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Exhibit 10.6
AMENDED AND RESTATED
CHIPS AND TECHNOLOGIES, INC.
1994 STOCK OPTION PLAN
(As Amended Through November 9, 1995)
1. Establishment and Purpose.
(a) Establishment. The Chips and Technologies, Inc. 1985 Stock Option
Plan was adopted on January 11, 1985 and was amended and restated on January 8,
1987 (the "Initial Plan"). The Initial Plan is amended and restated in its
entirety and renamed the Amended and Restated Chips and Technologies, Inc. 1994
Stock Option Plan (the "Plan") effective upon approval by the stockholders of
Chips and Technologies, Inc.
(b) Purpose. The Plan is established to create additional incentive for
key employees, directors and consultants or advisors of Chips and Technologies,
Inc. and any successor corporation thereto (collectively referred to as the
"Company"), and any present or future parent and/or subsidiary corporations of
such corporation (all of whom along with the Company being individually referred
to as a "Participating Company" and collectively referred to as the
"Participating Company Group"), to promote the financial success and progress of
the Participating Company Group. 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 Internal Revenue Code of 1986, as amended (the "Code").
2. Administration.
(a) Administration by Board and/or Compensation Committee. 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 herein to the Board shall also
mean the committee if such committee has been appointed and, unless the powers
of the committee have been specifically limited, the committee shall have all of
the powers of the Board granted herein, including, without limitation, the power
to terminate or amend the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. 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.
(b) Disinterested Administration. With respect to the participation in
the Plan of employees who are also officers or directors of the Company subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan shall be administered by the Board in compliance with the
"disinterested administration" requirement of Rule 16b-3, as promulgated under
the Exchange Act and amended from time to time or any successor rule or
regulation ("Rule 16b-3").
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(c) Compliance with Section 162(m) of the Code. In the event a
Participating Company is a "publicly held corporation" as defined in paragraph
(2) of section 162(m) of the Code, as amended by the Revenue Reconciliation Act
of 1993 (P.L. 103-66), and the regulations promulgated thereunder ("Section
162(m)"), the Company may establish a committee of outside directors meeting the
requirements of Section 162(m) to approve the grant of Options which might
reasonably be anticipated to result in the payment of employee remuneration that
would otherwise exceed the limit on employee remuneration deductible for income
tax purposes pursuant to Section 162(m).
(d) Options Authorized. Options may be either incentive stock options as
defined in section 422(a) of the Code ("Incentive Stock Options") or options not
intended to qualify as Incentive Stock Options ("Nonqualified Stock Options").
(e) Authority of Officers. Any officer of a Participating 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. The Options may be granted only to employees (including
officers) and directors of the Participating Company Group or to individuals who
are rendering services as consultants, advisors, or other independent
contractors to the Participating Company Group. The Board shall, in the Board's
sole discretion, determine which persons shall be granted Options (an
"Optionee"). A director of the Company shall be eligible to be granted only a
Nonqualified Stock Option unless the director is also an employee of the
Company. For purposes of the foregoing sentence, "employees" shall include
prospective employees to whom Options are granted in connection with written
offers of employment with Participating Company Group and "consultants" or
"advisors" shall include prospective consultants or advisors to whom Options are
granted in connection with written consulting or advising offers with the
Participating Company Group. An individual who is rendering services as a
consultant, advisor, or other independent contractor shall be eligible to be
granted only a Nonqualified Stock Option. An Optionee may, if otherwise
eligible, be granted additional Options.
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 9 below. The maximum number of shares of
Stock which may be issued under the Plan (including the Initial Plan) shall be
eighteen million two hundred thousand (18,200,000) shares. Subject to adjustment
as provided in paragraph 9 below, at any such time as a Participating Company is
a "publicly held corporation" as defined in Section 162(m), no person shall be
granted within any fiscal year of the Company Options which in the aggregate
cover more than five hundred thousand (500,000) shares (the "Per Person Limit").
In the event that any outstanding Option under the Plan (including the Initial
Plan) for any reason expires or is terminated or canceled and/or shares of Stock
subject to repurchase are repurchased by the
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Company, the shares allocable to the unexercised portion of such Option, or such
repurchased shares, may again be subject to an Option grant. Notwithstanding the
foregoing, any such shares shall be made subject to a new Option only if the
grant of such new Option and the issuance of such shares pursuant to such new
Option would not cause the plan or any Option granted under the Plan to
contravene Rule 16b-3.
