PHOENIX TECHNOLOGIES LTD, S-8, 1998-10-02

PHOENIX TECHNOLOGIES LTD
S-8, 1998-10-02
PREPACKAGED SOFTWARE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1998
REGISTRATION NO. 333-_____
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PHOENIX TECHNOLOGIES LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2685985
------------------------ -----------------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

411 E. Plumeria Drive
San Jose, CA 95134
(408) 570-1000
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

AWARD SOFTWARE INTERNATIONAL INC. 1997 EQUITY INCENTIVE PLAN
AWARD SOFTWARE INTERNATIONAL INC. 1995 STOCK OPTION PLAN
AWARD SOFTWARE INTERNATIONAL INC. EMPLOYEE STOCK PURCHASE PLAN
SAND MICROELECTRONICS, INC. NON-QUALIFIED STOCK OPTION PLAN
SAND MICROELECTRONICS, INC. 1998 STOCK PLAN
(FULL TITLE OF THE PLAN)

Stuart J. Nichols
Vice President and General Counsel
Phoenix Technologies Ltd.
441 E. Plumeria Drive
San Jose, California 95134
(408) 570-1000
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:
HERBERT P. FOCKLER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(650) 493-9300

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value .......
- - Outstanding Under Award's 1997
Equity Incentive Plan (1) 811,581 $7.158(3) $5,809,050(3) $1,713.67
- - Outstanding Under Award's 1995
Stock Option Plan (1) 1,469,699 $5.781(4) $8,496,329(4) $2,506.42
- - Outstanding Under Award's
Employee Stock Purchase Plan (1) 60,000 $5.419(5) $325,140(5) $95.91
- - Outstanding Under Sand's Non-
Qualified Stock Option Plan (2) 88,583 $0.267(6) $23,638(6) $6.97
- - Outstanding Under Sand's 1998
Stock Plan (2) 175,491 $1.041(7) $182,620(7) $53.87
TOTAL 2,605,353 $14,836,777 $4,376.84(8)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

(1) Pursuant to the Agreement and Plan of Reorganization (the "Award
Agreement") entered into as of April 15, 1998, by and among the
Registrant, Portland Acquisition Corporation and Award Software
International Inc. ("Award"), the Registrant assumed all of the
outstanding options to purchase Common Stock of Award under Award's, 1997
Equity Incentive Plan, 1995 Stock Option Plan and Employee Stock
Purchase Plan, and such options became exercisable to purchase shares of
Common Stock of the Registrant, subject to appropriate adjustments to
the number of shares and the exercise price of each such assumed option
as provided in the Award Agreement.

(2) Pursuant to the Agreement and Plan of Reorganization (the "Sand
Agreement") entered into as of September 17, 1998, by and among the
Registrant, Phoenix Sub Corporation and Sand Microelectronics, Inc.
("Sand"), the Registrant assumed all of the outstanding options to
purchase Common Stock of Sand under Sand's, Non-Qualified Stock Option
Plan and 1998 Stock Plan, and such options became exercisable to
purchase shares of Common Stock of the Registrant, subject to
appropriate adjustments to the number of shares and the exercise price
of each such assumed option as provided in the Sand Agreement.

(3) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the filing fee on the basis of the weighted average exercise
price of $7.158 per share for outstanding options to purchase a total
of 811,581 shares of Common Stock.

(4) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the filing fee on the basis of the weighted average exercise
price of $5.781 per share for outstanding options to purchase a total of
1,469,699 shares of Common Stock.

(5) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the filing fee on the basis of $5.419 per share (85% of
$6.375, which is the average high and low price of the Registrant's
Common Stock Price as reported on the Nasdaq National Market on
September 29, 1998) to purchase a total of 60,000 shares of Common Stock.

(6) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the filing fee on the basis of the weighted average exercise
price of $0.267 per share for outstanding options to purchase a total
of 88,583 shares of Common Stock.

(7) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the filing fee on the basis of the weighted average exercise
price of $1.041 per share for outstanding options to purchase a total of
175,491 shares of Common Stock.

(8) Amount of the Registration Fee was calculated pursuant to Section6(b) of
the Securities Act of 1933, as amended.

<PAGE>

PHOENIX TECHNOLOGIES LTD.
REGISTRATION STATEMENT ON FORM S-8

PART II

INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

Phoenix Technologies Ltd. (the "Company") hereby incorporates by
reference in this registration statement the following documents:

(a) The Company's Annual Report on Form 10-K filed under the Securities
Exchange Act of 1934 (the "Exchange Act") for the fiscal year ended
September 30, 1997.

(b) (1) The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997 filed pursuant to Section 13 of the Exchange Act.

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed pursuant to Section 13 of the Exchange Act.

(3) The Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 filed pursuant to Section 13 of the Exchange Act.

(4) The Company's Current Report on Form 8-K dated April 24, 1998
filed pursuant to Section 13 of the Exchange Act.

(5) The Company's Current Report on Form 8-K dated May 12, 1998
filed pursuant to Section 13 of the Exchange Act.

(6) The Company's Current Report on Form 8-K dated September 29, 1998
filed pursuant to Section 13 of the Exchange Act.

(7) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year ended September 30,
1997.

(c) Any description of any securities of the Company's contained in any
registration statement filed under Section 12 of the Exchange Act,
including any amendment or report filed for purpose of updating such
description.

All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act on or after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which
deregisters all securities remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be part
hereof from the date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

II-1
<PAGE>

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law grants to each
corporation organized thereunder the power to indemnify its officers and
directors for certain acts. Article TENTH of the Registrant's Amended and
Restated Certificate of Incorporation sets forth the extent to which officers
and directors of the Registrant may be indemnified against any liabilities
which they may incur in their capacities as directors or officers of the
Registrant. Article TENTH provides, in part, that each person who was or is
made a party or is threatened to be made a party or is involved in any
action, suit or proceeding by reason of the fact that he or she is or was a
director or officer of the Registrant or is or was serving at the request of
the Registrant as a director, officer, employee or agent of another
corporation or enterprise shall be indemnified and held harmless by the
Registrant, to the fullest extent authorized by the Delaware General
Corporation Law, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection with such proceeding; provided, however, that if
the person seeking indemnification initiated the proceeding in respect to
which he or she is seeking indemnification from the Registrant, the
Registrant shall provide such indemnification only if such proceeding was
authorized by the Registrant's Board of Directors. The right to
indemnification includes the right to be paid expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that if the Delaware General Corporation Law so requires, the payment of such
expenses in advance of the final disposition of a proceeding shall be made
only upon delivery to the Registrant of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to
indemnification.

Article NINTH of the Registrant's Restated Certificate of Incorporation
eliminates the personal liability of the Registrant's directors to the
Registrant or its stockholders for monetary damages for breach of a
director's fiduciary duty, except for liability: (1) for breach of a
director's duty of loyalty to the Registrant or its stockholders; (2) for
acts or omissions not in good faith or involving intentional misconduct or
knowing violations of law; (3) under Section 174 of the Delaware General
Corporation Law; or (4) for any transaction from which the director derived
an improper personal benefit.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not applicable.

II-2
<PAGE>
ITEM 8. EXHIBITS.

Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of counsel as to legality of securities being registered
10.34 Award's 1997 Equity Incentive Plan
10.35 Award's 1995 Stock Option Plan
10.36 Award's Employee Stock Purchase Plan
10.37 Sand's Non-Qualified Stock Option Plan
10.38 Sand's 1998 Stock Plan
23.1 Consent of counsel (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-5)
</TABLE>

ITEM 9. UNDERTAKINGS.

(a) RULE 415 OFFERINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3)of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

PROVIDED, HOWEVER, that paragraphs (a)(1)(i)and (a)(1)(ii)do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d)of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.

