AMENDED AND RESTATED
CHIPS AND TECHNOLOGIES, INC.
1985 STOCK OPTION PLAN
1. Purpose. The Chips and Technologies, Inc., 1985 Stock Option Plan
was adopted on January 11, 1985 (the "Prior Plan"). On January 8, 1987, the
Prior Plan was amended and restated as set forth herein (the "Plan"). The Plan
is established to create additional incentive for key employees, directors, and
consultants of Chips and Technologies, Inc. and any present or future parent
and/or subsidiary corporations of such corporation (collectively referred to as
the "Company") to promote the financial success and progress of the Company. For
purposes of the Plan, a parent corporation and a subsidiary corporation shall be
as defined in sections 425(e) and 425(f) of the Internal Revenue Code of 1986,
as amended (referred to herein as the "Code" or the "1986 Code"). The Internal
Revenue Code of 1954 as amended prior to the Tax Reform Act of 1986, shall be
referred to herein as the "1954 Code."
2. Administration. The Plan shall be administered by the Board of
Directors (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 it 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. Options may be either incentive stock options as defined in section 422A
of the Code (including any future amendments or replacements of such section)
("Incentive Stock Options") or nonqualified stock options.
3. Eligibility.
(a) Eligible Persons. The Options may be granted only to
employees (including officers), directors and consultants of the Company;
provided, however, that a director of the Company shall not be eligible to
receive an Option unless the Board has appointed a committee to administer the
Plan and the director is not a member of such committee. The Board shall, in the
Board's sole discretion, determine which persons shall be granted Options (an
"Optionee"). A director or consultant of the Company shall be eligible to be
granted only a nonqualified stock option unless the director or consultant is
also an employee of the Company. An Optionee may, if otherwise eligible, be
granted additional Options.
(b) Fair Market Value Limitation. The aggregate fair market
value of the stock for which an Optionee may be granted Incentive Stock Options
in any calendar year under all stock option plans of the Company, including the
Plan, shall, (i) for Options granted before January 1, 1987, comply with the
limitations set forth in section 422A(b)(8) of the 1954 Code (i.e., shall not
exceed One Hundred Thousand Dollars ($100,000) plus any unused limit carryover
to such year determined in accordance with section 422A(c)(4) of the 1954 Code)
and (ii) for Options granted after December 31, 1986, comply with the
limitations set forth in section 422A(b)(7) of the 1986 Code (i.e., shall not
become exercisable for the first time during any calendar year at a rate in
excess of One Hundred Thousand Dollars ($100,000)). Such limitations as applied
to an Incentive Stock Option shall be referred to as the "fair market value
limitation." In the event of an amendment to section 422A of the Code, this
paragraph 3(b) shall be automatically amended to make this provision no more
restrictive to the Optionee than necessary to ensure qualification of the
Incentive Stock Option as meeting the requirements of section 422A of the Code.
In the event an Optionee receives an Option intended to be an Incentive Stock
Option which is subsequently determined to have exceeded the fair market value
limitation, the Option shall be amended, if necessary in accordance with
applicable Treasury Regulations and rulings to preserve, as the first priority
to the maximum possible extent, the status of the Option as an Incentive Stock
Option and to preserve as a second priority, to the maximum possible extent, the
total number of shares of Stock subject to the Option.
4. Shares Subject to Option. The maximum number of shares which may be
issued under the Plan shall be 17,200,000 shares of the Company's authorized but
unissued common stock, subject to adjustment as provided in Paragraph 7 below.
In the event that any outstanding Option for any reason expires or is terminated
and/or shares subject to repurchase are repurchased by the Company, the shares
of common stock allocable to the unexercised portion of such Option, or so
repurchased, 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 January 11, 1985.