5. Time for Granting Options. All Options shall be granted, if at all, on
or before August 11, 2004.
6. Terms, Conditions and Form of Options. Subject to the provisions of the
Plan, the Board shall determine for each Option (which need not be identical)
the number of shares of Stock for which the Option shall be granted, the option
price of the Option, the exercisability of the Option, whether the Option is to
be treated as an Incentive Stock Option or as a Nonqualified Stock Option and
all other terms and conditions of the Option not inconsistent with the Plan.
Options granted pursuant to the Plan shall be evidenced by written agreements
specifying the number of shares of Stock covered thereby, in such form as the
Board shall from time to time establish, and shall comply with and be subject to
the following terms and conditions:
(a) Option Price. The option price for each Option shall be established
in the sole discretion of the Board; provided, however, that (i) the option
price per share for an Option shall be not less than the fair market value, as
determined by the Board, of a share of Stock on the date of the granting of the
Option, and (ii) no Incentive Stock Option granted to an Optionee who at the
time the Option is granted owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of a Participating
Company within the meaning of section 422(b)(6) of the Code and/or ten percent
(10%) of the total combined value of all classes of stock of a Participating
Company (a "Ten Percent Owner Optionee") shall have an option price per share
less than one hundred ten percent (110%) of the fair market value of a share of
Stock on the date the Option is granted.
(b) Exercise Period of Options. The Board shall have the power to set
the time or times within which each Option shall be exercisable or the event or
events upon the occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however, that (i) no
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years after the date such Option is granted and (ii) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the date such Option is granted.
(c) 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, by check, or cash equivalent, (ii) by tender to the Company of shares of
the Company's stock owned by the Optionee having a value, as determined by the
Board (but without regard to any restrictions on transferability applicable to
such stock by reason of federal or state securities laws or agreements with an
underwriter for the Company), not less than the option price, (iii) if
specifically permitted by the Board and set forth in the Optionee's Option
Agreement, by the Optionee's recourse promissory
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note, (iv) by the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of an Option (including, without
limitation, through 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), (v) by such other consideration and method of payment as the Board, in
its sole discretion, may allow, or (vi) by any combination thereof.
The Board may at any time or from time to time, by adoption of or by
amendment to the form of Standard Option Agreement described in paragraph 7
below, or by other means, grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the option price and/or which
otherwise restrict one (1) or more forms of consideration. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares of
the Company's stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's stock. Furthermore, no promissory note shall be
permitted if an exercise using a promissory note would be a violation of any
law. Any permitted promissory note shall be due and payable not more than five
(5) years after the Option is exercised, and interest shall be payable at least
annually and be at least equal to the minimum interest rate necessary to avoid
imputed interest pursuant to all applicable sections of the Code. The Board
shall have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock acquired on
exercise of the Option and/or with other collateral acceptable to the Company.
(x) Unless otherwise provided by the Board, an Option may not be
exercised by tender to the Company of shares of the Company's stock pursuant to
clause (ii) of this paragraph 6(c) unless such shares of the Company's stock
either have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.
(y) Unless otherwise provided by the Board, in the event the Company
at any time becomes subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
(z) The Company reserves, at any and all times, the right, in the
Company's sole and absolute discretion, to establish, decline to approve and/or
terminate any program and/or procedures for the exercise of Options by means of
an assignment of the proceeds of a sale of some or all of the shares of Stock to
be acquired upon such exercise pursuant to clause (iv) of this paragraph 6(c).
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7. Standard Forms of Stock Option Agreement.
(a) Incentive Stock Options. Unless otherwise provided for by the Board
at the time an Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of incentive stock option agreement attached hereto as Exhibit A and
incorporated herein by reference.
(b) Nonqualified Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonqualified
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of nonqualified stock option agreement attached hereto as
Exhibit B and incorporated herein by reference.
(c) Standard Term for Options. Unless otherwise provided for by the Board
in the grant of an Option, any Option granted hereunder shall be exercisable for
a term of ten (10) years.
8. Authority to Vary Terms. The Board shall have the authority from time to
time to vary the terms of the standard forms of stock 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 standard form or forms of stock option
agreement shall be in accordance with the terms of the Plan.