II-3
<PAGE>

(b) FILING INCORPORATION SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrants annual report pursuant to section 13(a)or section 15(d)of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to section 15(d)of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF REGISTRATION
STATEMENT ON FORM S-8

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California, on
this 29th day of September, 1998.

PHOENIX TECHNOLOGIES LTD.

By: /s/ Jack Kay
---------------------------------------
Jack Kay
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jack Kay and Robert J. Riopel jointly
and severally, as his attorneys-in-fact, each with the power of substitution,
for him in any and all capacities to sign any amendments to this Registration
Statement on Form S-8, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorney-
in-fact, or his substitute or substitutes, may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on the
29th day of September, 1998 in the capacities indicated.

SIGNATURE TITLE
--------- -----

/s/ Jack Kay
- ------------------------------- Director and Principal Executive Officer
Jack Kay

/s/ Robert J. Riopel
- ------------------------------- Principal Financial and Accounting Officer
Robert J. Riopel

/s/ Charles Federman
- ------------------------------- Director
Charles Federman

/s/ Ronald D. Fisher
- ------------------------------- Director
Ronald D. Fisher

/s/ Anthony P. Morris
- ------------------------------- Director
Anthony P. Morris

II-5
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
5.1 Opinion of counsel as to legality of securities being registered
10.34 Award's 1997 Equity Incentive Plan
10.35 Award's 1995 Stock Option Plan
10.36 Award's Employee Stock Purchase Plan
10.37 Sand's Non-Qualified Stock Option Plan
10.38 Sand's 1998 Stock Plan
23.1 Consent of counsel (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of PricewaterhouseCoopers LLP, Independent Accountants
24.1 Power of Attorney (see page II-5)
</TABLE>

<PAGE>

EXHIBIT 5.1

Wilson Sonsini Goodrich & Rosati
Professional Corporation

650 Page Mill Road
Palo Alto, California 94304-1050
Telephone 415-493-9300 Facsimile 415-493-6811

September 30, 1998

Phoenix Technologies Ltd.
411 E. Plumeria Drive
San Jose, California 95134

RE: REGISTRATION STATEMENT ON FORM S-8

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Phoenix Technologies Ltd. (the
"Registrant" or "you"), with the Securities and Exchange Commission on or
about September 30, 1998, in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 2,605,353 shares of
your Common Stock (the "Shares") reserved for issuance pursuant to
outstanding options and rights assumed by Phoenix under the Award Software
International Inc. ("Award") 1997 Equity Incentive Plan, Award's 1995 Stock
Option Plan, Award's Employee Stock Purchase Plan, Sand Microelectronics,
Inc. ("Sand") Non-Qualified Stock Option Plan and Sand's 1998 Stock Plan
(collectively, the "Plans"). As your legal counsel, we have examined the
actions taken and proposed to be taken by you in connection with the proposed
sale, issuance and payment of consideration for the Shares to be issued under
the Plans.

It is our opinion that, upon completion of the actions being taken, or
contemplated by us as your counsel to be taken by you prior to the issuance
of the Shares pursuant to the Registration Statement and the Plans, and upon
completion of the actions being taken in order to permit such transactions to
be carried out in accordance with the securities laws of the various states
where required, the Shares will be legally and validly issued, fully paid and
non-assessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in
the Registration Statement and any amendment thereto.

Sincerely,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

/s/ Wilson Sonsini Goodrich & Rosati

<PAGE>
EXHIBIT 10.34

AWARD SOFTWARE INTERNATIONAL, INC.

1997 EQUITY INCENTIVE PLAN

ADOPTED APRIL 30, 1997

Approved By Shareholders June 4, 1997
Amended January 22, 1998
Approved By Shareholders June 30, 1998

1. PURPOSES.

(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its
Affiliates, may be given an opportunity to purchase stock of the Company.

(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company
or its Affiliates, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Options issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section
6, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f) respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

<PAGE>

(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

(e) "COMPANY" means Award Software International, Inc., a California
corporation.

(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
that the service of an individual to the Company, whether as an Employee,
Director or Consultant is not interrupted or terminated. The Board or the
chief executive officer of the Company may determine, in that party's sole
discretion, whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board or the chief executive officer of the Company,
including sick leave, military leave, or any other personal leave; or (ii)
transfers between the Company, Affiliates or their successors.

(h) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.

(i) "DIRECTOR" means a member of the Board.

(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient
to constitute "employment" by the Company.

-2-

<PAGE>

(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(l) "FAIR MARKET VALUE" means the value of the common stock as
determined in good faith by the Board.

(m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(n) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

(p) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(q) "OPTION" means a stock option granted pursuant to the Plan.

(r) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.

-3-

<PAGE>

(s) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding
Option.

(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is
not a former employee of the Company or an affiliated corporation receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an affiliated corporation
at any time, and is not currently receiving direct or indirect remuneration
from the Company or an "affiliated corporation" for services in any capacity
other than as a Director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.

(u) "PLAN" means this 1997 Equity Incentive Plan.

(v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect with respect to the Company at the time
discretion is being exercised regarding the Plan.

(w) "SECURITIES ACT" means the Securities Act of 1933, as amended.

3. ADMINISTRATION.

(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

-4-

<PAGE>

(which need not be identical), including the time or times such Option may be
exercised in whole or in part; and the number of shares for which an Option
shall be granted to each such person.

(2) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

(3) To amend the Plan or an Option as provided in Section 11.

(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.

(c) The Board may delegate administration of the Plan to a committee of
the Board composed of not fewer than two (2) members (the "Committee") of the
Board who may, in the discretion of the Board, be Non-Employee Directors
within the meaning of Rule 16b-3. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power
to delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references
in this Plan to the Board shall thereafter be to the Committee or such
subcommittee), subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a committee of one or
more members of the Board the authority to grant Options to eligible persons
who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are
either (i) not

-5-

<PAGE>

then Covered Employees and are not expected to be Covered Employees at the
time of recognition of income resulting from such Option, or (ii) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the
Code.

4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to Options shall
not exceed in the aggregate one million seven hundred fifteen thousand
(1,715,000) shares of the Company's common stock. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the stock not purchased under such Option shall
revert to and again become available for issuance under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5. ELIGIBILITY.

(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors or
Consultants.

(b) No person shall be eligible for the grant of an Option if, at the
time of grant, such person owns (or is deemed to own pursuant to Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant. (c) Subject to the provisions of Section 10
relating to adjustments upon changes in stock, no person shall be eligible to
be granted Options

-6-

<PAGE>

covering more than two hundred fifty thousand (250,000) shares of the
Company's common stock in any calendar year.

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than set forth in the preceding sentence
if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other common stock of the
Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option

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<PAGE>

is granted or to whom the Option is transferred pursuant to subsection 6(d),
or (C) in any other form of legal consideration that may be acceptable to the
Board. In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a domestic relations order, unless otherwise
provided in a stock option agreement. The person to whom the Option is
granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.

(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to which the Option became vested but
was not fully exercised. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The
provisions of this subsection

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<PAGE>

6(e) are subject to any Option provisions governing the minimum number of
shares as to which an Option may be exercised.

(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced
in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Option for such person's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (i) the issuance of the shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act, or (ii) as to any particular requirement,
a determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.

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<PAGE>

of time ending on the earlier of (i) the date three (3) months following the
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant or such longer or shorter period specified in the Option
Agreement, or (ii) the expiration of the term of the Option as set forth in
the Option Agreement. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan.

(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, at the date
of termination, the Optionee is not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to and again become available for issuance under the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the
Plan.

