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MICROCHIP TECHNOLOGY INCORPORATED
1993 STOCK OPTION PLAN
AMENDED THROUGH APRIL 25, 1997
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TABLE OF CONTENTS
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ARTICLE I
GENERAL
1.1 PURPOSE OF THE PLAN.................................................................................... 1
(a) Amendment..................................................................................... 1
(b) Purpose....................................................................................... 1
(c) Effective Date................................................................................ 1
(d) Successor to 1989 Plan......................................................................... 2
(e) Parent/Subsidiaries........................................................................... 2
1.2 STRUCTURE OF THE PLAN................................................................................... 3
(a) Stock Programs................................................................................. 3
(b) General Provisions............................................................................ 3
1.3 ADMINISTRATION OF THE PLAN............................................................................. 3
(a) Bifurcation of Administration................................................................. 3
(b) Affiliate Administration....................................................................... 3
(c) Non-Affiliate Administration.................................................................. 4
(d) Term on Committee............................................................................. 4
(e) Authority of Plan Administrators.............................................................. 4
(f) Indemnification................................................................................ 5
1.4 ELIGIBLE PERSONS UNDER THE PLAN........................................................................ 5
(a) Discretionary Option Grant..................................................................... 5
(b) Automatic Option Grant Program................................................................. 5
1.5 STOCK SUBJECT TO THE PLAN............................................................................... 6
(a) Amendment...................................................................................... 6
(b) Available Shares............................................................................... 6
(c) Adjustments for Issuances...................................................................... 6
(d) Adjustments for Organic Changes................................................................ 7
(e) Limitation on Grants to Employees.............................................................. 7
ARTICLE II
DISCRETIONARY OPTION GRANT PROGRAM
2.1 TERMS AND CONDITIONS OF OPTIONS......................................................................... 8
(a) General........................................................................................ 8
(b) Option Price................................................................................... 8
(c) Payment of Option Price........................................................................ 8
(d) Fair Market Value.............................................................................. 9
(e) Term and Exercise of Options................................................................... 9
(f) Termination of Service.........................................................................10
(g) Discretion to Accelerate Vesting.............................................................. 11
(h) Discretion to Extend Exercise Period.......................................................... 11
(i) Definitions................................................................................... 11
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(j) Stockholder Rights............................................................................ 11
(k) Repurchase Rights............................................................................. 12
2.2 INCENTIVE OPTIONS...................................................................................... 12
(a) General....................................................................................... 12
(b) Dollar Limitation............................................................................. 13
(c) 10% Stockholder............................................................................... 13
(d) Application................................................................................... 13
2.3 CORPORATE TRANSACTIONS................................................................................. 13
(a) Definition.................................................................................... 13
(b) Acceleration of Option........................................................................ 14
(c) Termination and Options....................................................................... 14
(d) Adjustments on Assumption or Continuation..................................................... 14
(e) Discretion to Accelerate...................................................................... 15
(f) Plan Not to Affect Corporation................................................................ 15
2.4 CHANGE IN CONTROL...................................................................................... 15
(a) Definition.................................................................................... 15
(b) Discretion to Accelerate...................................................................... 15
(c) Exercise Rights................................................................................16
2.5 INCENTIVE OPTIONS...................................................................................... 16
ARTICLE III
RESERVED
ARTICLE IV
AUTOMATIC OPTION GRANT PROGRAM
4.1 TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS.........................................................16
(a) Amount and Date of Grant...................................................................... 16
(b) Exercise Price................................................................................ 17
(c) Method of Exercise............................................................................ 17
(d) Payment Price..................................................................................17
(e) Exercise Date................................................................................. 18
(f) Term of Option................................................................................ 18
(g) Vesting........................................................................................19
(h) Limited Transferability....................................................................... 19
4.2 CORPORATE TRANSACTION.................................................................................. 19
4.3 CHANGE IN CONTROL...................................................................................... 19
4.4 MISCELLANEOUS PROVISIONS............................................................................... 20
(a) Corporation Rights............................................................................ 20
(b) Privilege of Stock Ownership.................................................................. 20
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TABLE OF CONTENTS
continued
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ARTICLE V
MISCELLANEOUS
5.1 AMENDMENT OF THE PLAN AND AWARDS....................................................................... 20
(a) Board Authority............................................................................... 20
(b) Options Issued Prior to Stockholder Approval.................................................. 20
(c) Rule 16b-3 Plan............................................................................... 21
5.2 TAX WITHHOLDING........................................................................................ 21
(a) General....................................................................................... 21
(b) Shares to Pay for Withholding................................................................. 21
(i) Stock Withholding.................................................................... 21
(ii) Stock Delivery....................................................................... 21
5.3 EFFECTIVE DATE AND TERM OF PLAN........................................................................ 22
(a) Effective Date................................................................................ 22
(b) Incorporation of 1989 Plan.................................................................... 22
(c) Discretion.................................................................................... 22
(d) Termination of Plan........................................................................... 22
5.4 USE OF PROCEEDS........................................................................................ 22
5.5 REGULATORY APPROVALS................................................................................... 22
(a) General....................................................................................... 22
(b) Securities Registration....................................................................... 23
5.6 NO EMPLOYMENT/SERVICE RIGHTS........................................................................... 23
5.7 MISCELLANEOUS PROVISIONS............................................................................... 23
(a) Assignment.................................................................................... 23
(b) Choice of Law................................................................................. 23
(c) Plan Not Exclusive............................................................................ 24
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MICROCHIP TECHNOLOGY INCORPORATED
1993 STOCK OPTION PLAN
AMENDED THROUGH APRIL 25, 1997
ARTICLE I
GENERAL
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1.1 PURPOSE OF THE PLAN
(a) Amendment. On January 19, 1993, the Board of Directors
(the "Board") of Microchip Technology Incorporated, a Delaware corporation (the
"Corporation") adopted the 1993 Stock Option/Stock Issuance Plan. On April 23,
1993 and September 14, 1993, the Board amended the Plan authorizing additional
available shares of Common Stock. On October 7, 1993, the Board amended and
restated the Plan as stated herein. On April 18, 1994, the Board amended the
Plan authorizing additional available shares of Common Stock, subject to
stockholder approval. On January 20, and April 26, 1995, the Board amended the
Plan authorizing, among other matters, additional available shares of Common
Stock, subject to stockholder approval and the elimination of the stock issuance
portion of the Plan. Any options outstanding under the Plan before this
amendment shall remain valid and unchanged. On April 25, 1997, the Board amended
the Plan authorizing, among other matters, additional available shares of Common
Stock, subject to stockholder approval.
