RESTATED MICROCHIP TECHNOLOGY INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH APRIL 26, 1999
I. PURPOSE
The Microchip Technology Incorporated Employee Stock Purchase Plan (the
"Plan") is intended to provide eligible employees of the Company and one or more
of its Corporate Affiliates with the opportunity to acquire a proprietary
interest in the Company through participation in a plan designed to qualify as
an employee stock purchase plan under Section 423 of the Code.
II. DEFINITIONS
For purposes of administration of the Plan, the following terms shall have
the meanings indicated:
BOARD means the Board of Directors of the Company.
CODE means the Internal Revenue Code of 1986, as amended from time to time.
COMPANY means Microchip Technology Incorporated, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Microchip Technology Incorporated which shall by
appropriate action adopt the Plan.
COMMON STOCK means shares of the Company's common stock, par value $0.001
per share.
CORPORATE AFFILIATE means any parent or subsidiary corporation of the
Company (as determined in accordance with Code Section 424) which is
incorporated in the United States, including any parent or subsidiary
corporation which becomes such after the Effective Date.
EARNINGS means the sum of the following items of compensation paid to a
Participant by one or more Participating Companies during such individual's
period of participation in the Plan: (i) regular base salary, plus (ii) any
pre-tax contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Company or any Corporate Affiliate plus (iii) all overtime
payments, bonuses, commissions, profit-sharing distributions and other
incentive-type payments. There shall, however, be excluded from the calculation
of such Earnings any and all contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the Company
or one or more Corporate Affiliates under any employee benefit or welfare plan
now or hereafter established.
EFFECTIVE DATE means March 17, 1993, the start date of the first offering
period under the Plan. However, for any Corporate Affiliate which becomes a
Participating Company in the Plan after such date, a subsequent Effective Date
shall be designated with respect to participation by its Eligible Employees.
ELIGIBLE EMPLOYEE means any person who is engaged, on a regularly-scheduled
basis of more than twenty (20) hours per week for more than five (5) months per
calendar year, in the rendition of personal services to the Company or any other
Participating Company for earnings considered wages under Section 3121(a) of the
Code.
ENTRY DATE means the date an Eligible Employee first joins the offering
period in effect under the Plan. The earliest Entry Date under the Plan shall be
the Effective Date.
FAIR MARKET VALUE means the fair market value of the Common Stock on any
relevant date under the Plan and shall, for any date following the initial March
17, 1993 Effective Date, be deemed to be equal to the closing selling price per
share of Common Stock on the date in question, as officially quoted on the
Nasdaq National Market. If there is no quoted selling price for the date in
question, then the closing selling price per share of Common Stock on the next
preceding day for which there does exist such a quotation shall be determinative
of Fair Market Value.
PARTICIPANT means any Eligible Employee of a Participating Company who is
actively participating in the Plan.
PARTICIPATING COMPANY means the Company and such Corporate Affiliate or
Affiliates as may be designated from time to time by the Board to extend the
benefits of the Plan to their Eligible Employees.
SEMI-ANNUAL ENTRY DATE means the first business day of each March and
September within an offering period in effect under the Plan. However, the
earliest Semi-Annual Entry Date under the Plan shall be the March 17, 1993
Effective Date.
SEMI-ANNUAL PERIOD OF PARTICIPATION means each semi-annual period for which
the Participant actually participates in an offering period in effect under the
Plan. There shall be a maximum of four (4) semi-annual periods of participation
within each offering period. Except as otherwise designated by the Plan
Administrator, the first such semi-annual period (which may actually be less
than six (6) months for the initial offering period) shall extend from the start
date of the offering period through the last business day in August; subsequent
semi-annual periods shall then be measured from the first business day of
September and March thereafter to the last business day of February and August,
respectively.
SEMI-ANNUAL PURCHASE DATE means the last business day of each February and
August within an offering period on which shares of Common Stock are
automatically purchased for Participants under the Plan.
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SERVICE means the period during which an individual performs services as an
Eligible Employee and shall be measured from his or her hire date, whether that
date is before or after the Effective Date of the Plan.