(i) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after the termination of
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise
the Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant
to subsection 6(d), but only within the period

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ending on the earlier of (i) the date eighteen (18) months following the date
of death (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth in
the Option Agreement. If, at the time of death, the Optionee was not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the
Plan.

(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of
the common stock otherwise issuable to the Optionee as a result of the
exercise of the Option; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the Options, the Company shall keep available
at all times the number of shares of stock required to satisfy such Options.

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(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided,
however, that this undertaking shall not require the Company to register
under the Securities Act either the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

9. MISCELLANEOUS.

(a) The Board shall have the power to accelerate the time at which an
Option may first be exercised or the time during which an Option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions
in the Option stating the time at which it may first be exercised or the time
during which it will vest.

(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such Option
unless and until such person has satisfied all requirements for exercise of
the Option pursuant to its terms.

(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the

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employ of the Company or any Affiliate (or to continue acting as a Director
or Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment of any Employee, with or without cause and with or
without notice.

(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.

(e) (1) The Board or the Committee shall have the authority to effect,
at any time and from time to time (i) the repricing of any outstanding
Options under the Plan and/or (ii) with the consent of the affected holders
of Options, the cancellation of any outstanding Options and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of a ten percent (10%) shareholder (as defined
in subsection 5(b)), not less than one hundred and ten percent (110%) of the
Fair Market Value) per share of Common Stock on the new grant date.

(2) Shares subject to an Option canceled under this subsection 9(e)
shall continue to be counted, for the applicable period in which it was
granted, against the maximum award of Options permitted to be granted
pursuant to subsection 5(c) of the Plan. The repricing of an Option under
this subsection 9(e), resulting in a reduction of the exercise price, shall
be deemed to be a cancellation of the original Option and the grant of a
substitute Option; in the event of such repricing, both the original and the
substituted Options shall be counted for the applicable period

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against the maximum awards of Options permitted to be granted pursuant to
subsection 5(d) of the Plan. The provisions of this subsection 9(e) shall be
applicable only to the extent required by Section 162(m) of the Code.

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the type(s) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the maximum number of securities subject to award to any
person during any calendar year pursuant to subsection 5(d), and the
outstanding Options will be appropriately adjusted in the type(s) and number
of securities and price per share of stock subject to such outstanding
Options. Such adjustments shall be made by the Board or Committee, the
determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated
as a "transaction not involving the receipt of consideration by the
Company.")

(b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; or (3) a reverse
merger in which the Company is the surviving corporation but the shares of
the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; (4) the acquisition by any person, entity or
group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act,
or any comparable successor provisions (excluding any employee benefit plan,

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or related trust, sponsored or maintained by the Company or any Affiliate of
the Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then:
(i) any surviving or acquiring corporation shall assume Options outstanding
under the Plan or shall substitute similar options (including an option to
acquire the same consideration paid to stockholders in the transaction
described in this Subsection 10(b)) for those outstanding under the Plan, or
(ii) in the event any surviving or acquiring corporation refuses to assume
such options or to substitute similar options for those outstanding under the
Plan, (A) with respect to Options held by persons then performing services as
Employees, Directors or Consultants, the vesting of such Options and the time
during which such Options may be exercised shall be accelerated prior to such
event and the Options terminated if not exercised after such termination and
at or prior to such event, and (B) with respect to any other Options
outstanding under the Plan, such Options shall be terminated if not exercised
prior to such event.

11. AMENDMENT OF THE PLAN AND OPTIONS.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company to the extent shareholder approval is required to
comply with Rule 16b-3, Section 422 of the Code or any Nasdaq or securities
exchange listing requirements.

(b) The Board may in its sole discretion submit any other amendment to
the Plan for shareholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations promulgated thereunder regarding

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the exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with
the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under
it into compliance therewith.

(d) Rights and obligations under any Option granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

(e) The Board at any time, and from time to time, may amend the terms
of any one or more Options; PROVIDED HOWEVER, that the rights and obligations
under any Option shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the day before the tenth
anniversary of the date the Plan was adopted by the Board or approved by the
shareholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any Option granted while the Plan is
in effect shall not be or impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Option was granted.

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13. EFFECTIVE DATE OF PLAN

The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan
has been approved by the shareholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.

<PAGE>

EXHIBIT 10.35

AWARD SOFTWARE INTERNATIONAL, INC.

1995 STOCK OPTION PLAN

ADOPTED DECEMBER 15, 1994
AMENDED NOVEMBER 29, 1995
AMENDED MARCH 10, 1997

1. PURPOSES.

<PAGE>

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f) respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

(e) "Company" means Award Software International, Inc., a California
corporation.

(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the employment or relationship as a Director or Consultant is not interrupted
or terminated. The Board, in its sole discretion, may determine whether
Continuous Status as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; or (ii)
transfers between locations of the Company or between the Company, Affiliates
or their successors.

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(h) "COVERED EMPLOYEE" means the Chief Executive Officer and the four
(4) other highest compensated officers of the Company.

(i) "DIRECTOR" means a member of the Board.

(j) "DISINTERESTED PERSON" means a Director who either (i) was not
during the one year prior to service as an administrator of the Plan granted
or awarded equity securities pursuant to the Plan or any other plan of the
Company or any of its affiliates entitling the participants therein to
acquire equity securities of the Company or any of its affiliates except as
permitted by Rule 16b-3(c)(2)(i); or (ii) is otherwise considered to be a
"disinterested person" in accordance with Rule 16b-3(c)(2)(i), or any other
applicable rules, regulations or interpretations of the Securities and
Exchange Commission.

(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as
a Director nor payment of a director's fee by the Company shall be sufficient
to constitute "employment" by the Company.

(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(m) "FAIR MARKET VALUE" means the value of the common stock as
determined in good faith by the Board and in a manner consistent with Section
260.140.50 of Title 10 of the California Code of Regulations.

(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

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(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

(p) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(q) "OPTION" means a stock option granted pursuant to the Plan.

(s) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.

(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (as defined in the
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an affiliated corporation receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an affiliated corporation
at any time, and is not currently receiving compensation for personal
services in any capacity other than as a Director, or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.

(u) "PLAN" means this 1995 Stock Option Plan.

(v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.

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3. ADMINISTRATION.

(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a Committee, as provided in
subsection 3(c).

(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; whether an Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each Option granted (which need
not be identical), including the time or times such Option may be exercised
in whole or in part; and the number of shares for which an Option shall be
granted to each such person.

(3) To amend the Plan as provided in Section 11.

(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee shall be Disinterested Persons and may also be, in
the discretion of the Board, Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the

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administration of the Plan, the powers theretofore possessed by the Board
(and references in this Plan to the Board shall thereafter be to the
Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.
The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Additionally, prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, and notwithstanding anything to the contrary contained herein,
the Board may delegate administration of the Plan to any person or persons
and the term "Committee" shall apply to any person or persons to whom such
authority has been delegated. Notwithstanding anything in this Section 3 to
the contrary, the Board or the Committee may delegate to a committee of one
or more members of the Board the authority to grant Options to eligible
persons who (1) are not then subject to Section 16 of the Exchange Act and/or
(2) are either (i) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such
Option, or (ii) not persons with respect to whom the Company wishes to comply
with Section 162(m) of the Code.

(d) Any requirement that an administrator of the Plan be a
Disinterested Person shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that
such requirement shall not apply. Any Disinterested Person shall otherwise
comply with the requirements of Rule 16b-3.

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4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to Options shall
not exceed in the aggregate one million eight hundred sixty thousand
ninety-six (1,860,096) shares of the Company's common stock. If any Option
shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the stock not purchased under such
Option shall revert to and again become available for issuance under the
Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5. ELIGIBILITY.

(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors or
Consultants.