(b) Purpose. This 1993 Stock Option Plan, amended through
April 25, 1997 ("Plan") is intended to promote the interests of the Corporation
by providing (i) key employees (including officers) of the Corporation (or its
parent or subsidiary corporations) who are responsible for the management,
growth and financial success of the Corporation (or its parent or subsidiary
corporations), (ii) non-employee members of the Corporation's Board of Directors
(the "Board") and (ii) consultants and other independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary corporations)
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the corporation as an incentive for them to remain in
the service of the Corporation (or its parent or subsidiary corporations).
(c) Effective Date. The Plan became effective on the first
date on which the shares of the Corporation's common stock are registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "1934
Act"). Such date is hereby designated as the Effective Date of the Plan. The
effective date
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of any amendments to the Plan shall be as of the date of Board approval.
Notwithstanding the foregoing, certain amendments referenced herein must be
approved by the stockholders of the Corporation.
(d) Successor to 1989 Plan. This Plan shall serve as the
successor to the Corporation's 1989 Stock Option Plan (the "1989 Plan"), and no
further option grants or stock issuances shall be made under the 1989 Plan from
and after the Effective Date of this Plan. All options outstanding under the
1989 Plan on such Effective Date are hereby incorporated into this Plan and
shall accordingly be treated as outstanding options under this Plan. However,
each outstanding option so incorporated shall continue to be governed solely by
the express terms and conditions of the instrument evidencing such grant, and no
provision of this Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such incorporated options with respect to their
acquisition of shares of the Corporation's common stock thereunder. All
outstanding unvested share issuances under the 1989 Plan shall continue to be
governed solely by the express terms and conditions of the instruments
evidencing such issuances, and no provision of this Plan shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
unvested shares.
(e) Parent/Subsidiaries. For purposes of the Plan, the
following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation:
(i) Any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation shall be
considered to be a parent of the corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in any other corporation in such
chain.
(ii) Each corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in any other corporation in such
chain.
(f) All references herein to number of shares of Common Stock
have been restated to reflect a 2-for-1 stock split of the Common Stock effected
on September 14, 1993, a 3-for-2 stock split of the Common Stock effected on
April 4, 1994, a 3-for-2 split of
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the Common Stock effected on November 8, 1994, and a 3-for-2 split of the Common
Stock effected on January 6, 1997.
1.2 STRUCTURE OF THE PLAN
(a) Stock Programs. The Plan shall be divided into two
separate components: the Discretionary Option Grant Program specified in Article
II and the Automatic Option Grant Program specified in Article IV. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase shares of Common Stock
in accordance with the provisions of Article II. Under the Automatic Option
Grant Program, non-employee members of the Board will be automatically granted
options to purchase shares of the Common Stock in accordance with the provisions
of Article IV.
(b) General Provisions. Unless the context clearly indicates
otherwise, the provisions of Articles I and V shall apply to the Discretionary
Option Grant Program and the Automatic Stock Grant Program, and shall
accordingly govern the interests of all individuals under the Plan.
1.3 ADMINISTRATION OF THE PLAN
(a) Bifurcation of Administration. The eligible persons under
the Discretionary Option Grant Program shall be divided into two groups and
there shall be a separate administrator for each group. One group shall be
comprised of eligible persons that are "Affiliates." For purposes of the Plan,
the term "Affiliates" shall mean (i) all "executive officers" as that term is
defined in Rule 16a-1(f) promulgated under the Securities and Exchange Act of
1934 as amended (the "1934 Act"), (ii) all directors of the Company, and (iii)
all persons who own 10% or more of the Company's issued and outstanding common
stock. The other group shall be comprised of all eligible persons under the Plan
that are not Affiliates ("Non-Affiliates").