9. Effect of Change in Stock Subject to Plan. Appropriate adjustments shall
be made in the number and class of shares of Stock subject to the Plan, to the
Per Person Limit set forth in paragraph 4 above, 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.
10. Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Control
Company. For purposes of applying this Paragraph 10, the "Control Company" shall
mean the corporation whose stock is subject to the Option.
(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
where the stockholders of the Control Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Control Company;
(b) a merger in which the stockholders of the Control Company before such
merger do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Control Company; or
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(c) the sale, exchange, or transfer of all or substantially all of the
Control Company's assets (other than a sale, exchange, or transfer to one or
more corporations where the stockholders of the Control Company before such
sale, exchange or transfer retain, directly or indirectly, at least a majority
of the beneficial interest in the voting stock of the corporation(s) to which
the assets were transferred).
In the event of a Transfer of Control, any unexercisable and/or unvested
portion of the outstanding Options shall be immediately exercisable and vested
as of the date thirty (30) days prior to the date of the Transfer of Control
unless the Board provides for the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"Acquiring Corporation"), to either assume the Control Company's rights and
obligations under outstanding Options or substitute options for the Acquiring
Corporation's stock for such outstanding Options. The exercise and/or vesting of
any Option that was permissible solely by reason of this paragraph 10 shall be
conditioned upon the consummation of the Transfer of Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control.
11. Provision of Information. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.
12. Options Non-Transferable. Unless otherwise provided by the Board, during
the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee and no Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution.
13. Termination or Amendment of Plan and Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan and/or
any Option at any time; provided, however, that without the approval of the
Company's stockholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 9 above), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c) no expansion in the class of persons eligible
to receive Nonqualified Stock Options. In addition to the foregoing, the
approval of the Company's stockholders shall be sought for any amendment to the
Plan or an Option for which the Board deems stockholder approval necessary in
order to comply with Rule 16b-3. In any event, no amendment may adversely affect
any then outstanding Option or any unexercised portion thereof, without the
consent of the Optionee, unless such amendment is required to enable an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock Option.
14. Continuation of Initial Plan as to Outstanding Options. Notwithstanding
any other provision to the contrary, the terms of the Initial Plan shall remain
in effect and apply to Options granted pursuant to the Initial Plan.
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IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing is the Amended and Restated Chips and Technologies, Inc. 1994
Stock Option Plan as duly adopted by the Board of Directors of the Company on
August 11, 1994 and as subsequently amended through November 9, 1995.
--------------------------
Jeffery Anne Tatum,
Secretary
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
Between
CHIPS AND TECHNOLOGIES, INC.
and
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You have been granted an option under the Amended and Restated Chips
and Technologies, Inc. 1994 Stock Option Plan (the "Plan"). This Agreement
describes the terms and conditions of your option (the "Agreement").
Number of Shares Your option is for shares of
the common stock of Chips and Technologies,
Inc., a Delaware corporation ("Chips").
Option Price You may purchase your option shares for
$ per share, which was the
closing price of the common stock of Chips on
, 199 .
Type of Option This option is intended to be an
incentive stock option as provided in section
422 of the Internal Revenue Code of 1986, as
amended (the "Code"), but Chips does not
warrant that it qualifies as such. You should
consult with your own tax advisor regarding
the tax effects of this Option and the
requirements necessary to obtain favorable
income tax treatment under section 422 of the
Code.
Grant Date The "Grant Date" of your option is , 19 .
This is the date the Board of Directors of
Chips approved your option grant.
Initial Vesting Date The "Initial Vesting Date" of your option is
, 19 . This is the date your option begins to
vest.
Exercisability You may exercise your option immediately in
its entirety after the Grant Date unless the
total value of all of your incentive stock
options from Chips which first become
exercisable in 19__ exceeds $100,000 (see
$100,000 Exercise Limitation below). However,
if you buy unvested option shares, they may
not be sold or otherwise transferred until
they become vested (see Right of Repurchase
below).
Term Your option will expire on , 19 , unless your
employment with Chips (or a parent corporation
or subsidiary corporation of Chips as defined
in section 424 of the Code) is terminated as
explained below, or unless Chips is involved
in a "transfer of control" transaction as
explained below.
Vesting of Option On the Initial Vesting Date,
of the option shares will be vested.