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 for which the Option shall be granted, the
option price of the Option, the exercisability of the Option, whether the Option
is a nonqualified stock option or an Incentive Stock Option, and all other terms
and conditions of the Option not inconsistent with this Paragraph 6. Options
granted pursuant to the Plan shall be evidenced by written agreements specifying
the number of shares 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 shall be determined as follows:
(1) for Incentive Stock Options, the option price shall be not
less than the fair market value, as determined by the Board, of the shares of
common stock of the Company on the date of the granting of the Option;
(2) for 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 the Company within the meaning of section 422A(b)(6)
of the Code and/or ten percent (10%) of the total combined value of all classes
of stock of the Company within the meaning of section 422A(b)(6) of the Code (a
"Ten Percent Owner Optionee"), the option price for
any Option granted to such Ten Percent Owner Optionee shall not be less than one
hundred ten percent (110%) of the fair market value of the shares on the date
the Option is granted; and
(3) the option price for nonqualified stock options shall be
determined by the Board on the date the option is granted (i) for persons who
are subject to Section 16 of the Securities Exchange Act of 1934, as amended,
shall not be less than the fair market value, as determined by the Board, of the
shares of common stock of the Company on the date of the granting of the Option
and (ii) for persons who are not subject to Section 16 of the Securities
Exchange Act of 1934, as amended, and may be less than the fair market value of
the common stock of the Company on the date of the granting of the Option, but
in no event shall the option price be less than the par value of the shares.
(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
Option intended to be an Incentive Stock Option shall be exercisable after the
expiration of ten (10) years after the date such Option is granted; (ii) no
Option intended to be a nonqualified stock option shall be exercisable after the
expiration of ten (10) years and one (1) month after the date such Option is
granted, and (iii) no Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years from the date such Option is
granted.
(c) Payment of Option Price. Payment of the option price for
the number of shares being purchased pursuant to any Option shall be made (1) in
cash or cash equivalent, (2) by tender to the Company of shares of the Company's
common stock which (i) either have been owned by the Optionee for more than six
(6) months or were not acquired, directly or indirectly, from the Company, and
(ii) have a fair market value, as determined by the Board, not less than the
option price, or (3) if specifically permitted by the Board and set forth in the
Optionee's Option, by the Optionee's promissory note if the Optionee is an
employee and/or director of the Company at the time the Option is granted. The
Board may at any time or from time to time, by adoption of or by amendment to
the standard form of Incentive Stock Option Agreement set forth in Paragraph
6(f) 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 the tender of
the Company's common stock to the extent such tender of stock would constitute a
violation of the provisions of Section 160 of the Delaware General Corporation
Law, or the corresponding provisions of other applicable law. In the event the
Board permits the exercise of an Option in whole or in part by means of the
Optionee's promissory note, the Board shall determine the provisions of such
note; provided, however, that such note shall not represent more than the lesser
of (1) one hundred percent (100%) of the option price or (2) the maximum amount
permitted under the Delaware General Corporation Law or other applicable law,
the principal shall be due and payable not more than five (5) years after the
Option is granted, and interest shall be payable at least annually and be at
least equal to the minimum interest rate to avoid imputed interest pursuant to
all applicable sections of the Code. The Board shall have the authority from
time to time to permit the Optionee to secure any promissory note used to
exercise an Option with collateral other than the Company's common stock.
(d) Sequential Exercise Limitation. An Incentive Stock Option
granted before January 1, 1987, shall not be exercisable if there is
outstanding, within the meaning of section 422A of the 1954 Code, any other
Incentive Stock Option (as defined in the 1954 Code) which was granted to the
Optionee by the Company prior to the grant of the Option. The foregoing
restriction on exercise shall not apply to any option granted after December 31,
1986. In the event of an amendment to section 422A of the Code, this Paragraph
6(d) shall be automatically amended to make this provision no more restrictive
to the Optionee than necessary if there is outstanding, within the meaning of
section 422A of the 1954 Code, any other Incentive Stock Option (as defined in
the 1954 Code) which was granted to the Optionee by the Company prior to the
grant of the Option. The foregoing restriction on exercise shall not apply to
any option granted after December 31, 1986. In the event of an amendment to
section 422A of the Code, this Paragraph 6(d) shall be automatically amended to
make this provision no more restrictive to the Optionee than necessary ions.
Unless otherwise provided for by the Board at the time an Option is granted, an
Option designated by the Board 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.
(ii) Authority to Vary Terms. The Board shall have the authority
from time to time to vary the terms of the option agreement set forth as Exhibit
A 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 option agreement or agreements shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority (A) to grant Options which are not immediately
exercisable, and (B) for Options which are intended to be nonqualified stock
options, to eliminate those provisions set forth in Exhibit A required to
satisfy the provisions of section 422A of the Code.
7. Effect of Change in Stock Subject to Plan. Appropriate adjustments
shall be made in the number and class of shares of stock subject to this Plan
and to any outstanding Options and in the exercise 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.
8. 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 shareholders.