(b) Affiliate Administration. The power to administer the
Discretionary Option Grant Program with respect to eligible persons that are
Affiliates shall be vested with a committee (the "Senior Committee") of two (2)
or more non-employee Board members appointed by the Board. No Board member shall
be eligible to serve on the Senior Committee if such individual has, within the
relevant period designated below, received an option grant or direct stock
issuance under this Plan (not including any option grants made pursuant to the
Automatic Option Grant Program set forth in Article IV) or any other stock plan
of the Corporation (or any parent or subsidiary corporation):
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(i) for each of the initial members of the Committee,
the period commencing with the Effective Date of the Plan and ending with the
date of his or her appointment to the Senior Committee, or
(ii) for any successor or substitute member, the
twelve-month period immediately preceding the date of his or her appointment to
the Senior Committee or (if shorter) the period commencing with the Effective
Date of the Plan and ending with the date of his or her appointment to the
Senior Committee.
(c) Non-Affiliate Administration. The power to administer the
Discretionary Option Grant Program with respect to eligible persons that are not
Non-Affiliates shall be vested with the Board. The Board, however, may at any
time appoint a committee (the "Employee Committee") of one or more persons who
are members of the Board and delegate to such Employee Committee the power, in
whole or in part, to administer the Discretionary Stock Option Grant Program
with respect to the Non-Affiliates.
(d) Term on Committee. Members of the Senior Committee and the
Employee Committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time. The Board at
any time may terminate the functions of the Employee Committee and reassume all
powers and authority previously delegated to such Committee.
(e) Authority of Plan Administrators. The Board, the Employee
Committee, and the Senior Committee, whichever is applicable, shall each be
referred to herein as a "Plan Administrator." Each Plan Administrator shall have
the authority and discretion, with respect to its administered group, to select
which eligible persons shall participate in the Plan. Unless otherwise required
by law, decisions among members of a Plan Administrator shall be by majority
vote. With respect to each administered group, the applicable Plan Administrator
shall have full power and authority (subject to the express provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for the
proper administration of the Discretionary Option Grant Program and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding option grants or stock issuances thereunder as it
may deem necessary or advisable. All decisions made by a Plan Administrator
shall be final and binding on all parties in its administered group who have an
interest in the Discretionary Option Grant Program or any outstanding option
thereunder. The Plan Administrator shall also have full authority to determine,
with respect to the option grants made under the Discretionary Option Program,
the number of shares to be covered by each such grant, the status of the granted
option as either an incentive stock option ("Incentive option") which satisfies
the requirements of Section
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422 of the Internal Revenue Code or a non-statutory option not intended to meet
such requirements, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding.
(f) Indemnification. In addition to such other rights of
indemnification as they may have, the members of each Plan Administrator shall
be indemnified and held harmless by the Company, to the extent permitted under
applicable law, for, from and against all costs and expenses reasonably incurred
by them in connection with any action, legal proceeding to which any such member
thereof may be a party, by reason of any action taken or failed to be taken,
under or in connection with the Plan or any rights granted thereunder, and
against all amounts paid by them in settlement thereof or paid by them in
satisfaction of a judgment of any such action, suit or proceeding, except a
judgment based upon a finding of bad faith.
1.4 ELIGIBLE PERSONS UNDER THE PLAN
(a) Discretionary Option Grant Program. The persons eligible
to participate in the Discretionary Option Grant Program under Article II are as
follows:
(i) officers and other key employees of the
Corporation (or its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations);
(ii) non-employee members of the Board (excluding
those current members of the Senior Committee); and
(iii) those consultants or other independent
contractors who provide valuable services to the Corporation (or its parent or
subsidiary corporations).
(b) Automatic Option Grant Program. The persons eligible to
participate in the Automatic Option Grant Program shall be limited to
non-employee Board members. A non-employee Board member shall not be eligible to
participate in the Automatic Option Grant Program, however, if such individual
has at any time been in the prior employ of the Corporation (or any parent or
subsidiary corporation). Unless otherwise provided in the Plan, persons who are
eligible under the Automatic Option Grant Program may also be eligible to
receive option grants under the Discretionary Option Grant Program in effect
under this Plan.
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1.5 STOCK SUBJECT TO THE PLAN
(a) Amendment. Under the Plan, 6,072,227 shares were
originally authorized to be issued under the Plan (constituting 5,565,977
authorized shares under the 1989 Plan and rolled over into this Plan plus
506,250 additional shares authorized by the Board on January 19, 1993). On April
23, 1993, an additional 2,193,750 shares were authorized by the Board, subject
to stockholder approval at the next stockholders' meeting. At that point, the
total available authorized shares were 8,265,977. On September 14, 1993, the
Board authorized the number of shares of Common Stock issuable under the Plan to
be increased by 2,281,500 shares. On April 18, 1994, the Board authorized the
number of shares of Common Stock issuable under the Plan to be increased by
2,925,000 shares. On January 20, 1995 and April 26, 1995, the Board authorized
the number of shares of Common Stock issuable under the Plan to be increased by
1,425,000 shares, subject to Stockholder approval, such that the maximum number
of shares issuable for the term of the Plan shall be as set forth in Section
1.5(b) below.
(b) Available Shares. Shares of the Corporation's common stock
(the "Common Stock") shall be available for issuance under the Plan and shall be
drawn from either the Corporation's authorized but unissued shares of Common
Stock or from reacquired shares of Common Stock, including shares repurchased by
the Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 14,897,477
shares, subject to adjustment from time to time in accordance with the
provisions of this Section 1.5. To the extent one or more outstanding options
under the 1989 Plan which have been incorporated into this Plan (as adjusted for
the 1993 Stock Dividend) are subsequently exercised, the number of shares issued
with respect to each such option shall reduce, on a share-for-share basis, the
number of shares available for issuance under this Plan.