Thereafter, 1/48 of the option shares will
vest for each
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full month of your continuous employment with
Chips (or a parent or subsidiary corporation
of Chips) from the Initial Vesting Date. Your
option stops vesting when your employment with
Chips (or a parent corporation or subsidiary
corporation of Chips) terminates. Vesting
during an approved leave of absence is
governed by the applicable Leave of Absence
Policy in effect at the time you go on leave.
$100,000 Exercise The total value of all of your Chips'
Limitation incentive stock options (including this
option) which are exercisable for the first
time during 19__ (the value is determined at
the time each option was granted) shall not
exceed one hundred thousand dollars
($100,000). Such limitation on exercise shall
be referred to in this Agreement as the
"$100,000 Exercise Limitation." If compliance
with the $100,000 Exercise Limitation will
prevent you from exercising the option for any
vested shares for more than thirty (30) days
after the vesting date for such shares, the
option shall be deemed to be two (2) options.
The first option shall be for the maximum
number of shares that can comply with the
$100,000 Exercise Limitation without
preventing the option from being exercisable
as to vested shares. The second option, which
shall not be treated as an incentive stock
option, shall be for the balance of the shares
subject to the option and shall be exercisable
on the same terms and at the same time as set
forth in this Agreement. Unless otherwise
specified in your notice of exercise, the
first option shall be deemed to be exercised
first and then the second option shall be
deemed to be exercised.
Right of Repurchase 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
transferred until they become vested.
If your employment with Chips (or a parent
corporation or subsidiary corporation 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. If Chips wishes to
exercise its right to repurchase the unvested
shares, it must give you notice within 60 days
after (i) the termination of your employment,
or exercise of the option, if later, or (ii)
Chips has received notice of the attempted
disposition. Chips must exercise its right to
repurchase the unvested shares, if at all, for
all of the unvested shares, except as Chips
and you otherwise agree. However, Chips will
not repurchase your unvested shares if you
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transfer your unvested shares to your
ancestors, descendants, or spouse or to a
trustee for their benefit, provided that the
transferee agrees in writing 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 has
the right to assign the right of repurchase to
one or more persons as may be selected by
Chips' Board of Directors.
To ensure that the unvested shares will be
available for repurchase, you are 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.
If Chips exercises its right to repurchase
your unvested shares, payment by Chips to the
escrow agent on behalf of you or your legal
representative will be made in cash within 60
days after the date of the mailing of the
written notice. For purposes of this payment,
cancellation of any outstanding promissory
note 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 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.
The certificates for unvested shares have
stamped on them a special legend referring to
Chips' right of repurchase. As your vesting
percentage increases, you may request, at
reasonable intervals, that Chips exchange
those legended shares which have vested for
shares that are freely transferable.
Transfer of Control 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
(other than a sale, exchange, or transfer to
one or more corporations where Chips'
stockholders before such sale, exchange, or
transfer retain, directly or indirectly, at
least a majority of the beneficial interest in
the voting stock of the corporation(s) to
which the assets were transferred).
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.
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In the event of a transfer of control, all
shares acquired upon exercise of your option
shall become vested shares effective 30 days
prior to the transfer of control, unless the
Chips' Board of Directors arranges with the
surviving, continuing, successor, or
purchasing corporation, as the case may be,
for such corporation to assume Chips' rights
and obligations under this Agreement or
substitute its own option for your Chips'
option. Your option will terminate effective
as of the date of the transfer of control to
the extent that your option is 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.
Regular Termination If your employment with Chips (or a parent
corporation or subsidiary corporation of
Chips) terminates for any reason, with or
without cause, your option, to the extent
unexercised, may be exercised (to purchase
vested shares only) within 30 days after the
date of your termination.
Restrictions on You may not sell shares that you acquire by
Resale: General exercising your option at any time you are in
possession of material inside information
concerning Chips. In addition, sales of shares
that you acquire by exercising your option
will be governed by Chips' employee trading
policy, as in effect at the time of the
proposed sale.
Restrictions on If you are an officer of Chips, shares that
Resale: Officers you acquire by exercising your option may only
be sold during the officers' trading
restriction period. This period commences on
the third business day following the release
of quarterly financial results and ends
twenty-one days thereafter, unless extended by
Chips' President or Chief Financial Officer.