9. Assignment of Repurchase Option. In the event that the Company is
unable, pursuant to Section 160 of the Delaware General Corporation Law, or the
corresponding provisions of other applicable law, to exercise its Unvested Share
Repurchase Option (as defined in the Incentive Stock Option Agreement) to
repurchase any unvested shares purchased pursuant to an Option and if the fair
market value of the stock to be repurchased is greater than the repurchase
price, the Board may assign such Unvested Share Repurchase Option to one or more
persons as it may select, provided that the Company shall receive aggregate cash
consideration for such assignment equal to or greater than the fair market value
of the stock which may be repurchased under such Unvested Share Repurchase
Option (as determined by the Board) minus the repurchase price of such stock.
The requirements of this Paragraph 9 regarding the minimum consideration to be
received by the Company shall not inure to the benefit of the Optionee whose
shares are being repurchased so that failure by the Company to comply with the
provisions of this Paragraph 9 shall not be available to such Optionee as a
defense or otherwise to prevent the repurchase of the Optionee's unvested stock
by an assignee of the Unvested Share Repurchase Option.
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 shareholders
of the Control Company of all or substantially all of the stock of the Control
Company where the shareholders 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 shareholders 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
(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 shareholders 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, the Board,
in its sole discretion, shall either (i) provide that any unexercisable portion
of the Option shall be immediately exercisable 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 an option 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.
11. Termination or Amendment of Plan. The Board may terminate or amend
the Plan at any time; provided, however, that without the approval of the
Company's shareholders, there shall be (i) no increase in the total number of
shares covered by the Plan (except by operation of the provisions of Paragraph 7
above), and (ii) no change in the class of persons eligible to receive Options.
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 the Option to qualify as an incentive stock
option (as defined in the Code).
12. Continuation of Prior Plan as to Outstanding Options.
Notwithstanding any other provision of the Plan to the contrary, the terms of
the Prior Plan shall remain in effect and apply to Options granted pursuant to
the Prior Plan.
STOCK OPTION AGREEMENT
BETWEEN
CHIPS AND TECHNOLOGIES, INC.
AND
[[firstname lastname]]
GRANT NUMBER [[grantnumber]]
You have been granted an option under the Amended and Restated Chips
and Technologies, Inc. 1985 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 shares of
the common stock of Chips and Technologies,
Inc., a Delaware corporation ("Chips").
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
provided in section 422 of the Internal
Revenue Code of 1986, as amended (the
"Code").
GRANT DATE The "Grant Date" of your option is
grantdate. 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 [[period1vestdate]]. 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
[[period1expiredate]], 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 OPTIONS On the Initial Vesting Date,
period1sharesvesting shares of the option
will be vested.
Thereafter, 1/48th of the option shares will
vest for eachfull month of your continuous
employment with 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.
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 be 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), 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 allow you to
transfer your unvested shares to your
ancestors, descendents, 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 make 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 principle and any
accrued interest canceled. Within 30 days
after payment by Chips, the escrow agent will
give the shares which Chips has purchase 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 you vesting
percentage increases, you may request, at
reasonable intervals, the 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, Chips'
Board of Directors, in its sole discretion,
will either (i) provide that all shares
acquired on exercises of your option become
vested shares effective upon the transfer of
control, or (ii) arrange with the surviving,
continuing, successor, or purchasing
corporation, as the case may be, that such
corporation assume Chips' rights and
obligations under this Agreement. 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, will expire on the date of
termination.
RESTRICTIONS ON
RESALE: GENERAL You may not sell shares (that you
acquire by exercising your option) at any
time you are in possession of material inside
information. 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
RESALE: OFFICERS If you are an officer of Chips,
shares that you acquire by exercising your
option may only be sold during the officer's
trading window. This window commences on the
third day following the release of quarterly
financial results and ends ten business 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.
3050 Zanker Road
San Jose, CA 95134
Attn: Financial Services 1-7
Your notice must specify how many whole
shares you wish to purchase, and must contain
such representation 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.
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
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 OF OPTION
AND ISSUANCE OF
SHARES
The grant of your option and the issuance of
shares upon the exercise of the option is
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.
TRANSFER OF OPTION Prior to your death, only you may exercise
your option, and you can not 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.
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 in such event 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 a 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 Plan 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 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.
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.
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:_____________________________
JAMES STAFFORD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
OPTIONEE
BY:____________________________