(b) A Director shall in no event be eligible for the benefits of the
Plan unless at the time discretion is exercised in the selection of the
Director as a person to whom Options may be granted, or in the determination
of the number of shares which may be covered by Options granted to the
Director: (i) the Board has delegated its discretionary authority over the
Plan to a Committee which consists solely of Disinterested Persons; or
(ii) the Plan otherwise complies with the requirements of Rule 16b-3. The Board
shall otherwise comply with the requirements of Rule 16b-3. This subsection
5(b) shall not apply (i) prior to the date of the first registration of an
equity security of the

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<PAGE>

Company under Section 12 of the Exchange Act, or (ii) if the Board or
Committee expressly declares that it shall not apply.

(c) No person shall be eligible for the grant of an Option if, at the
time of grant, such person owns (or is deemed to own pursuant to Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant.

(d) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options
covering more than five hundred thousand (500,000) shares of the Company's
common stock in any twelve (12) month period.

6. OPTION PROVISIONS.

(a) TERM. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.

(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the

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Option is granted. The exercise price of each Nonstatutory Stock Option
shall be not less than eighty-five percent (85%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, either at the time of the
grant or exercise of the Option, (A) by delivery to the Company of other
common stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.

In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order satisfying
the requirements of Rule 16b-3 and the rules thereunder (a "QDRO"), and shall
be exercisable during the lifetime of the person to whom the Option is

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granted only by such person or any transferee pursuant to a QDRO. The person
to whom the Option is granted may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionee, shall thereafter be entitled to
exercise the Option.

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<PAGE>

representative, the merits and risks of exercising the Option; and (2) to
give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person's own account
and not with any present intention of selling or otherwise distributing the
stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) as to any particular requirement, a determination
is made by counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The Company
may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.

(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months after the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period, which in
no event shall be less than thirty (30) days, specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement. If, after termination, the Optionee does not exercise
his or her Option within the time specified in the Option

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Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period, which in no event shall be less than six (6) months,
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

(i) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after the termination of
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise
the Option at the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant
to subsection 6(d), but only within the period ending on the earlier of (i)
the date eighteen (18) months following the date of death (or such longer or
shorter period, which in no event shall be less than six (6) months,
specified in the Option

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<PAGE>

Agreement), or (ii) the expiration of the term of such Option as set forth in
the Option Agreement. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and
the shares covered by such Option shall revert to and again become available
for issuance under the Plan.

(j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares
so purchased shall be subject to a repurchase right in favor of the Company,
with the repurchase price to be equal to the original purchase price of the
stock, or to any other restriction the Board determines to be appropriate;
provided, however, that (i) the right to repurchase at the original purchase
price shall lapse at a minimum rate of twenty percent (20%) per year over
five (5) years from the date the Option was granted, and (ii) such right
shall be exercisable only within (A) the ninety (90) day period following the
termination of employment or the relationship as a Director or Consultant, or
(B) such longer period as may be agreed to by the Company and the Optionee
(for example, for purposes of satisfying the requirements of Section
1202(c)(3) of the Code (regarding "qualified small business stock")), and
(iii) such right shall be exercisable only for cash or cancellation of
purchase money indebtedness for the shares. Should the right of repurchase
be assigned by the Company, the assignee shall pay the Company cash equal to
the difference between the original purchase price and the stock's Fair
Market Value if the original purchase price is less than the stock's Fair
Market Value.

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<PAGE>

(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of
the common stock otherwise issuable to the participant as a result of the
exercise of the Option; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the Options, the Company shall keep available
at all times the number of shares of stock required to satisfy such Options.

(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; PROVIDED,
HOWEVER, that this undertaking shall not require the Company to register
under the Securities Act either the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.

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<PAGE>

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

9. MISCELLANEOUS.

(a) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such Option
unless and until such person has satisfied all requirements for exercise of
the Option pursuant to its terms.

(b) Throughout the term of any Option, the Company shall deliver to the
holder of such Option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the Option term, a balance
sheet and an income statement. This section shall not apply when issuance is
limited to key employees whose duties in connection with the Company assure
them access to equivalent information.

(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate
(or to continue acting as a Director or Consultant) or shall affect the right
of the Company or any Affiliate to terminate the employment or relationship
as a Director or Consultant of any Employee, Director, Consultant or Optionee
with or without cause.

(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first

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<PAGE>

time by any Optionee during any calendar year under all plans of the Company
and its Affiliates exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order
in which they were granted) shall be treated as Nonstatutory Stock Options.

(e) (1) The Board or the Committee shall have the authority to effect,
at any time and from time to time (i) the repricing of any outstanding
Options under the Plan and/or (ii) with the consent of the affected holders
of Options, the cancellation of any outstanding Options and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of a ten percent (10%) stockholder (as defined
in subsection 5(c)), not less than one hundred and ten percent (110%) of the
Fair Market Value) per share of Common Stock on the new grant date.

(2) Shares subject to an Option canceled under this subsection
9(e) shall continue to be counted against the maximum award of Options
permitted to be granted pursuant to subsection 5(d) of the Plan. The
repricing of an Option under this subsection 9(e), resulting in a reduction
of the exercise price, shall be deemed to be a cancellation of the original
Option and the grant of a substitute Option; in the event of such repricing,
both the original and the substituted Options shall be counted against the
maximum awards of Options permitted to be granted pursuant to subsection 5(d)
of the Plan. The provisions of this subsection 9(e) shall be applicable only
to the extent required by Section 162(m) of the Code.

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<PAGE>

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(b) In the event of: (1) a merger or consolidation in which the
Company is not the surviving corporation or (2) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise then to the extent permitted by applicable law: (i) any surviving
corporation shall assume any Options outstanding under the Plan or shall
substitute similar Options for those outstanding under the Plan, or (ii) such
Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute
similar options for those outstanding under the Plan, then such Options shall
be terminated if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, any Options outstanding under the
Plan shall terminate if not exercised prior to such event.

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<PAGE>

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:

(1) Increase the number of shares reserved for Options under the
Plan;

(2) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422 of the Code);
or

(3) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.

(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

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<PAGE>

Incentive Stock Options and/or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.

(d) Rights and obligations under any Option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Option was
granted and (ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on January 10, 2005, which shall
be within ten (10) years from the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No
Options may be granted under the Plan while the Plan is suspended or after it
is terminated.

(b) Rights and obligations under any Option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Option was
granted.

13. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.

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<PAGE>

EXHIBIT 10.36

Award Software International, Inc.

EMPLOYEE STOCK PURCHASE PLAN

Adopted May 29, 1996
Approved by Shareholders August 21, 1996
Amended January 22, 1998
Approved by Shareholders June 30, 1998

1. PURPOSE.

(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Award Software International, Inc., a
California corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may
be given an opportunity to purchase stock of the Company.

(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code").

(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company.

(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) of
the Code.

2. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration
to a Committee, as provided in subparagraph 2(c). Whether or not the Board
has delegated administration, the Board shall have the final power to
determine all questions of policy and expediency that may arise in the
administration of the Plan.

(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).

(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.

(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this

<PAGE>

power, may correct any defect, omission or inconsistency in the Plan, in a
manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

(iv) To amend the Plan as provided in paragraph 13.

(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company and its Affiliates and to carry out the intent that the Plan be
treated as an "employee stock purchase plan" within the meaning of Section
423 of the Code.