Notice of Exercise When you wish to exercise your option, you
must send an executed Notice of Exercise to:
Chips and Technologies, Inc.
2950 Zanker Road
San Jose, California 95134
Attn: Financial Services 1-7
Your notice must specify how many whole shares
you wish to purchase, and must contain such
representations and agreements as to your
investment intent with respect to the shares
as may be required by Chips. Your notice must
be delivered in person or by certified mail to
Chips' Stock Administrator prior to the
expiration date of the term of the Option,
accompanied by an executed copy of the then
current form of escrow instructions, if you
are exercising your option for unvested
shares, and full payment of the option
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price for the number of shares being
purchased. 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, or a money order;
- Irrevocable directions to a securities
broker approved by Chips to sell your
option shares and to deliver all or a
portion of the sale proceeds to Chips
in payment of the option price. (The
balance of the sales proceeds, if any,
will be delivered to you.) The
directions must be given by signing a
form provided by Chips.
Withholding Taxes In order to exercise your option, you must
make arrangements to pay any federal and state
withholding taxes that may be due as a result
of the option exercise. In the future, at any
time requested by Chips, you must make
arrangements to pay any federal or state
withholding taxes that may be due as a result
of any transfer of any shares acquired on
exercise of your option, the operation of any
federal or state law providing for the
imputation of interest, or the lapse of any
restriction with respect to any shares
acquired on exercise of your option.
Certificate Registration The certificate or certificates issued upon
the exercise of your option will be registered
in your name.
Restriction on Grant The grant of your option and the issuance of
of Option and Issuance shares upon the exercise of the option are
of Shares subject to compliance with all applicable
requirements of federal or state law with
respect to such securities. Your option may
not be exercised if the issuance of shares
upon such exercise would constitute a
violation of any applicable federal or state
securities law or other law or regulations. As
a condition to the exercise of your option,
Chips may require you to make any
representation or warranty to Chips as may be
necessary or
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appropriate to evidence compliance with any
applicable law or regulation. Chips may place
legends on the certificates for your option
shares referring to any applicable federal or
state securities law restrictions.
Restriction on Issuance In the event that the adoption of any
of Shares to Section 16 amendment of the Plan is subject to the
Insiders approval of Chips' stockholders in order for
the option to comply with the requirements of
Rule 16b-3, promulgated under the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), the option shall not be
exercisable prior to such stockholder approval
if you are subject to Section 16(b) of the
Exchange Act, unless the Board, in its sole
discretion, approves the exercise of the
option prior to such stockholder approval.
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.
Regardless of any marital property settlement
agreement, Chips is not obligated to honor a
Notice of Exercise from your former spouse,
nor is Chips obligated to recognize your
former spouse's interest in your option in any
other way.
Changes in Stock Appropriate adjustments shall be made in the
Subject to the Option number, exercise price and class of shares of
stock subject to the option in the event of a
stock dividend, stock split, reverse stock
split, combination, reclassification or like
change in the capital structure of Chips.
In the event of any such change in the capital
structure of Chips, any and all new
substituted or additional securities to which
you are entitled by reason of your ownership
of the shares acquired upon exercise of your
option will be immediately subject to Chips'
right of repurchase with the same force and
effect as the shares subject to the right of
repurchase immediately before such event (see
Right of Repurchase above).
Employee Rights Your option or this Agreement do not
give you the right to be retained as an
employee by Chips (or a parent corporation or
subsidiary corporation of Chips). Chips
reserves the right to terminate your
employment at any time, with or without
cause.
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 are made for dividends
or other rights if the applicable record date
occurs prior to the date your stock
certificate is issued, except in the event of
a change in the stock subject to the option as
described above.
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14
Applicable Law This Agreement will be interpreted and
enforced under the laws of the State of
California.
Other Agreements The text of the Plan 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.
Binding Effect This Agreement shall inure to
the benefit of and be binding upon the parties
hereto and their respective heirs, executors,
administrators, successors and assigns.
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, unless such
amendment is necessary in order to enable the
option to qualify as an incentive stock
option.
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.
By signing this Agreement, you 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:
-------------------------
OPTIONEE
-------------------------
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EXHIBIT B
NONQUALIFIED STOCK OPTION AGREEMENT
Between
CHIPS AND TECHNOLOGIES, INC.
and
--------------
You have been granted an option under the Amended and Restated Chips
and Technologies, Inc. 1994 Stock Option Plan (the "Plan"). This Agreement
describes the terms and conditions of your option (the "Agreement").