(c) Adjustments for Issuances. Should one or more outstanding
options under this Plan (including outstanding options under the 1989 Plan
incorporated into this Plan) expire or terminate for any reason prior to
exercise in full, then the shares subject to the portion of each option not so
exercised shall be available for subsequent option grant under the Plan. All
share issuances under the Plan, whether or not the shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan,
shall reduce on a share-for-share basis the number of shares of Common Stock
available for subsequent option grants under the Plan. In addition, should the
exercise price of an outstanding option under the Plan (including any option
incorporated from the 1989 Plan) be paid with shares of Common
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Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option under the Plan, then the
number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option is exercised, and not
by the net number of shares of Common Stock actually issued to the option
holder.
(d) Adjustments for Organic Changes. Should any change be made
to the Common Stock issuable under the Plan by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, then appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities and price per share in effect
under each option outstanding under either the Discretionary Option Grant
Program or the Automatic Option Grant Program and (iii) the number and/or class
of securities and price per share in effect under each outstanding option
incorporated into this Plan from the 1989 Plan. Such adjustments to the
outstanding options are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Board shall be final, binding and conclusive. The
amount of options granted automatically under the Automatic Option Grant Program
on the Annual Automatic Grant Date and on the Initial Automatic Grant Date shall
not be adjusted regardless of any organic changes made to the Common Stock
issuable under the Plan.
(e) Limitations on Grants to Employees. Notwithstanding any
other provision herein to the contrary, the following limitations shall apply to
grants of options to Employees:
(i) No employee shall be granted, in any fiscal year
of the Corporation, options to purchase more than three hundred thousand
(300,000) shares.
(ii) In connection with his or her initial
employment, an Employee may be granted options to purchase up to an additional
five hundred thousand (500,000) shares which shall not count against the limit
set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Corporation's
capitalization as described in Section 1.5(d).
(iv) If an option is cancelled in the same fiscal
year of the Corporation in which such option was granted (other than in
connection with a transaction described in Section
7
1.5(d)), the cancelled option will be counted against the limit set forth in
Section 1.5(e)(i). For this purpose, if the exercise price of an option is
reduced, the transaction will be treated as a cancellation of the option and the
grant of a new option.
ARTICLE II
DISCRETIONARY OPTION GRANT PROGRAM
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2.1 TERMS AND CONDITIONS OF OPTIONS
(a) General. Options granted to eligible persons ("Optionees")
pursuant to the Discretionary Option Grant Program set forth in this Article II
shall be authorized by action of the Plan Administrator and, at the Plan
Administrator's discretion, may be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted non-statutory options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section 2.2 hereof.
(b) Option Price. The option price per share shall be fixed by
the Plan Administrator in accordance with the following provisions:
(i) The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of such Common Stock on the grant date;
and
(ii) The option price per share of the Common Stock
subject to a non-statutory stock option shall in no event be less than one
hundred percent (100%) of the fair market value of such Common Stock on the
grant date.
(c) Payment of Option Price. The option price shall become
immediately due upon exercise of the option and shall be payable in one of the
following alternative forms specified below:
(i) full payment in cash or check drawn to the
Corporation's order;
(ii) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (A) shall provide
irrevocable written instructions to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the
8
settlement date, sufficient funds to cover the aggregate option price payable
for the purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Corporation in connection with
such purchase and (B) shall provide written directives to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
For purposes of this Section 2.1(c), the Exercise Date shall be the date on
which written notice of the option exercise is delivered to the Corporation.
Except to the extent the sale and remittance procedure is utilized in connection
with the exercise of the option, payment of the option price for the purchased
shares must accompany such notice.
(d) Fair Market Value. The fair market value per share of
Common Stock shall be determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the NASDAQ
National Market System, the fair market value shall be the closing price per
share on the date in question, as such price is reported by the National
Association of Securities Dealers through the NASDAQ National Market System or
any successor system. If there is no reported closing selling price for the
Common Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of fair
market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair market value
shall be the closing selling price per share on the date in question on the
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the fair market value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
(e) Term and Exercise of Options. Each option granted under
this Discretionary Option Grant Program shall be exercisable at such time or
times and during such period as is determined by the Plan Administrator and set
forth in the instrument evidencing the grant. No such option, however, shall
have a maximum term in excess of ten (10) years from the grant date. During the
lifetime of the Optionee, the option shall be exercisable only by the Optionee
and shall not be assignable or transferable by the
9
Optionee other than by will or by the laws of descent and distribution following
the Optionee's death.
(f) Termination of Service. The following provisions shall
govern the exercise period applicable to any outstanding options held by the
Optionee at the time of cessation of Service or death:
(i) Should an Optionee cease Service for any reason
(including permanent disability as defined in Section 22(e)(3) of the Internal
Revenue Code but not including death) while holding one or more outstanding
options under this Article II, then none of those options shall (except to the
extent otherwise provided pursuant to Section 2.1(g) below) remain exercisable
for more than a ninety (90) day period (or such shorter or longer period
determined by the Plan Administrator and set forth in the instrument evidencing
the grant, but not to exceed twelve (12) months) measured from the date of such
cessation of Service.