III. ADMINISTRATION
The Plan shall be administered by a committee (the "Plan Administrator")
comprised of two (2) or more non-employee Board members appointed from time to
time by the Board. The Plan Administrator shall have full authority to
administer the Plan, including authority to interpret and construe any provision
of the Plan and to adopt such rules and regulations for administering the Plan
as it may deem necessary in order to comply with the requirements of Section 423
of the Code. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated in
accordance with Article IX.
B. The Plan shall be implemented in a series of successive offering
periods, each to be of a duration of twenty-four (24) months or less as
designated by the Plan Administrator prior to the start date. The initial
offering period will begin on the Effective Date and will end on the last
business day in February 1995. The next offering period shall commence on the
first business day in March 1995, and subsequent offering periods shall commence
as designated by the Plan Administrator.
C. Under no circumstances shall any offering period commence under the
Plan, nor shall any shares of Common Stock be issued hereunder, until such time
as (i) the Plan shall have been approved by the Company's stockholders and (ii)
the Company shall have complied with all applicable requirements of the
Securities Act of 1933 (as amended), all applicable listing requirements of any
securities exchange on which shares of the Common Stock are listed and all other
applicable statutory and regulatory requirements.
D. The Participant shall be granted a separate purchase right for each
offering period in which he/she participates. The purchase right shall be
granted on the Entry Date on which such individual first joins the offering
period in effect under the Plan and shall be automatically exercised in
successive semi-annual installments on the last business day of each February
and August within the remainder of the offering period. Accordingly, each
purchase right may be exercised up to two (2) times each calendar year it
remains outstanding.
E. The acquisition of Common Stock through plan participation for any
offering period shall neither limit nor require the acquisition of Common Stock
by the Participant in any subsequent offering period.
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V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Company shall be eligible to
participate in the Plan in accordance with the following provisions:
- An individual who is an Eligible Employee with at least thirty (30)
days of Service prior to the start date of the offering period may enter
that offering period on the Semi-Annual Entry Date coincident with such
start date or on any subsequent Semi-Annual Entry Date within that offering
period on which he/she remains an Eligible Employee. The Semi-Annual Entry
Date on which such individual first joins the offering period shall become
such individual's Entry Date for the offering period, and on that date such
individual shall be granted his/her purchase right for the offering period.
- An individual who is not an Eligible Employee with at least thirty
(30) days of Service on the start date of the offering period may
subsequently enter that offering period on the first Semi-Annual Entry Date
on which he/she is an Eligible Employee with thirty (30) or more days of
Service or on any subsequent Semi-Annual Entry Date within that offering
period on which he/she remains an Eligible Employee. The Semi-Annual Entry
Date on which such individual first joins the offering period shall become
such individual's Entry Date for that offering period, and on that date
such individual shall be granted his/her purchase right for the offering
period.
B. To participate for a particular offering period, the Eligible Employee
must complete the enrollment forms prescribed by the Plan Administrator
(including a purchase agreement and a payroll deduction authorization) and file
such forms with the Plan Administrator (or its designate) on or before his/her
scheduled Entry Date.
C. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Earnings paid to the Participant during each Semi-Annual
Period of Participation within the offering period, up to a maximum of ten
percent (10%). The deduction rate so authorized shall continue in effect for the
remainder of the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
- The Participant may, at any time during a Semi-Annual Period of
Participation, reduce his/her rate of payroll deduction. Such reduction
shall become effective as soon as possible after the filing of the
requisite reduction form with the Plan Administrator (or its designate),
but the Participant may not effect more than one (1) such reduction during
the same Semi-Annual Period of Participation.
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- The Participant may not increase his/her rate of payroll deduction
following his/her Entry Date into the offering period. However, the
Participant may, prior to his/her Entry Date into any new offering period,
increase the rate of his/her payroll deduction by filing the appropriate
form with the Plan Administrator (or its designate). The new rate (which
may not exceed the ten percent (10%) maximum) shall become effective as of
the Participant's Entry Date into the first offering period following the
filing of such form.
Payroll deductions will automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of Section VII
below.
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable under the Plan shall, solely in the
discretion of the Plan Administrator, be made available from either authorized
but unissued shares of Common Stock or from shares of Common Stock reacquired by
the Company, including shares of Common Stock purchased on the open market. The
total number of shares which may be issued over the term of the Plan shall not
exceed 3,706,000 shares(1) (subject to adjustment under Section VI.B below).