Number of Shares Your option is for shares of the
common stock of Chips and Technologies,
Inc., a Delaware corporation ("Chips").
Option Price You may purchase your option
shares for $ per share, which was the
closing price of the common stock of Chips
on , 199 .
Type of Option This option is intended to be
a nonqualified stock option and will not be
treated as an incentive stock option as
provided in section 422 of the Internal
Revenue Code of 1986, as amended (the
"Code").
Grant Date The "Grant Date" of your option is
, 19 . This is the date the Board
of Directors of Chips approved your option
grant.
Initial Vesting Date The "Initial Vesting Date" of your option is
, 19 . This is the date your
option begins to vest.
Exercisability You may exercise your option immediately in
its entirety 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 of Repurchase
below).
Term Your option will expire on , 19 ,
unless your employment or service with Chips
(or a parent corporation or subsidiary
corporation of Chips as defined in section
424 of the Code) is terminated as explained
below, or unless Chips is involved in a
"transfer of control" transaction as
explained below.
Vesting of Option On the Initial Vesting Date, of
the option shares will be vested.
Thereafter, 1/48 of the option shares will
vest for each full month of your continuous
employment or service with Chips (or a
parent or subsidiary corporation of Chips)
from the Initial Vesting Date. Your option
stops vesting when your employment or
service with Chips (or a parent corporation
or subsidiary corporation of Chips)
terminates. Vesting during an approved leave
of absence is
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governed by the applicable Leave of Absence
Policy in effect at the time you go on
leave.
Right of Repurchase 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 transferred until they become
vested.
If your employment or service with Chips (or
a parent corporation or subsidiary
corporation 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. If Chips wishes to exercise
its right to repurchase the unvested shares,
it must give you notice within 60 days after
(i) the termination of your employment or
service, or exercise of the option, if
later, or (ii) Chips has received notice of
the attempted disposition. Chips must
exercise its right to repurchase the
unvested shares, if at all, for all of the
unvested shares, except as Chips and you
otherwise agree. However, Chips will not
repurchase your unvested shares if you
transfer your unvested shares to your
ancestors, descendants, or spouse or to a
trustee for their benefit, provided that the
transferee agrees in writing 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 has the right to assign the right
of repurchase to one or more persons as may
be selected by Chips' Board of Directors.
To ensure that the unvested shares will be
available for repurchase, you are 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.
If Chips exercises its right to repurchase
your unvested shares, payment by Chips to
the escrow agent on behalf of you or your
legal representative will be made in cash
within 60 days after the date of the mailing
of the written notice. For purposes of this
payment, cancellation of any outstanding
promissory note 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 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.
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The certificates for unvested shares have
stamped on them a special legend referring
to Chips' right of repurchase. As your
vesting percentage increases, you may
request, at reasonable intervals, that Chips
exchange those legended shares which have
vested for shares that are freely
transferable.
Transfer of Control 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 (other than a sale, exchange,
or transfer to one or more corporations
where Chips' stockholders before such sale,
exchange, or transfer retain, directly or
indirectly, at least a majority of the
beneficial interest in the voting stock of
the corporation(s) to which the assets were
transferred).
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, all
shares acquired upon exercise of your option
shall become vested shares effective 30 days
prior to the transfer of control, unless the
Chips' Board of Directors arranges with the
surviving, continuing, successor, or
purchasing corporation, as the case may be,
for such corporation to assume Chips' rights
and obligations under this Agreement or
substitute its own option for your Chips'
option. Your option will terminate effective
as of the date of the transfer of control to
the extent that your option is 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.
Regular Termination If your employment or service
with Chips (or a parent corporation or
subsidiary corporation of Chips) terminates
for any reason, with or without cause, your
option, to the extent unexercised, may be
exercised (to purchase vested shares only)
within 30 days after the date of your
termination.
Restrictions on You may not sell shares that you acquire by
Resale: General exercising your option at any time you are
in possession of material inside information
concerning Chips. In addition, sales of
shares that you acquire by exercising your
option will be governed by Chips' employee
trading policy, as in effect at the time of
the proposed sale.