(ii) Any option held by the Optionee under this
Article II and exercisable in whole or in part on the date of his or her death
may be subsequently exercised by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
Such exercise, however, must occur prior to the earlier of six months following
the date of optionee's death or the specified expiration date of the option
term. Upon the occurrence of the earlier event, the option shall terminate and
cease to be outstanding.
(iii) Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option term.
(iv) During the applicable post-Service exercise
period, the option shall not be exercisable for more than the number of shares
(if any) in which the Optionee is vested at the time of his or her cessation of
Service (less any option shares subsequently purchased by the Optionee prior to
death). Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to be outstanding with respect to any vested shares
for which the option has not otherwise been exercised. However, each outstanding
option shall immediately terminate and cease to be outstanding, at the time of
the Optionee's cessation of Service, with respect to any shares for which the
option is not otherwise at that time exercisable or in which the Optionee is not
otherwise at that time vested.
(v) Should (A) the optionee's service be terminated
for misconduct (including, but not limited to, any act
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of dishonesty, willful misconduct, fraud or embezzlement) or (B) the Optionee
make any unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations, then in any
such event all outstanding options held by the Optionee under this Article II
shall terminate immediately and cease to be outstanding.
(g) Discretion to Accelerate Vesting. The Plan Administrator
shall have complete discretion, exercisable either at the time the option is
granted or at any time while the option remains outstanding, to permit one or
more options held by the Optionee under this Article II to be exercised, during
the limited post-Service exercise period applicable under Section 2.1(f) above,
not only with respect to the number of vested shares of Common Stock for which
each such option is exercisable at the time of the optionee's cessation of
Service but also with respect to one or more subsequent installments of vested
shares for which the option would otherwise have become exercisable had such
cessation of Service not occurred.
(h) Discretion to Extend Exercise Period. The Plan
Administrator shall also have full power and authority to extend the period of
time for which the option is to remain exercisable following the Optionee's
cessation of Service or death from the limited period in effect under Section
2.1(f) above to such greater period of time as the Plan Administrator shall deem
appropriate. In no event, however, shall such option be exercisable after the
specified expiration date of the option term.
(i) Definitions. For purposes of the foregoing provisions of
this Section 2.1 (and for all other purposes under the Discretionary Option
Grant Program):
(i) The Optionee shall (except to the extent
otherwise specifically provided in the applicable stock option agreement) be
deemed to remain in Service for so long as such individual renders services on a
periodic basis to the Corporation (or any parent or subsidiary corporation) in
the capacity of an Employee, a non-employee member of the Board or an
independent consultant or advisor.
(ii) The Optionee shall be considered to be an
Employee for so long as he or she remains in the employ of the Corporation or
one or more parent or subsidiary corporations, subject to the control and
direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
(j) Stockholder Rights. An Optionee shall have no stockholder
rights with respect to any shares covered by the option
11
until such individual shall have exercised the option and paid the option price
for the purchased shares.
(k) Repurchase Rights. The shares of Common Stock acquired
upon the exercise of any Article II option grant may be subject to repurchase by
the Corporation in accordance with the following provisions:
(i) The Plan Administrator shall have the discretion
to authorize the issuance of unvested shares of Common Stock under this Article
II. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.
(ii) All of the Corporation's outstanding repurchase
rights under this Article II shall automatically terminate, and all shares
subject to such terminated rights shall immediately vest in full, upon the
occurrence of any Corporate Transaction under Section 2.3 hereof, except to the
extent: (A) any such repurchase right is expressly assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction or
(B) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
(iii) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the Optionee's
cessation of Service, to cancel the Corporation's outstanding repurchase rights
with respect to one or more shares purchased or purchasable by the Optionee
under this Discretionary Option Grant Program and thereby accelerate the vesting
of such shares in whole or in part at any time.
2.2 INCENTIVE OPTIONS
(a) General. The terms and conditions specified below shall be
applicable to all incentive options ("Incentive Options") granted under this
Article II pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Incentive Options may only be granted to individuals who
are employees of the Corporation. Options which are specifically designated as
"non-statutory" options when issued under the Plan shall not be subject to such
terms and conditions.
12
(b) Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more Incentive Options granted to any Employee under this Plan (or
any other option plan of the Corporation or its parent or subsidiary
corporations) may for the first time become exercisable during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such Incentive Options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options under the
federal tax laws shall be applied on the basis of the order in which such
Incentive Options are granted. Should the number of shares of Common Stock for
which any Incentive Option first becomes exercisable in any calendar year exceed
the applicable One Hundred Thousand Dollar ($100,000) limitation, then that
option may nevertheless be exercised in that calendar year for the excess number
of shares as a non-statutory option under the federal tax laws.
(c) 10% Stockholder. If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Code Section
424(d)) possessing ten percent (10%) or more of the total combined voting power
of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five years,
measured from the grant date.
(d) Application. Except as modified by the preceding
provisions of this Section 2.2, the provisions of Articles I, II and V of the
Plan shall apply to all Incentive Options granted hereunder.
2.3 CORPORATE TRANSACTIONS
(a) Definition. For purposes of this Plan, any of the
following stockholder approved transactions to which the Corporation is a party
shall be considered a "Corporate Transaction":
(i) a merger or consolidation in which the
corporation is not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation, or
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(iii) any reverse merger in which the Corporation is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to person or persons different from those who held
such securities immediately prior to such merger.