However, not more than 1,390,000(2) shares may be issued under the Plan from and
after March 1, 1995, subject to adjustment under Section VI.B below.
B. In the event any change is made to the outstanding Common Stock by
reason of any stock dividend, stock split, combination of shares or other change
affecting such outstanding Common Stock as a class without the Company's receipt
of consideration, appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number of securities issuable over
the term of the Plan and from and after the March 1, 1995 effective date of this
restatement, (ii) the class and maximum number of securities purchasable per
Participant during any one (1) Semi-Annual Period of Participation and (iii) the
class and number of securities and the price per share in effect under each
purchase right at the time outstanding under the Plan. Such adjustments shall be
designed to preclude the dilution or enlargement of rights and benefits under
the Plan.
VII. PURCHASE RIGHTS
An Eligible Employee who participates in the Plan for a particular offering
period shall have the right to purchase shares of Common Stock, in a series of
successive semi-annual installments during such offering period, upon the terms
and conditions set forth below and shall execute a purchase agreement embodying
such terms and conditions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
PURCHASE PRICE. Common Stock shall be issuable at the end of each
Semi-Annual Period of Participation within the offering period at a purchase
price equal to eighty-five percent (85%) of the LOWER of (i) the Fair Market
Value per share on the Participant's Entry Date into that offering period or
- ----------
1 Adjusted to reflect the 400,000 share increase authorized by the Board on
April 26, 1999, subject to stockholder approval at the 1999 Annual Meeting.
Should this proposed increase not be approved, then the total number of
shares which may be issued over the term of the Plan shall not exceed
3,306,000.
2 Adjusted to reflect the 400,000 share increase authorized by the Board on
April 26, 1999, subject to stockholder approval at the 1999 Annual Meeting.
Should the proposed increase not be approved then the total number of
shares that may be issued under the Plan from and after March 1, 1995,
subject to adjustment under Section VI.B, below may not exceed 990,000.
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(ii) the Fair Market Value per share on the Semi-Annual Purchase Date on which
such Semi-Annual Period of Participation ends. However, for each Participant
whose Entry Date is other than the start date of the offering period, the clause
(i) amount shall in no event be less than the Fair Market Value of the Common
Stock on the start date of that offering period.
PAYMENT. Payment for the Common Stock purchased under the Plan shall be
effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin with the first full payroll period beginning with or
immediately following the Participant's Entry Date into the offering period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of the offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from a Participant may be
commingled with the general assets of the Company and may be used for general
corporate purposes.
NUMBER OF PURCHASABLE SHARES. The number of shares purchasable per
Participant for each Semi-Annual Period of Participation during the offering
period shall be the number of whole shares obtained by dividing the payroll
deductions collected from the Participant during that Semi-Annual Period of
Participation by the purchase price in effect for the Participant for such
period. No Participant may purchase more than Thirteen Thousand Five Hundred
(13,500) shares of Common Stock per Semi-Annual Period of Participation, subject
to periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Corporate Affiliates.
TERMINATION OF PURCHASE RIGHT. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last five (5) business
days of the Semi-Annual Period of Participation, terminate his/her
outstanding purchase right under the Plan by filing the prescribed
notification form with the Plan Administrator (or its designate). No
further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right, and any payroll deductions
collected for the Semi-Annual Period of Participation in which such
termination occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Semi-Annual
Purchase Date. If no such election is made at the time the purchase right
is terminated, then the deductions collected with respect to the terminated
right shall be refunded as soon as possible.
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(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the offering period for which
the terminated purchase right was granted. In order to resume participation
in any subsequent offering period, such individual must re-enroll in the
Plan (by making a timely filing of a new purchase agreement and payroll
deduction authorization) on or before his/her scheduled Entry Date into the
new offering period.
(iii) If the Participant ceases to remain an Eligible Employee while
his/her purchase right remains outstanding, then such purchase right shall
immediately terminate, and the payroll deductions collected from such
Participant for the Semi-Annual Period of Participation in which the
purchase right so terminates shall be promptly refunded to the Participant.