(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee")
constituted in accordance with the requirements of Rule 16b-3 under the
Exchange Act. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate four hundred twenty-eight
thousand seven hundred fifty (428,750) shares of the Company's common stock
(the "Common Stock"). If any right granted under the Plan shall for any
reason terminate without having been exercised, the Common Stock not
purchased under such right shall again become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

4. GRANT OF RIGHTS; OFFERING.

(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the
Plan to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all employees granted rights to purchase
stock under the Plan shall have the same rights and privileges. The terms
and conditions of an Offering shall be incorporated by reference into the
Plan and treated as part of the Plan. The provisions of separate Offerings
need not be identical, but each Offering shall include (through incorporation
of the provisions of this Plan by reference in the document comprising the
Offering or otherwise) the period during which the Offering shall be
effective, which period shall not exceed twenty-seven (27) months beginning
with the Offering Date, and the substance of the provisions contained in
paragraphs 5 through 8, inclusive.

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<PAGE>

(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right
with a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.

5. ELIGIBILITY.

(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in
subparagraph 5(b), an employee of the Company or any Affiliate shall not be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee has been in the employ of the Company or any Affiliate for such
continuous period preceding such grant as the Board or the Committee may
require, but in no event shall the required period of continuous employment
be equal to or greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms of the
applicable Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee's customary employment with the Company or such Affiliate is
for at least twenty (20) hours per week and at least five (5) months per
calendar year.

(b) The Board or the Committee may provide that, each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that Offering,
which right shall thereafter be deemed to be a part of that Offering. Such
right shall have the same characteristics as any rights originally granted
under that Offering, as described herein, except that:

(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of
the exercise price of such right;

(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering;
and

(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before
the end of the Offering, he or she will not receive any right under that
Offering.

(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or of any Affiliate. For
purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code
shall apply in determining the stock ownership of any employee, and stock
which such employee may purchase under all outstanding rights and options
shall be treated as stock owned by such employee.

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<PAGE>

(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock
of the Company or any Affiliate to accrue at a rate which exceeds twenty five
thousand dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which such rights
are outstanding at any time.

(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that
the Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.

6. RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to
the number of shares of Common Stock of the Company purchasable with a
percentage designated by the Board or the Committee not exceeding fifteen
percent (15%) of such employee's Earnings (as defined by the Board or the
Committee in each Offering) during the period which begins on the Offering
Date (or such later date as the Board or the Committee determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering. The Board or the Committee
shall establish one or more dates during an Offering (the "Purchase Date(s)")
on which rights granted under the Plan shall be exercised and purchases of
Common Stock carried out in accordance with such Offering.

(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition,
in connection with each Offering that contains more than one Purchase Date,
the Board or the Committee may specify a maximum aggregate number of shares
which may be purchased by all eligible employees on any given Purchase Date
under the Offering. If the aggregate purchase of shares upon exercise of
rights granted under the Offering would exceed any such maximum aggregate
number, the Board or the Committee shall make a pro rata allocation of the
shares available in as nearly a uniform manner as shall be practicable and as
it shall deem to be equitable.

(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or

(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.

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<PAGE>

7. PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within
the time specified in the Offering, in such form as the Company provides.
Each such agreement shall authorize payroll deductions of up to the maximum
percentage specified by the Board or the Committee of such employee's
Earnings during the Offering (as defined by the Board or Committee in each
Offering). The payroll deductions made for each participant shall be
credited to an account for such participant under the Plan and shall be
deposited with the general funds of the Company. A participant may reduce
(including to zero) or increase such payroll deductions, and an eligible
employee may begin such payroll deductions, after the beginning of any
Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for
in the Offering and only if the participant has not had the maximum amount
withheld during the Offering.

(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering.
Upon such withdrawal from the Offering by a participant, the Company shall
distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's interest in that Offering shall be automatically
terminated. A participant's withdrawal from an Offering will have no effect
upon such participant's eligibility to participate in any other Offerings
under the Plan but such participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under
the Plan.

(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's
employment with the Company and any designated Affiliate, for any reason, and
the Company shall distribute to such terminated employee all of his or her
accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire stock for the terminated employee) under
the Offering, without interest.

(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution,
or by a beneficiary designation as provided in paragraph 14 and, otherwise
during his or her lifetime, shall be exercisable only by the person to whom
such rights are granted.

8. EXERCISE.

(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms
of the Plan and the applicable Offering, at the purchase price specified in
the Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of

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<PAGE>

accumulated payroll deductions remaining in each participant's account after
the purchase of shares which is less than the amount required to purchase one
share of stock on the final Purchase Date of an Offering shall be held in
each such participant's account for the purchase of shares under the next
Offering under the Plan, unless such participant withdraws from such next
Offering, as provided in subparagraph 7(b), or is no longer eligible to be
granted rights under the Plan, as provided in paragraph 5, in which case such
amount shall be distributed to the participant after such final Purchase
Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of
shares which is equal to the amount required to purchase whole shares of
stock on the final Purchase Date of an Offering shall be distributed in full
to the participant after such Purchase Date, without interest.

(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and
other securities and other laws applicable to the Plan. If on a Purchase
Date in any Offering hereunder the Plan is not so registered or in such
compliance, no rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than
twelve (12) months and the Purchase Date shall in no event be more than
twenty-seven (27) months from the Offering Date. If on the Purchase Date of
any Offering hereunder, as delayed to the maximum extent permissible, the
Plan is not registered and in such compliance, no rights granted under the
Plan or any Offering shall be exercised and all payroll deductions
accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.

9. COVENANTS OF THE COMPANY.

(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.

(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to issue and sell shares of stock upon
exercise of the rights granted under the Plan. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such
rights unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to rights granted
under the Plan shall constitute general funds of the Company.

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<PAGE>

11. RIGHTS AS A SHAREHOLDER.

A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.

12. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan and outstanding rights will be appropriately adjusted in the class(es)
and maximum number of shares subject to the Plan and the class(es) and number
of shares and price per share of stock subject to outstanding rights. Such
adjustments shall be made by the Board or the Committee, the determination of
which shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a "transaction
not involving the receipt of consideration by the Company.")

(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
the acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act, or comparable successor rule) of securities of the Company representing
at least fifty percent (50%) of the combined voting power entitled to vote in
the election of directors, then, as determined by the Board in its sole
discretion (i) any surviving or acquiring corporation may assume outstanding
rights or substitute similar rights for those under the Plan, (ii) such
rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock
immediately prior to the transaction described above and the participants'
rights under the ongoing Offering terminated.

13. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:

(i) Increase the number of shares reserved for rights under the
Plan;

-7-

<PAGE>

(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act as amended ("Rule 16b-3")); or

(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.

It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to employee stock
purchase plans and/or to bring the Plan and/or rights granted under it into
compliance therewith.

(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.

14. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to the end
of an Offering but prior to delivery to the participant of such shares and
cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death during an Offering.

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its sole discretion, may
deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company
may designate.

15. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board in its discretion, may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate at the time
that all of the shares subject to the Plan's share reserve, as increased
and/or adjusted from time to time, have been issued under the terms of the
Plan. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.

-8-

<PAGE>

(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan,
except as expressly provided in the Plan or with the consent of the person to
whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section
423 of the Code.

16. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on the same day that the Company's
initial public offering of shares of common stock becomes effective (the
"Effective Date"), but no rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the shareholders of the
Company within twelve (12) months before or after the date the Plan is
adopted by the Board or the Committee, which date may be prior to the
Effective Date.

-9-

<PAGE>
EXHIBIT 10.37

SAND MICROELECTRONICS, INC.

NON-QUALIFIED

STOCK OPTION PLAN

A. Purpose and Scope

The purposes of this Plan are to encourage stock ownership by employees,
directors and independent contractors (hereinafter collectively referred to as
"Participants") of Sand Microelectronics, Inc. (hereinafter called the
"Company"), to provide an incentive for the Participants to expand and improve
the profits and prosperity of the Company, and to assist the Company in
attracting and retaining Participants through the grant of Options to purchase
shares of the Company's common stock.