(b) Acceleration of Option. Upon the stockholder approval of a
Corporate Transaction, each option which is at the time outstanding under this
Article II shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares. However, an outstanding option under this Article II
shall not so accelerate if and to the extent: (A) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (B) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option, or (C) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (A) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
(c) Termination of Options. Upon the consummation of the
Corporate Transaction, all outstanding options under this Article II shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
(d) Adjustments on Assumption or Continuation. Each
outstanding option under this Article II which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall
remain the same. In addition, the class and number of securities available for
issuance under the Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted.
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(e) Discretion to Accelerate. The Plan Administrator shall
have the discretion, exercisable either in advance of any actually-anticipated
Corporate Transaction or at the time of an actual Corporate Transaction, to
provide (upon such terms as it may deem appropriate) for the automatic
acceleration of one or more outstanding options granted under the Plan which are
assumed or replaced in the Corporate Transaction and do not otherwise accelerate
at that time, in the event the Optionee's Service should subsequently terminate
within a designated period following the effective date of such Corporate
Transaction.
(f) Plan Not to Affect Corporation. The grant of options under
this Article II shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
2.4 CHANGE IN CONTROL
(a) Definition. For purposes of this Plan, a Change in Control
shall be deemed to occur in the event:
(i) any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number) ceases, by
reason of one or more proxy contests for the election of Board members, to be
comprised of individuals who either (a) have been Board members continuously
since the beginning of such period or (b) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (a) who were still in office at the time such
election or nomination was approved by the Board.
(b) Discretion to Accelerate. The Plan Administrator shall
have the discretionary authority, exercisable either in advance of any actually
anticipated Change in Control or at the time of an actual Change in Control, to
provide for the automatic acceleration of one or more outstanding options under
this Article
15
II (and the termination of one or more of the Corporation's outstanding
repurchase rights under this Article II) upon the occurrence of the Change in
Control. The Plan Administrator shall also have full power and authority to
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent termination of the Optionee's Service
within a specified period following the Change in control.
(c) Exercise Rights. Any options accelerated in connection
with the Change in Control shall remain fully exercisable until the expiration
or sooner termination of the option term.
2.5 INCENTIVE OPTIONS.
The exercisability as Incentive Options of any options
accelerated under Sections 2.3 or 2.4 hereof in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section 2.2 hereof.
ARTICLE III
RESERVED
--------
ARTICLE IV
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
4.1 TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS.
(a) Amount and Date of Grant. During the term of this Plan,
automatic option grants (the "Automatic Option Grant") shall be made to each
eligible non-employee member of the Board ("Optionee") as follows:
(i) Each year on the Annual Automatic Grant Date an
option to acquire 5,000 shares of Common Stock ("Option Shares") shall be
granted to each eligible non-employee member of the Board for so long as there
are shares of Common Stock available under Section 1.5 hereof. The "Annual
Automatic Grant Date" shall be as of the first business day of the month in
which the Corporation's Annual Stockholders Meeting is held. Notwithstanding the
foregoing, (1) any non-Employee Member of the Board whose term ended as of such
Automatic Grant Date shall not be eligible to receive any automatic option
grants on that Annual Automatic Grant Date and (2) any non-Employee Member of
the Board who has received an Automatic Grant pursuant to Section 4.1(a)(ii) on
the same date as the Annual Automatic Grant Date or within 30 days prior
thereto,
16
shall not be eligible to receive an Automatic Option Grant on that Annual
Automatic Grant Date.
(ii) On the Initial Automatic Grant Date, every new
member of the Board who is an eligible non-Employee and has not previously been
a member of the Board shall be granted an option to acquire 10,000 shares of
Common Stock ("Option Shares") as long as there are shares of Common Stock
available under Section 1.5 hereof. The "Initial Automatic Grant Date" shall be
as of the date that the Optionee was first appointed or elected to the Board.
(b) Exercise Price. The exercise price per share of Common
Stock subject to each automatic option grant made under this Article IV shall be
equal to 100% of the fair market value per share of the Common Stock on the
applicable Automatic Grant Date, as determined in accordance with the valuation
provisions of Section 2.1(d) hereof.
(c) Method of Exercise. In order to exercise an option with
respect to any Option Shares for which an Automatic Option Grant is exercisable
at the time, Optionee (or in the case of an exercise after Optionee's death,
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following action:
(i) execute and deliver to the Secretary of the
Company a written notice of exercise;
(ii) pay the aggregate Option Price in one of the
alternate forms as set forth in Section 4.1(d) below; and
(iii) furnish appropriate documentation that the
person or persons exercising the option (if other than the Optionee) has the
right to exercise such option. As soon after the Exercise Date (as defined in
Section 4.1(e) hereof), as practical, the Company shall mail or deliver to or on
behalf of the Optionee (or any other person or persons exercising this option in
accordance herewith) a certificate or certificates representing the shares for
which the option has been exercised in accordance with the provisions of this
Plan. In no event may any option be exercised for any fractional shares.