Restrictions on If you are an officer of Chips, shares that
Resale: Officers you acquire by exercising your option may
only be sold during the officers' trading
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restriction period. This period commences on
the third business day following the release
of quarterly financial results and ends
twenty-one days thereafter, unless extended
by Chips' President or Chief Financial
Officer.
Notice of Exercise When you wish to exercise your option, you
must send an executed Notice of Exercise to:
Chips and Technologies, Inc.
2950 Zanker Road
San Jose, California 95134
Attn: Financial Services 1-7
Your notice must specify how many whole
shares you wish to purchase, and must
contain such representations and agreements
as to your investment intent with respect to
the shares as may be required by Chips. Your
notice must be delivered in person or by
certified mail to Chips' Stock Administrator
prior to the expiration date of the term of
the Option, accompanied by an executed copy
of the then current form of escrow
instructions, if you are exercising your
option for unvested shares, and full payment
of the option price for the number of shares
being purchased. 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, or a money order;
- Irrevocable directions to a
securities broker approved by Chips
to sell your option shares and to
deliver all or a portion of the sale
proceeds to Chips in payment of the
option price. (The balance of the
sales proceeds, if any, will be
delivered to you.) The directions
must be given by signing a form
provided by Chips.
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Withholding Taxes In order to exercise your option, you must
make arrangements to pay any federal and
state withholding taxes that may be due as a
result of the option exercise. In the
future, at any time requested by Chips, you
must make arrangements to pay any federal or
state withholding taxes that may be due as a
result of any transfer of any shares
acquired on exercise of your option, the
operation of any federal or state law
providing for the imputation of interest, or
the lapse of any restriction with respect to
any shares acquired on exercise of your
option.
Certificate Registration The certificate or certificates
issued upon the exercise of your option will
be registered in your name.
Restriction on Grant The grant of your option and the issuance of
of Option and Issuance shares upon the exercise of the option are
of Shares subject to compliance with all applicable
requirements of federal or state law with
respect to such securities. Your option may
not be exercised if the issuance of shares
upon such exercise would constitute a
violation of any applicable federal or state
securities law or other law or regulations.
As a condition to the exercise of your
option, Chips may require you to make any
representation or warranty to Chips as may
be necessary or appropriate to evidence
compliance with any applicable law or
regulation. Chips may place legends on the
certificates for your option shares
referring to any applicable federal or state
securities law restrictions.
Restriction on Issuance In the event that the adoption of any
of Shares to Section 16 amendment of the Plan is subject to the
Insiders approval of Chips' stockholders in order for
the option to comply with the requirements
of Rule 16b-3, promulgated under the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the option shall not
be exercisable prior to such stockholder
approval if you are subject to Section 16(b)
of the Exchange Act, unless the Board, in
its sole discretion, approves the exercise
of the option prior to such stockholder
approval.
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.
Regardless of any marital property
settlement agreement, Chips is not obligated
to honor a Notice of Exercise from your
former spouse, nor is Chips obligated to
recognize your former spouse's interest in
your option in any other way.
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Changes in Stock Appropriate adjustments shall be made in the
Subject to the Option number, exercise price and class of shares
of stock subject to the option in the event
of a stock dividend, stock split, reverse
stock split, combination, reclassification
or like change in the capital structure of
Chips.
In the event of any such change in the
capital structure of Chips, any and all new
substituted or additional securities to
which you are entitled by reason of your
ownership of the shares acquired upon
exercise of your option will be immediately
subject to Chips' right of repurchase with
the same force and effect as the shares
subject to the right of repurchase
immediately before such event (see Right of
Repurchase above).
Employee Rights Your option or this Agreement do not
give you the right to be retained as an
employee by Chips (or a parent corporation
or subsidiary corporation of Chips). Chips
reserves the right to terminate your
employment at any time, with or without
cause.
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 are made for
dividends or other rights if the applicable
record date occurs prior to the date your
stock certificate is issued, except in the
event of a change in the stock subject to
the option as described above.
Applicable Law This Agreement will be interpreted and
enforced under the laws of the State of
California.
Other Agreements The text of the Plan 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.
Binding Effect This Agreement shall inure to the
benefit of and be binding upon the parties
hereto and their respective heirs,
executors, administrators, successors and
assigns.
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.
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 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: __________________________
OPTIONEE
By: __________________________
7