B. Definitions

Unless otherwise required by the context:

1. "Board" shall mean the Board of Directors of the Company.

2. "Committee" shall mean the Stock Option Plan Committee which is
appointed by the Board, and which shall be composed of at least three members of
the Board. In the absence of appointment of the Committee, the Board of
Directors shall function as the Committee.

3. "Company" shall mean Sand Microelectronics Inc., a California
corporation.

4. "Code" shall mean the Internal Revenue Code of 1986, as amended.

5. "Grant Date of Option" shall mean the date, as shown in the Employee or
Director Stock Option Agreement, when an authorized representative of the
Company signed that agreement for the Company.

6. "Option" shall mean a right to purchase Stock, granted pursuant to the
Plan.

7. "Option Price" shall mean the purchase price for Stock under an Option,
as determined in accordance with Section F.

8. "Participant" shall mean an employee, director or independent contractor
of the Company to whom an Option is granted under the Plan.

9. "Pronouns" - where necessary to include all Participants, the male form
of pronouns shall include the female equivalent.

10. "Plan" shall mean this Sand Microelectronics Inc. Non-Qualified Stock
Option Plan.

11. "Stock" shall mean the common stock of the Company.

1
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

C. Stock to be Optioned

Subject to the provisions of Section O of the Plan, the maximum number
of shares of Stock that may be optioned or sold under the Plan shall be five
hundred fifty-eight thousand (558,000) shares. Such shares may be treasury,
or authorized, but unissued, shares of Stock of the Company.

D. Administration

The Plan shall be administered by the Committee. One half of the
Committee, rounded to the next higher integer, shall constitute a quorum for the
transaction of business. The Committee shall be responsible to the Board for
the operation of the Plan, and shall make recommendations to the Board with
respect to participation in the Plan by employees, directors and independent
contractors of the Company, and with respect to the extent of that
participation. The interpretation and construction of any provision of the Plan
by the Committee shall be final, unless otherwise determined by the Board. No
member of the Board or the Committee shall be liable for any action or
determination made by him or her in good faith.

E. Eligibility

The Board, upon recommendation of the Committee, may grant Options to any
employee (including an employee who is an officer) or director of the Company or
any independent contractor hired to do work for the Company. Options may be
awarded by the Board at any time and from time to time to new Participants, or
to then Participants, or to a greater or lesser number of Participants, and may
include or exclude previous Participants, as the Board, upon recommendation of
the Committee shall determine. Options granted at different times need not
contain similar provisions.

F. Option Price

The purchase price for Stock under each Option shall be as determined by
the Board at the time the Option is granted.

2
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

G. Terms and Conditions of Options

Options granted pursuant to the Plan shall be authorized by the Board and
shall be evidenced by agreements in such form as the Board, upon recommendation
of the Committee, shall from time to time approve. Such agreements shall comply
with and be subject to the following terms and conditions:

1. EMPLOYMENT AGREEMENT. The Board may, in its discretion, include in any
Option granted under the Plan a condition that the Participant shall agree to
remain in the employ of, or to render services to, the Company for a period of
time (specified in the agreement) following the date the Option is granted or
that the Participant be in the employ or continue to render services to the
Company at the time Stock is purchased under the Option. No such agreement
shall impose upon the Company any obligation to employ, or continue to purchase
services from, the Participant for any period of time.

2. TIME AND METHOD OF PAYMENT. The Option Price shall be paid in full in
cash at the time an Option is exercised under the Plan. Otherwise, an exercise
of any Option granted under the Plan shall be invalid and of no effect.
Promptly after the exercise of an Option and the payment of the full Option
Price, the Participant shall be entitled to the issuance of a stock certificate
evidencing his or her ownership of such Stock. A Participant shall have none of
the rights of a shareholder until shares are issued to him, and no adjustment
will be made for dividends or other rights for which the record date is prior to
the date such stock certificate is issued. The Board may impose sale or
transfer restrictions on the shares as it deems necessary to protect the
corporate or income tax status of the Company and the income tax status of other
shareholders of the Company, and may require that the Participant enter into a
Stock Purchase Agreement as a condition of receiving the shares.

3. NUMBER OF SHARES. Each Option shall state the total number of shares of
Stock to which it pertains.

4. OPTION PERIOD AND LIMITATIONS ON EXERCISE OF OPTIONS. The Board may, in
its discretion, provide that an Option may not be exercised in whole or in part
for any period or periods of time specified in the Option agreement or that the
shares purchased through exercise of an Option under this Plan may not be sold
or transferred for any period of time specified in the Stock Purchase Agreement.
Except as provided in the Option agreement, an Option may be exercised with
regard to the Options vested under Section J, in whole or in part, any time
during its term. No Option may be exercised after the expiration of ten years
from the Grant Date of Option or more than ninety (90) days after termination of
employment or of being a director (Section H) or more than ninety (90) days
after an independent contractor renders a final billing (Section J.3). No
Option may be exercised for a fractional share of Stock.

3
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

H. Termination for Vesting and Post Termination Purchase Purposes

If an employee ceases to be employed by the Company for whatever reason, or
if a director of the Company ceases to be a director of the Company for any
reason, the portion of his or her Options which has not vested in accordance
with Section J shall terminate immediately. The Participant may, at any time
within ninety (90) days after the date of such termination, exercise his or her
Options to the extent that the Participant was vested in accordance with Section
J on the date of termination, but in no event shall any Option be exercisable
more than ten years from the date it was granted. Any vested Option not
exercised by a Participant within ninety (90) days after the date of termination
of employment shall terminate. The Committee may cancel a vested Option during
the ninety (90) day period referred to in this paragraph, if the Participant
engages in employment or activities contrary, in the opinion of the Committee,
to the best interests of the Company.

Where an independent contractor fails to render a final billing within
thirty (30) days of substantial completion of work under a contract, the
beginning date for the ninety (90) day Option exercise period as set forth in
Section J.3. shall be determined by the Committee. Any such determination of
the Committee shall be final and conclusive, unless overruled by the Board.

I. Rights in Event of Death

If a Participant dies while employed, or a director of the Company dies
while a director of the Company, or within ninety (90) days after termination of
that status, and without having fully exercised his or her Options, the
executors or administrators, or legatees or heirs, of his or her estate shall
have the right to exercise such Options to the extent and for the time period
that such deceased Participant was entitled to exercise the Options on the date
of his or her death; provided, however, that in no event shall the Options be
exercisable more than ten years from the date they were granted or when the
exercise by a person other than a Participant would, in the opinion of the
Committee, endanger the income tax status of the Company.

4
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

J. Vesting of Options

The right to exercise Options granted under this Plan, in whole or in part,
shall accrue as follows:

1. EMPLOYEES. An Employee/Participant may purchase shares under this Plan
equal to the below listed Vesting Percentage times the number of shares granted
by the Option rounded to the nearest whole share. The Vesting Percentage shall
be determined in accordance with the following schedule based upon the number of
years of employment since the Grant Date of Option:

<TABLE>
<CAPTION>
YEARS OF EMPLOYMENT SINCE

GRANT DATE OF OPTION VESTING PERCENTAGE
<S> <C>
less than 1 year 0%

1 or more years, but less than 2 years 25%

2 or more years, but less than 3 years 50%

3 or more years, but less than 4 years 75%

4 years or more 100%
</TABLE>

For purposes of determining theVesting Percentage, the Employee shall be deemed
to be employed during any period when the Employee is on military leave, sick
leave or other bona fide leave of absence (to be determined in the sole
discretion of the Committee).