(d) Payment Price. The exercise price shall be payable in one
of the alternative forms specific below:
(i) full payment in cash or check made payable to the
Corporation's order; or
(ii) full payment through a sale and remittance
procedure pursuant to which the non-employee Board member (A) shall provide
irrevocable written instructions to a designated brokerage
17
firm to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares and shall (B) concurrently provide written directives to the Corporation
to deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
(e) Exercise Date. For purposes of this Article IV, the
Exercise Date shall be the date on which written notice of the option exercise
is delivered to the Corporation, and the fair market value per share of Common
Stock on any relevant date under this Article IV shall be determined in
accordance with the provisions of Section 2.1(d) hereof. Except to the extent
the sale and remittance procedure specified above is utilized for the exercise
of the potion, payment of the option price for the purchased shares must
accompany the exercise notice.
(f) Term of Option. Each automatic option grant under this
Article IV shall have a maximum term of ten (10) years measured from the
Automatic Grant Date. Should Optionee's service as a Board member cease for any
reason while an option remains outstanding and unexercised, then the option term
shall immediately terminate and the option shall cease to be outstanding prior
to the Expiration Date in accordance with the following provisions:
(i) The option shall immediately terminate and cease
to be outstanding for any shares of Common Stock for which the option was not
otherwise exercisable at the time of Optionee's cessation of Board service.
(ii) Should Optionee cease, for any reason other than
death, to serve as a member of the Board, then Optionee shall have a six-month
period measured from the date of such cessation of Board service in which to
exercise the options which vested prior to the time of such cessation of Board
service. In no event, however, may any option be exercised after the Expiration
Date of such option.
(iii) Should Optionee die while serving as a Board
member or within six months after cessation of Board service, then the personal
representative of the Optionee's estate (or the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution) shall have the right to exercise any option
for any or all of the shares of Common Stock for which the option is, in
accordance with the provisions of this Plan, exercisable at the time of the
Optionee's cessation of Board service, less any shares subsequently purchased by
the Optionee pursuant to the option prior to death. Such right shall cease to be
exercisable and the option shall accordingly terminate with respect to all
Common Stock
18
available under such option by the earlier of (A) the expiration of the
twelve-month period measured from the date of Optionee's death or (B) the
Expiration Date.
(g) Vesting. Each Automatic Option Grant made pursuant to
Section 4.1(a)(i) shall become exercisable and vest in a series of twelve (12)
equal and successive monthly installments, with the first such installment to
become exercisable one month after the Annual Automatic Grant Date. Each
Automatic Option Grant made pursuant to Section 4.1(a)(ii) shall become
exercisable and vest in a series of 36 equal and successive monthly
installments, with the first such installment to become exercisable one month
after the Initial Automatic Grant Date. Each installment of an option shall only
vest and become exercisable if the Optionee has not ceased serving as a Board
member as of such installment date.
(h) Limited Transferability. Each Automatic Option Grant shall
be exercisable only by Optionee during Optionee's lifetime and shall be neither
transferable nor assignable, other than by will or by the laws of descent and
distribution following Optionee's death.
4.2 CORPORATE TRANSACTION
In the event of stockholder approval of a Corporate
Transaction (as that term is defined in Section 2.3(a)), then all options
granted pursuant to this Article IV (to the extent outstanding at such time, but
not otherwise fully exercisable and vested) shall automatically accelerate and
immediately vest so that the option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable for all
of the Option Shares at the time subject to the option and may thereafter be
exercised for any or all such Option Shares. Upon the consummation of the
Corporate Transaction, the option shall, to the extent not previously exercised,
terminate and cease to be outstanding.
4.3 CHANGE IN CONTROL
All options granted pursuant to an Automatic Option Agreement
under this Article IV (to the extent outstanding, but not otherwise fully
exercisable and vested) shall automatically accelerate in connection with a
Change in Control (as that term is defined in Section 2.4(a)), so that such
option shall, immediately prior to the effective date of such Change in Control,
become fully exercisable for all of the Option Shares at the time subject to
that option and may be exercised for any or all of such Option Shares. The
option shall remain so exercisable until such option has terminated in
accordance with Section 4.1(d) hereof.
19
4.4 MISCELLANEOUS PROVISIONS
(a) Corporation Rights. The Automatic Option Grants shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
(b) Privilege of Stock Ownership. An Optionee shall not have
any of the rights of a stockholder with respect to Option Shares until such
individual shall have exercised the option and paid the option price for the
Option Shares.
ARTICLE V
MISCELLANEOUS
-------------
5.1 AMENDMENT OF THE PLAN AND AWARDS
(a) Board Authority. The Board has complete and exclusive
power and authority to amend or modify the Plan (or any component thereof) in
any or all respects whatsoever. However, no such amendment or modification
shall, without the consent of the Corporation's stockholders, disqualify any
option previously granted under the Plan for treatment as an Incentive Option,
or adversely affect rights and obligations with respect to options at the time
outstanding under the Plan, unless the Optionee or Participant consents to such
amendment. In addition, the Board may not, without the approval of the
Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, except for permissible
adjustments under Section 1.5(d) or extend the term of the Plan, (ii) materially
modify the eligibility requirements for plan participation or (iii) materially
increase the benefits accruing to plan participants.
(b) Options Issued Prior to Stockholder Approval. Options to
purchase shares of Common Stock may be granted under the Discretionary Option
Grant Program and the Automatic Option Grant Program prior to any required
stockholder approvals, provided, any shares actually issued under the Plan are
held in escrow until stockholder approval is obtained. If such stockholder
approval is not obtained within twelve (12) months of the meeting of the Board
approving the Plan or any amendments, then (i) any unexercised options shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.