However, in the event the Participant's cessation of Eligible Employee
status occurs by reason of his/her death or permanent disability, then such
individual (or the personal representative of the estate of a deceased
Participant) shall have the following election, exercisable at any time
prior to the last five (5) business days of the Semi-Annual Period of
Participation in which such cessation of Eligible Employee status occurs:
- to withdraw all of the Participant's payroll deductions for
such Semi-Annual Period of Participation, or
- to have such funds held for the purchase of shares on the
Semi-Annual Purchase Date immediately following such cessation of Eligible
Employee status.
If a timely election is not made, then the payroll deductions shall be
refunded as soon as possible after the close of such Semi-Annual Period of
Participation. In no event, however, may any payroll deductions be made on the
Participant's behalf following his/her cessation of Eligible Employee status.
STOCK PURCHASE. Shares of Common Stock shall automatically be purchased on
behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded in accordance with the Termination of Purchase
Right provisions above) on each Semi-Annual Purchase Date. The purchase shall be
effected by applying each Participant's payroll deductions for the Semi-Annual
Period of Participation ending on such Semi-Annual Purchase Date (together with
any carryover deductions from the preceding Semi-Annual Period of Participation)
to the purchase of whole shares of Common Stock (subject to the limitation on
the maximum number of purchasable shares set forth above) at the purchase price
in effect for the Participant for such Semi-Annual Period of Participation. Any
payroll deductions not applied to such purchase because they are not sufficient
to purchase a whole share shall be held for the purchase of Common Stock in the
next Semi-Annual Period of Participation. However, any payroll deductions not
applied to the purchase of Common Stock by reason of the limitation on the
maximum number of shares purchasable by the Participant during the Semi-Annual
Period of Participation shall be promptly refunded to the Participant.
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PRORATION OF PURCHASE RIGHTS. Should the total number of shares of Common
Stock which are to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded to such Participant.
RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder rights with
respect to the shares subject to his/her outstanding purchase right until the
shares are actually purchased on the Participant's behalf in accordance with the
applicable provisions of the Plan. No adjustments shall be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.
A Participant shall be entitled to receive, as soon as practicable after
each Semi-Annual Purchase Date, a stock certificate for the number of shares
purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
Alternatively, the Participant may request the issuance of such certificate in
"street name" for immediate deposit in a designated brokerage account.
ASSIGNABILITY. No purchase right granted under the Plan shall be assignable
or transferable by the Participant other than by will or by the laws of descent
and distribution following the Participant's death, and during the Participant's
lifetime the purchase right shall be exercisable only by the Participant.
CHANGE IN OWNERSHIP. Should any of the following transactions (a "Change in
Ownership") occur during the offering period:
(i) a merger or other reorganization in which the Company will not be
the surviving corporation (other than a reorganization effected primarily
to change the State in which the Company is incorporated), or
(ii) a sale of all or substantially all of the Company's assets in
liquidation or dissolution of the Company, or
(iii) a reverse merger in which the Company is the surviving
corporation but in which more than fifty percent (50%) of the Company's
outstanding voting stock is transferred to person or persons different from
those who held the stock immediately prior to such merger, or
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the effective date of such
Change in Ownership by applying the payroll deductions of each Participant for
the Semi-Annual Period of Participation in which such Change in Ownership occurs
to the purchase of whole shares of Common Stock at eighty-five percent (85%) of
the LOWER of (i) the Fair Market Value per share of Common Stock on the
Participant's Entry Date into the offering period in which such Change in
Ownership occurs or (ii) the Fair Market Value per share of Common Stock
8
immediately prior to the effective date of such Change in Ownership. However,
the applicable share limitations of Articles VII and VIII shall continue to
apply to any such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the offering period is other than the start
date of that offering period, be less than the Fair Market Value per share of
Common Stock on such start date.
The Company shall use its best efforts to provide at least ten (10)-days
advance written notice of the occurrence of any such Change in Ownership, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights in accordance with the applicable
provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (I) rights to purchase Common Stock
accrued under any other purchase right outstanding under this Plan and (II)
similar rights accrued under other employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company or its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Company or any Corporate Affiliate (determined on the basis of the
value of such stock on the date or dates such rights are granted the
Participant) for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the right to acquire
Common Stock pursuant to each purchase right outstanding under the Plan shall
accrue as follows:
(i) The right to acquire Common Stock under each such purchase right
shall accrue in a series of successive semi-annual installments as and when
the purchase right first becomes exercisable for each such installment on
the last business day of each Semi-Annual Period of Participation for which
the right remains outstanding.