2. DIRECTORS. A Director/Participant may purchase shares under this Plan
equal to the below listed Vesting Percentage times the number of shares granted
by the Option rounded to the nearest whole share. The Vesting Percentage shall
be determined in accordance with the following schedule based upon the number of
years of directorship (member of Board) since the Grant Date of Option:

<TABLE>
<CAPTION>
YEARS OF DIRECTORSHIP SINCE

GRANT DATE OF OPTION VESTING PERCENTAGE
<S> <C>
less than 1 year 0%

1 or more years, but less than 2 years 25%

2 or more years, but less than 3 years 50%

3 or more years, but less than 4 years 75%

4 years or more 100%
</TABLE>

5
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

J. Vesting of Options (continued)

3. INDEPENDENT CONTRACTOR. An Independent Contractor shall be 100% vested
in their Option at the time when their final billing is rendered to the Company
for services performed under the contract under which the Option was granted.
The right to exercise such Option shall continue for ninety (90) days after such
final billing or, in the absence of a final billing, from the date determined by
the Committee in accordance with Section H. All rights to exercise the Option
shall terminate after this ninety (90) day period. The Company reserves the
right to terminate any Option granted to an Independent Contractor at any time
prior to exercise, if, in the sole opinion of the Committee, the Independent
Contractor has failed to perform in accordance with the terms of the contract
under which the Option was granted or if the Independent Contractor has engaged
in activities contrary to the best interests of the Company.

K. No Obligation to Exercise the Option

The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.

L. Nonassignability

Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a participant's lifetime shall be
exercisable only by such Participant.

M. No Registration Rights

The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act of 1933 or any other applicable law.

6
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

N. Effect of Change in Stock Subject to the Plan

The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option, and the price per share shall all be
proportionally adjusted for any increase or decrease in the number of issued
shares of Stock subsequent to the effective date of the Plan resulting from (1)
a subdivision or consolidation of shares or any other capital adjustment, or (2)
the payment of a stock dividend. If the Company shall be the surviving
corporation in any merger or consolidation, any Option shall pertain, apply, and
relate to the securities to which a holder of the number of shares of Stock
subject to the Option would have been entitled after the merger or
consolidation. Upon dissolution or liquidation of the Company, or upon a merger
or consolidation in which the Company is not the surviving corporation, all
Options outstanding under the Plan shall terminate, provided however, that each
Participant (and each other person entitled under Section I to exercise an
Option) shall have the right within ninety (90) days after such dissolution or
liquidation, or such merger or consolidation, to exercise such Participant's
Options in whole or in part, but only to the extent that such Options are vested
and otherwise exercisable under the terms of the Plan.

O. Amendment or Termination

The Board, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted. Neither the
Board nor the Committee may, without the consent of the holder of an Option,
alter or impair any Option previously granted under the Plan, except as
authorized herein. Unless sooner terminated, the Plan shall remain in effect
for a period of ten years from the date of the Plan's adoption by the Board.
However, the Board may extend the validity of the Plan for such further period
as it may desire proper at its sole discretion. Termination of the Plan shall
not affect any Option previously granted.

7
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

P. Agreement and Representation of Employees

As a condition to the exercise of any portion of an Option the Company may
require the person exercising such Option to (1) enter into a Stock Purchase
Agreement with the Company and (2) represent and warrant at the time of such
exercise that any shares of Stock acquired at exercise are being acquired only
for investment and without any present intention to sell or distribute such
shares, if, in the opinion of counsel for the Company, such representation is
required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.

Q. Reservation of Shares of Stock

The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Stock that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed necessary by counsel for the Company for the
lawful issuance and sale of its Stock hereunder shall relieve the Company of any
liability in respect of the failure to issue or sell Stock as to which the
requisite authority has not been obtained.

R. Effective Date of Plan

The Plan shall be effective from the date that the Plan is approved by the
Board.

8
SAND MICROELECTRONICS, INC., STOCK OPTION PLAN (I)
COMPANY CONFIDENTIAL

<PAGE>

EXHIBIT 10.38

SAND MICROELECTRONICS, INC.

1998 STOCK PLAN

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SECTION 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . 1
(b) CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) DISABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 1
(f) EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(g) EXERCISE PRICE. . . . . . . . . . . . . . . . . . . . . . . 1
(h) FAIR MARKET VALUE . . . . . . . . . . . . . . . . . . . . . 1
(i) ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) NONSTATUTORY OPTION . . . . . . . . . . . . . . . . . . . . 2
(k) OFFEREE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(l) OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) OPTIONEE. . . . . . . . . . . . . . . . . . . . . . . . . . 2
(n) PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(o) PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . 2
(p) SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(q) SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(r) STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(s) STOCK OPTION AGREEMENT. . . . . . . . . . . . . . . . . . . 2
(t) STOCK PURCHASE AGREEMENT. . . . . . . . . . . . . . . . . . 2
(u) SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . . . 2

SECTION 3. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) COMMITTEE MEMBERSHIP. . . . . . . . . . . . . . . . . . . . 2
(b) COMMITTEE PROCEDURES. . . . . . . . . . . . . . . . . . . . 2
(c) COMMITTEE RESPONSIBILITIES. . . . . . . . . . . . . . . . . 3
(d) FINANCIAL REPORTS . . . . . . . . . . . . . . . . . . . . . 4

SECTION 4. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) GENERAL RULE. . . . . . . . . . . . . . . . . . . . . . . . 4
(b) TEN-PERCENT SHAREHOLDERS. . . . . . . . . . . . . . . . . . 4
(c) ATTRIBUTION RULES . . . . . . . . . . . . . . . . . . . . . 4
(d) OUTSTANDING STOCK . . . . . . . . . . . . . . . . . . . . . 4

SECTION 5. STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . 4
(a) BASIC LIMITATION. . . . . . . . . . . . . . . . . . . . . . 4
(b) ADDITIONAL SHARES.. . . . . . . . . . . . . . . . . . . . . 5

SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES . . . . . . . . . . . . 5
(a) STOCK PURCHASE AGREEMENT. . . . . . . . . . . . . . . . . . 5
(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS . . . . 5
(c) PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . 5
(d) WITHHOLDING TAXES . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

-i-

(e) RESTRICTIONS ON TRANSFER OF SHARES. . . . . . . . . . . . . 5

SECTION 7. TERMS AND CONDITIONS OF OPTIONS . . . . . . . . . . . . . . . . 6
(a) STOCK OPTION AGREEMENT. . . . . . . . . . . . . . . . . . . 6
(b) NUMBER OF SHARES. . . . . . . . . . . . . . . . . . . . . . 6
(c) EXERCISE PRICE. . . . . . . . . . . . . . . . . . . . . . . 6
(d) WITHHOLDING TAXES.. . . . . . . . . . . . . . . . . . . . . 6
(e) EXERCISABILITY. . . . . . . . . . . . . . . . . . . . . . . 6
(f) TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) NONTRANSFERABILITY. . . . . . . . . . . . . . . . . . . . . 7
(h) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE . . . . . . . 7
(i) NO RIGHTS AS A SHAREHOLDER. . . . . . . . . . . . . . . . . 7
(j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS . . . . . 7
(k) RESTRICTIONS ON TRANSFER OF SHARES. . . . . . . . . . . . . 7

SECTION 8. PAYMENT FOR SHARES. . . . . . . . . . . . . . . . . . . . . . . 8
(a) GENERAL RULE. . . . . . . . . . . . . . . . . . . . . . . . 8
(b) SURRENDER OF STOCK. . . . . . . . . . . . . . . . . . . . . 8
(c) PROMISSORY NOTES. . . . . . . . . . . . . . . . . . . . . . 8
(d) CASHLESS EXERCISE . . . . . . . . . . . . . . . . . . . . . 8

SECTION 9. ADJUSTMENT OF SHARES. . . . . . . . . . . . . . . . . . . . . . 8
(a) GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) REORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . 9
(c) RESERVATION OF RIGHTS . . . . . . . . . . . . . . . . . . . 9

SECTION 10. LEGAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . 9

SECTION 11. NO EMPLOYMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . 9

SECTION 12. DURATION AND AMENDMENTS. . . . . . . . . . . . . . . . . . . . 9
(a) TERM OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . 9
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. . . . . . . . . . . . 10
(c) EFFECT OF AMENDMENT OR TERMINATION. . . . . . . . . . . . . 10

SECTION 13. EXECUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>

-ii-

<PAGE>

SAND MICROELECTRONICS, INC.
1998 STOCK PLAN

SECTION 1. PURPOSE.