20
(c) Rule 16b-3 Plan. With respect to persons subject to
Section 16 of the 1934 Act, the Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the 1934 Act. To the extent any revision of the Plan or action by any Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by such Plan Administrator. In
addition, the Board may amend the Plan from time to time as it deems necessary
in order to meet the requirements of any amendments to Rule 16b-3 without the
consent of the shareholders of the Company.
5.2 TAX WITHHOLDING
(a) General. The Corporation's obligation to deliver shares of
Common Stock upon the exercise of stock options for such shares or the vesting
of such shares under the Plan shall be subject to the satisfaction of all
applicable Federal, State and local income tax and employment tax withholding
requirements.
(b) Shares to Pay for Withholding. A Plan Administrator may,
in its discretion and in accordance with the provisions of this Section 5.2(b)
and such supplemental rules as the Plan Administrator may from time to time
adopt (including the applicable safe-harbor provisions of SEC Rule 16b-3),
provide any or all holders of non-statutory options or unvested shares under the
Plan with the right to use shares of the Corporation's Common Stock in
satisfaction of all or part of the Federal, State and local income tax and
employment tax liabilities incurred by such holders in connection with the
exercise of their options or the vesting of their shares (the "Taxes"). Such
right may be provided to any such holder in either or both of the following
formats:
(i) Stock Withholding. The holder of the nonstatutory
option or unvested shares may be provided with the election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such non-statutory option or the vesting of such shares, a
portion of those shares with an aggregate fair market value equal to the
percentage of the applicable Taxes (not to exceed one hundred percent (100%))
designated by the holder.
(ii) Stock Delivery. The Plan Administrator may, in
its discretion, provide the holder of the non-statutory option or the unvested
shares with the election to deliver to the Corporation, at the time the
non-statutory option is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than pursuant to the
transaction triggering the Taxes) with an aggregate fair market value equal to
the percentage of the taxes incurred in connection with such option
21
exercise or share vesting (not to exceed one hundred percent (100%)) designated
by the holder.
5.3 EFFECTIVE DATE AND TERM OF PLAN
(a) Effective Date. This Plan, as successor to the
Corporation's 1989 Stock Option Plan, become effective as of the applicable
Effective Date, and no further option grants or stock issuances shall be made
under the 1989 Plan from and after such Effective Date.
(b) Incorporation of 1989 Plan. Each option issued and
outstanding under the 1989 Plan immediately prior to the Effective Date of the
Discretionary Option Grant Program shall be incorporated into this Plan and
treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such options with
respect to their acquisition of shares of Common Stock thereunder.
(c) Discretion. The option and vesting acceleration provisions
of Article II relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
which are outstanding under the 1989 Plan on the Effective Date of the
Discretionary Option Grant Program but which do not otherwise provide for such
acceleration.
(d) Termination of Plan. The Plan shall terminate upon the
earlier of (i) January 19, 2003 or (ii) the date on which all shares available
for issuance under the Plan shall have been issued pursuant to the exercise of
options granted under the Plan. If the date of termination is determined under
clause (i) above, then all option grants and unvested stock issuances
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such grants or
issuances.
5.4 USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants under the Plan shall be used for general
corporate purposes.
5.5 REGULATORY APPROVALS
(a) General. The implementation of the Plan, the granting of
any option under the Plan, and the issuance of Common
22
Stock upon the exercise or surrender of the option grants made hereunder shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it, and the Common Stock issued pursuant to it.
(b) Securities Registration. No shares of Common Stock or
other assets shall be issued or delivered under this Plan unless and until there
shall have been compliance with all applicable requirements of Federal and State
securities laws, including the filing and effectiveness of the Form S-8
registration statement for the shares of Common Stock issuable under the Plan,
and all applicable listing requirements of any securities exchange on which
stock of the same class is then listed.
5.6 NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the right
to remain in the employ or service of the Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
5.7 MISCELLANEOUS PROVISIONS
(a) Assignment. The right to acquire Common Stock or other
assets under the Plan may not be assigned, encumbered or otherwise transferred
by any Optionee or Participant. The provisions of the Plan shall inure to the
benefit of, and be binding upon, the Corporation and its successors or assigns,
whether by Corporate Transaction or otherwise, and the Participants and
Optionees, the legal representatives of their respective estates, their
respective heirs or legatees and their permitted assignees.
(b) Choice of Law. The provisions of the Plan relating to the
exercise of options and the vesting of shares shall be governed by the laws of
the State of Arizona, as such laws are applied to contracts entered into and
performed in such State.
(c) Plan Not Exclusive. This Plan is not intended to be the
exclusive means by which the Corporation may issue options or warrants to
acquire its shares of Common Stock, stock awards or issuances, or any other type
of award or issuance. To the extent permitted by applicable law, any such other
option, warrants,
23
issuance, or awards may be issued by the Company, other than pursuant to this
Plan, without shareholder approval.
24
EXECUTED as of the 25th day of April, 1997.
MICROCHIP TECHNOLOGY CORPORATION,
a Delaware corporation
By: /s/ Steve Sanghi
------------------------------------
Steve Sanghi
Its: Chairman of the Board,
President and Chief Executive
Officer
Attested by:
/s/ C. Philip Chapman
- ------------------------------------
C. Philip Chapman
Secretary
/s/ Mary Simmons-Mothershed
- ------------------------------------
Mary Simmons-Mothershed
Assistant Secretary
25