprice]
per share, which was the closing price of the common
stock of Chips on [grantdate].
Type of Option This option is intended to be a nonqualified stock
option and will not be treated as an incentive stock
option as defined in section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
Grant Date The "Grant Date" of your option is [grantdate].
Initial Vesting Date The "Initial Vesting Date" of your option is
[period1vestdate], which is six (6) months from
the Grant Date. This is the date your option begins to
vest.
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Exercisability You may exercise your option immediately in its
entirety on or after the Grant Date. However, if you
buy unvested option shares, they may not be sold or
otherwise transferred until they become vested. (See
Right to Repurchase below).
Term Your option will expire on [period1expiredate], the
"Expiration Date", which is ten (10) years from the
Grant Date, unless your service as a director of Chips
is terminated as explained below, or unless Chips is
involved in a "transfer of control" transaction as
explained below.
Vesting of Options On the Initial Vesting Date, [period1sharesvesting]
shares of the option will be vested (one-eighth (1/8)
of the option shares). Thereafter one-forty-eighth
(1/48) of the option shares will vest for each full
month of your continuous service as a director of
Chips from the Initial Vesting Date. Your option stops
vesting when your service as a director of Chips
terminates.
Your Right to Buy
Unvested Shares You can buy shares that have not yet vested.
The number of shares you buy over and above your
vested shares are "unvested shares." They may not be
sold or otherwise be transferred until they become
vested.
Chips' Right to
Repurchase Your
Unvested Shares If your service as a director of Chips terminates for
any reason, with or without cause while you are
holding unvested shares, or if you or your legal
representative attempts to sell, exchange, transfer,
pledge, or otherwise dispose of any unvested shares
(other than pursuant to an "ownership change", as
defined below), Chips may buy those unvested shares
back from you at the option price you originally paid
as adjusted to reflect changes in the number, exercise
price and class of the shares.
If Chips wishes to exercise its right to repurchase
your unvested shares, it must give you written notice
within sixty (60) days after the later of (i) the
termination of your service as a director or your
exercise of your option, if later, or (ii) the date
Chips received notice of the attempted disposition of
the shares by you or your legal representative.
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Chips must exercise its right to repurchase the
unvested shares, if at all, for all of the unvested
shares unless Chips and you otherwise agree. However,
Chips will not repurchase your unvested shares if you
transfer your unvested shares to your ancestors,
descendents, or spouse or to a trustee for their
benefit and the transferee agrees in writing (in a
form satisfactory to Chips) to take the shares subject
to Chips' right of repurchase.
In the event Chips is unable to exercise the right of
repurchase under the provisions of Section 160 of the
Delaware General Corporation Law, or the corresponding
provisions of other applicable law, Chips may assign
the right of repurchase to one or more persons
selected by Chips' Board of Directors (the
"Board").
Escrow for Unvested
Shares To ensure that the unvested shares will be available
for repurchase by Chips, when you buy any unvested
shares, you may be required to deposit the certificate
for the shares with an escrow agent designated by
Chips under the terms and conditions of an escrow
agreement approved by Chips. Chips will pay the escrow
costs.
Payment by Chips
through Escrow If Chips exercises its right to repurchase your
unvested shares, Chips will make payment to the escrow
agent on behalf of you or your legal representative in
cash within sixty (60) days after Chips mails to you
its written notice of exercise of right of repurchase.
For purposes of this payment, cancellation of any
outstanding promissory note of yours that you have
previously delivered to Chips will be treated as
payment in cash to the extent of the unpaid principal
and any accrued interest canceled. Within thirty (30)
days after payment by Chips, the escrow agent will
give the shares which Chips has purchased to Chips and
give the payment received from Chips to you.
Legend on Unvested
Shares Chips may stamp your certificates for unvested shares
you purchase with a special legend referring to Chips'
right of repurchase. As your vesting percentage
increases, you may request, at reasonable intervals,
that Chips exchange
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such legended shares which have vested for shares
without such a legend.
Stock Dividends If, from time to time, there is any stock dividend,
stock split, or other change in the character or
amount of any of Chips' outstanding stock, then any
and all new substituted or additional securities to
which you are entitled by reason of your ownership of
option shares will be immediately subject to Chips'
right of repurchase with the same force and effect as
your option shares subject to the right of repurchase
immediately before such event. (See Right to
Repurchase above.)
Ownership Change The following events constitute an "ownership
change" of Chips: (1) the direct or indirect sale or
exchange by Chips' stockholders of all or
substantially all of Chips' stock; (2) a merger in
which Chips is a party; or (3) the sale, exchange, or
transfer of all or substantially all of Chips' assets.
If there is an ownership change, Chips' right of
repurchase will continue but your service as a
director will include service with Chips and any
parent or subsidiary corporation of Chips (as defined
in Section 424 of the Code) at the time you were a
director whether or not such corporation was included
in such term before and after the ownership change.
Transfer of Control A "transfer of control" of Chips means an
ownership change in which Chips' stockholders before
such ownership change do not retain, directly or
indirectly, at least a majority of the beneficial
interest in Chips' voting stock.
