Exhibit 10.4
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MICROCHIP TECHNOLOGY INCORPORATED
1993 STOCK OPTION PLAN
AMENDED THROUGH AUGUST 18, 2000
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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.................................................... 2
(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.......................................... 4
(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.................................... 6
1.5 STOCK SUBJECT TO THE PLAN.............................................. 6
(a) Amendment......................................................... 6
(b) Available Shares.................................................. 6
(c) Adjustments for Issuances......................................... 7
(d) Adjustments for Organic Changes................................... 7
(e) Limitation on Grants to Employees................................. 8
ARTICLE II
DISCRETIONARY OPTION GRANT PROGRAM
2.1 TERMS AND CONDITIONS OF OPTIONS........................................ 8
(a) General........................................................... 8
(b) Option Price...................................................... 9
(c) Payment of Option Price........................................... 9
(d) Fair Market Value................................................. 9
(e) Term and Exercise of Options...................................... 10
(f) Termination of Service............................................ 10
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(g) Discretion to Accelerate Vesting.................................. 11
(h) Discretion to Extend Exercise Period.............................. 12
(i) Definitions....................................................... 12
(j) Stockholder Rights................................................ 12
(k) Repurchase Rights................................................. 12
2.2 INCENTIVE OPTIONS...................................................... 13
(a) General........................................................... 13
(b) Dollar Limitation................................................. 13
(c) 10% Stockholder................................................... 14
(d) Application....................................................... 14
(e) No Incentive Options After August 18, 2000........................ 14
2.3 CORPORATE TRANSACTIONS................................................. 14
(a) Definition........................................................ 14
(b) Acceleration of Option............................................ 15
(c) Termination and Options........................................... 15
(d) Adjustments on Assumption or Continuation......................... 15
(e) Discretion to Accelerate.......................................... 16
(f) Plan Not to Affect Corporation.................................... 16
2.4 CHANGE IN CONTROL...................................................... 16
(a) Definition........................................................ 16
(b) Discretion to Accelerate.......................................... 17
(c) Exercise Rights................................................... 17
2.5 INCENTIVE OPTIONS...................................................... 17
ARTICLE III
RESERVED
ARTICLE IV
AUTOMATIC OPTION GRANT PROGRAM
4.1 TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS........................ 17
(a) Amount and Date of Grant.......................................... 17
(b) Exercise Price.................................................... 18
(c) Method of Exercise................................................ 18
(d) Payment Price..................................................... 19
(e) Exercise Date..................................................... 19
(f) Term of Option.................................................... 19
(g) Vesting........................................................... 20
(h) Limited Transferability........................................... 20
4.2 CORPORATE TRANSACTION.................................................. 20
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4.3 CHANGE IN CONTROL...................................................... 21
4.4 MISCELLANEOUS PROVISIONS............................................... 21
(a) Corporation Rights................................................ 21
(b) Privilege of Stock Ownership...................................... 21
ARTICLE V
MISCELLANEOUS
5.1 AMENDMENT OF THE PLAN AND AWARDS....................................... 21
(a) Board Authority................................................... 21
(b) Options Issued Prior to Stockholder Approval...................... 22
(c) Rule 16b-3 Plan................................................... 22
5.2 TAX WITHHOLDING........................................................ 22
(a) General........................................................... 22
(b) Shares to Pay for Withholding..................................... 22
(i) Stock Withholding............................................ 23
(ii) Stock Delivery............................................... 23
5.3 EFFECTIVE DATE AND TERM OF PLAN........................................ 23
(a) Effective Date.................................................... 23
(b) Incorporation of 1989 Plan........................................ 23
(c) Discretion........................................................ 23
(d) Termination of Plan............................................... 24
5.4 USE OF PROCEEDS........................................................ 24
5.5 REGULATORY APPROVALS................................................... 24
(a) General........................................................... 24
(b) Securities Registration........................................... 24
5.6 NO EMPLOYMENT/SERVICE RIGHTS........................................... 24
5.7 MISCELLANEOUS PROVISIONS............................................... 25
(a) Assignment........................................................ 25
(b) Choice of Law..................................................... 25
(c) Plan Not Exclusive................................................ 25
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MICROCHIP TECHNOLOGY INCORPORATED
1993 STOCK OPTION PLAN
AMENDED THROUGH AUGUST 18, 2000
ARTICLE I
GENERAL
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. On August 18, 2000 the stockholders
approved an amendment to the Plan (which was adopted by the Board on May 5,
2000) to extend its term as set forth in Section 5.3(d) hereof. The Board also
amended the Plan to provide that, following the approval by the stockholders of
the extension of the term o the Plan, Incentive Options could no longer be
granted (see Section 2.2(e)).
(b) PURPOSE. This 1993 Stock Option Plan, amended through August 18,
2000 ("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).
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(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
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
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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 the Common Stock effected on November 8, 1994, a
3-for-2 split of the Common Stock effected on January 6, 1997, and a 3-for-2
split of the Common Stock effected on February 7, 2000.
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").
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(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):
(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
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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 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
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(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.
1.5 STOCK SUBJECT TO THE PLAN
(a) AMENDMENT(1). Under the Plan, 9,108,341 shares were originally
authorized to be issued under the Plan (constituting 8,348,966 authorized shares
under the 1989 Plan and rolled over into this Plan plus 759,375 additional
shares authorized by the Board on January 19, 1993). On April 23, 1993, an
additional 3,290,625 shares were authorized by the Board, subject to stockholder
approval at the next stockholders' meeting. At that point, the total available
authorized shares was 12,398,966. On September 14, 1993, the Board authorized
the number of shares of Common Stock issuable under the Plan to be increased by
3,422,250 shares. On April 18, 1994, the Board authorized the number of shares
of Common Stock issuable under the Plan to be increased by 4,387,500 shares. On
January 20, 1995 and April 25, 1997, the Board authorized the number of shares
of Common Stock issuable under the Plan to be increased by 2,137,500 and
3,000,000 shares, respectively, 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 25,346,216
shares, subject to adjustment from time to time in accordance with the
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(1) All number are as adjusted for stock splits which have occurred through
February 2000.
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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 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
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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 six hundred seventy-five thousand
(675,000) shares.
(ii) In connection with his or her initial employment, an
Employee may be granted options to purchase up to an additional one million one
hundred twenty-five thousand 1, 125,000) 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 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
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.
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(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 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
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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 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.
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(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 (x) six months following
the date of Optionee's death or (y) 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 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
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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 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
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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.
(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
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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.
(e) NO INVENTIVE OPTIONS AFTER AUGUST 18, 2000. From and after August
18, 2000, no Incentive Options shall be granted under the Plan.
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
(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.
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(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
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provide for the automatic acceleration of one or more outstanding options under
this Article 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
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the same date as the Annual Automatic Grant Date or within 30 days prior
thereto, 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:
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(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 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
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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 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.
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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.
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
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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.
(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
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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 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, 2013 2 or (ii) the date on which all shares available for
----------
(2) By amendment of the stockholders approved August 18, 2000, the term of the
Plan was extended from January 19, 2003 to January 19, 2013.
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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 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.
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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, issuance, or awards may be issued by the Company, other than pursuant
to this Plan, without shareholder approval.
EXECUTED as of the 18th day of August, 2000.
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/ Mary K. Simmons
---------------------------
Mary K. Simmons
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