(ii) No right to acquire Common Stock under an outstanding purchase
right shall accrue to the extent the Participant has already accrued in the
same calendar year the right to acquire Common Stock under one or more
other purchase rights at the rate of Twenty-Five Thousand Dollars ($25,000)
worth of Common Stock (determined on the basis of the Fair Market Value on
the date or dates such rights are granted) for each calendar year those
rights are at any time outstanding.
(iii) If by reason of such accrual limitations, any purchase right of
a Participant does not accrue for a particular Semi-Annual Period of
Participation, then the payroll deductions which the Participant made
during that Semi-Annual Period of Participation with respect to such
purchase right shall be promptly refunded.
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C. In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
IX. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue the Plan following
the close of any Semi-Annual Period of Participation. However, the Board may
not, without the approval of the Company's stockholders:
(i) materially increase the number of shares issuable under the Plan
or the maximum number of shares purchasable per Participant during any one
Semi-Annual Period of Participation, except that the Plan Administrator
shall have the authority, exercisable without such stockholder approval, to
effect adjustments to the extent necessary to reflect changes in the
Company's capital structure pursuant to Section VI.B;
(ii) alter the purchase price formula so as to reduce the purchase
price payable for the shares issuable under the Plan; or
(iii) materially increase the benefits accruing to Participants under
the Plan or materially modify the requirements for eligibility to
participate in the Plan.
B. The Company shall have the right, exercisable in the sole discretion of
the Plan Administrator, to terminate all outstanding purchase rights under the
Plan immediately following the close of any Semi-Annual Period of Participation.
Should the Company elect to exercise such right, then the Plan shall terminate
in its entirety. No further purchase rights shall thereafter be granted or
exercised, and no further payroll deductions shall thereafter be collected,
under the Plan.
X. DISPOSITION OF SHARES
A. The Plan Administrator may, in its absolute discretion, impose, as a
condition to the issuance of the shares of Common Stock purchased under the
Plan, the requirement that each Participant provide the Company with prompt
notice of any transfer or other disposition of those shares which is effected
within two (2) years after Participant's Entry Date into the offering period in
which the shares were purchased OR within one year after the Semi-Annual
Purchase Date on which those shares were in fact purchased. The Plan
Administrator may further require the certificate evidencing such shares to be
endorsed with a legend indicating the existence of such notice requirement and
impose appropriate stop transfer orders with respect to such certificate in the
absence of such notice.
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B. The Company shall not record on its books of record any transfer or
other disposition of the shares of Common Stock issued under the Plan which is
not effected in compliance with the foregoing notice requirement. Moreover, the
Company may impose, as a condition to the recordation of such transfer or
disposition, the requirement that the Participant satisfy all Federal, state and
local income and employment tax withholding obligations applicable to such
transfer or disposition.
XI. GENERAL PROVISIONS
A. The Plan became effective on the March 17, 1993 Effective Date.
B. The March 1, 1995 restatement incorporated a series of amendments to the
Plan authorized by the Board in January, 1995 to effect the following changes to
the Plan: (i) allow Eligible Employees to join an offering period on any
Semi-Annual Entry Date within that offering period, (ii) prohibit Participants
from increasing their rate of payroll deduction under the Plan after their Entry
Date into a particular offering period, (iii) obligate Participants to notify
the Company of any disqualifying disposition (as defined in Code Section 423) of
the shares they acquire under the Plan and (iv) and increase in the number of
shares of Common Stock available for issuance over the term of the Plan.
C. The Plan shall terminate upon the EARLIER of (i) the last business day
in February 2003 or (ii) the date on which all shares available for issuance
under the Plan shall have been sold pursuant to purchase rights exercised under
the Plan.
D. All costs and expenses incurred in the administration of the Plan shall
be paid by the Company.
E. Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any of its Corporate Affiliates
for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.
F. The provisions of the Plan shall be governed by the laws of the State of
Arizona without resort to that State's conflict-of-laws rules.
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SCHEDULE A
COMPANIES PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF APRIL 26, 1999
Microchip Technology Incorporated
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