In the event of a transfer of control, the Board, in
its sole discretion, will either (i) provide that any
unvested portion of your option will become vested as
of a date prior to the transfer of control, as the
Board so determines, or (ii) arrange with the
surviving, continuing, successor, or purchasing
corporation, as the case may be, that such corporation
either assume Chips' rights and obligations under this
Agreement or substitute options for such corporation's
stock for your option. Your option will terminate on
the date of the transfer of control to the extent that
your option is neither exercised as of the date
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of the transfer of control nor assumed by the
surviving, continuing, successor, or purchasing
corporation, as the case may be.
Termination of Your
Service as Director If you cease to be a director of Chips for
any reason, your option as to unvested shares expires
immediately.
If you cease to be a director of Chips because of your
death or disability as defined in Section 422(c) of
the Code, your option as to vested shares expires six
(6) months after your service as a director ends or on
the Expiration Date of the term of the option,
whichever is first.
If you cease to be a director of Chips because of any
other reason, your option as to vested shares expires
one (1) month after your service as a director ends or
on the Expiration Date of the term of the option,
whichever is first.
However, if a sale, within the applicable time periods
set forth in the preceding two paragraphs, of shares
acquired upon the exercise of the option would subject
you to suit under Section 16(b) of the Securities
Exchange Act of 1934, as amended, your option as to
vested shares will not expire until the earliest to
occur of (i) the tenth (10th) day following the date
on which your sale of such shares would no longer be
subject to such suit, (ii) the one hundred and
ninetieth (190th) day after your service as a director
ends, or (iii) the Expiration Date.
Notwithstanding the foregoing, no additional vesting
will occur after your service as a director
terminates.
Restrictions on
Resale You may not sell your option shares at any time you
are in possession of material inside information. In
addition, your sale of your option shares will be
governed by Chips' trade restriction policy in effect
at the time of the proposed sale.
You may sell your option shares only during the
trading window. This window currently commences on the
third day following the release of quarterly financial
results and
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ends twenty-eight (28) days thereafter, unless
extended by Chips' President or Chief Financial
Officer.
Notice of Exercise When you wish to exercise your option, you
must send a signed Notice of Exercise to Chips at its
main office which currently is:
Chips and Technologies, Inc.
2950 Zanker Road
San Jose, CA 95134
Attn: Corporate Services
Your notice must specify how many whole shares you
wish to purchase and must contain any representations
and agreements as to your investment intent with
respect to the shares required by Chips. Your notice
must be delivered in person, by certified or
registered mail, return receipt requested, by
confirmed facsimile transmission, or by such other
means as Chips may permit, to Chips' Stock
Administrator, or other authorized representative of
Chips, prior to the Expiration Date, accompanied by a
signed form of Chips' then current escrow
instructions, if you are exercising your option for
unvested shares, and full payment of the option price
for the number of shares you are purchasing. The
Notice of Exercise is effective when it is received by
Chips. Chips will not be required to issue fractional
shares upon the exercise of your option.
Form of Payment When you submit your Notice of Exercise,
you must include payment of the option price for the
number of shares you are purchasing. Payment may be
made in one (or a combination of two or more) of the
following forms:
- Your personal check
- A cashier's check
- Cash
- Assignment of the sale proceeds of some or
all of the shares acquired on exercise of
the option (including an exercise
complying with Regulation T of the Board
of Governors of the Federal Reserve
System)
Taxes You will be responsible for the payment of any tax
liability on income related to the option, its
exercise and/or the transfer of any shares acquired
upon exercise of the option
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and Chips will issue a Form 1099-MISC to report any
such income.
Certificate
Registration Chips will register the certificate or certificates
issued upon the exercise of your option in your name
or, if applicable, in the name of your heir(s).
Transfer of Option Prior to your death, only you may exercise
your option, and you cannot transfer or assign your
option. However, you may dispose of your option in
your will or by the laws of descent and distribution.
Stockholder Rights You, or your estate or heirs, have no rights as
a stockholder of Chips until a certificate for your
option shares has been issued. No adjustments will be
made for dividends or other rights if the applicable
record date occurs prior to the date your stock
certificate is issued, unless there is a change in the
stock as described in the Plan.
Applicable Law This Agreement will be interpreted and enforced
under the laws of the State of California.
Other Agreements The Plan, as it may be amended from time to time, is
incorporated in this Agreement by reference. This
Agreement and the Plan constitute the entire
understanding between you and Chips regarding your
option. Any prior agreements, understandings,
commitments, or negotiations concerning your option
are superseded.
Amendment Chips may at any time amend or terminate the Plan
and/or your option. However, no amendment or
termination may adversely affect your option without
your consent.
Binding Effect This Agreement will benefit, and will bind,
you, Chips, and the respective heirs, executors,
administrators, successors and assigns of you and
Chips.
Time of Expiration Whenever there is a reference in this
Agreement to a date when your option expires, the
option will expire on that date at 5:00 p.m. local
time in San Jose, California.
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By signing this Agreement, you and Chips agree to all of the terms and
conditions described above and in the Plan, including Chips' right to repurchase
unvested shares.
CHIPS AND TECHNOLOGIES, INC.
By:
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Its:
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Dated:
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OPTIONEE
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Name:
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Dated:
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