The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications. The Plan provides for the direct award or sale of
Shares and for the grant of Options to purchase Shares. Options granted under
the Plan may include Nonstatutory Options as well as incentive stock options
intended to qualify under section 422 of the Internal Revenue Code.

SECTION 2. DEFINITIONS.

(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time.

(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

(c) "COMMITTEE" shall mean a committee consisting of members of the
Board of Directors that is appointed by the Board of Directors. If no
Committee has been appointed, the entire Board of Directors shall constitute
the Committee. At such time as the officers and directors of the Company
become reporting persons with respect to the Securities Exchange Act of 1934,
the Committee shall have membership composition which enables the Plan to
qualify under Rule 16b-3 with regard to the grant of Options or other rights
to acquire Shares to persons who are subject to Section 16 of the Securities
Exchange Act of 1934.

(d) "COMPANY" shall mean Sand Microelectronics, Inc., a California
corporation.

(e) "DISABILITY" shall means that an Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.

(f) "EMPLOYEE" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes under the Plan except the
second sentence of Section 4(a).

(g) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.

(h) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Committee in good faith.

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Such determination shall be conclusive and binding on all persons.

(i) "ISO" shall mean an employee incentive stock option described in Code
section 422(b).

(j) "NONSTATUTORY OPTION" shall mean an employee stock option that is
not an ISO.

(k) "OFFEREE" shall mean an individual to whom the Committee has
offered the right to acquire Shares (other than upon exercise of an Option).

(l) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.

(m) "OPTIONEE" shall mean an individual who holds an Option.

(n) "PLAN" shall mean this Sand Microelectronics, Inc. 1998 Stock Plan.

(o) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.

(p) "SERVICE" shall mean service as an Employee.

(q) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).

(r) "STOCK" shall mean the common stock of the Company.

(s) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.

(t) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such
Shares.

(u) "SUBSIDIARY" shall mean any corporation, of which the Company
and/or one or more other Subsidiaries own not less than 50 percent of the
total combined voting power of all classes of outstanding stock of such
corporation. A corporation that attains the status of a Subsidiary on a date
after the adoption of the Plan shall be considered a Subsidiary commencing as
of such date.

SECTION 3. ADMINISTRATION.

(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The
members of the Committee shall be appointed by the Board of Directors.

(b) COMMITTEE PROCEDURES. The Board of Directors shall designate one
of the members of the Committee as chairperson. The Committee may hold
meetings at such times and places as it shall determine. The acts of a
majority of the

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Committee members present at meetings at which a quorum exists, or acts
reduced to or approved in writing by all Committee members, shall be valid
acts of the Committee.

(c) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;

(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;

(iv) To determine when Shares are to be awarded or offered for
sale and when Options are to be granted under the Plan;

(v) To select Offerees and Optionees;

(vi) To determine the number of Shares to be awarded or offered
for sale or to be made subject to each Option;

(vii) To prescribe the terms and conditions of each award or sale
of Shares, including (without limitation) the Purchase Price and vesting
of the award, and to specify the provisions of the Stock Purchase
Agreement relating to such award or sale;

(viii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price and vesting of the
Option, to determine whether such Option is to be classified as an ISO
or as a Nonstatutory Option, and to specify the provisions of the Stock
Option Agreement relating to such Option;

(ix) To amend any outstanding Stock Purchase or Stock Option
Agreement; provided, however, that the rights and obligations under any
Stock Purchase or Stock Option Agreement shall not be materially altered
or impaired adversely by any such amendment, except with the consent of
the Optionee or Offeree;

(x) To determine the disposition of an Option or other right to
acquire Shares in the event of an Optionee's or Offeree's divorce or
dissolution of marriage;

(xi) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Stock Purchase or Stock Option
Agreement; and

(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.

All decisions, interpretations and other actions of the Committee shall be
final and binding on all Offerees,

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Optionees, and all persons deriving their rights from an Offeree or Optionee.
No member of the Committee shall be liable for any action that he or she has
taken or has failed to take in good faith with respect to the Plan, any
Option or any other right to acquire Shares under the Plan.

(d) FINANCIAL REPORTS. To the extent required by applicable law, and not
less often than annually, the Company shall furnish to Optionees and Offerees
Company summary financial information including a balance sheet regarding the
Company's financial condition and results of operations, unless such Optionees
or Offerees have duties with the Company that assure them access to equivalent
information. Such financial statements need not be audited.

SECTION 4. ELIGIBILITY.

(a) GENERAL RULE. Only Employees shall be eligible for designation as
Optionees or Offerees by the Committee. In addition, only individuals who
are employed as common-law employees by the Company or a Subsidiary shall be
eligible for the grant of ISOs.

(b) TEN-PERCENT SHAREHOLDERS. An Employee who owns more than 10
percent of the total combined voting power of all classes of outstanding
stock of the Company or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Offeree unless (i) the Exercise Price for an
option is at least 110 percent of Fair Market Value on the date of grant,
(ii) the Purchase Price for a sale of Shares is at least 100% of Fair Market
Value at the date of purchase, and (ii) in the case of an ISO, such ISO by
its terms is not exercisable after the expiration of five years from the date
of grant.

(c) ATTRIBUTION RULES. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock
owned, directly or indirectly, by or for his brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries.

(d) OUTSTANDING STOCK. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by
any other person.

SECTION 5. STOCK SUBJECT TO PLAN.

(a) BASIC LIMITATION. Shares offered under the Plan shall be
authorized but unissued Shares, or issued Shares that have been reacquired by
the Company. The aggregate number of Shares which may be issued under the
Plan (upon exercise

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of Options or other rights to acquire Shares) shall not exceed 349,796
Shares, subject to adjustment pursuant to Section 9. The number of Shares
which are subject to Options or other rights to acquire Shares outstanding at
any time under the Plan shall not exceed the number of Shares which then
remain available for issuance under the Plan. During the term of the Plan,
the Company shall at all times reserve and keep available sufficient Shares
to satisfy the requirements of the Plan.

(b) ADDITIONAL SHARES. In the event that any outstanding Option or
other right to acquire Shares for any reason expires or is canceled or
otherwise terminated, the Shares allocable to the unexercised portion of such
Option or other right shall again be available for the purposes of the Plan.

SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.

(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may
be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.

(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically
expire if not exercised by the Offeree within the number of days specified by
the Committee and communicated to the Offeree by the Committee. Such right
shall not be transferable and shall be exercisable only by the Offeree to
whom such right was granted.

(c) PURCHASE PRICE. To the extent required by applicable law, the
Purchase Price of Shares to be offered under the Plan shall not be less than
eighty-five percent (85%) of the Fair Market Value of such Shares, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Purchase Price shall be determined by the Committee at its sole discretion.
The Purchase Price shall be payable in a form described in Section 8 or in
the form of services previously rendered to the Company.

(d) WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state or local withholding tax obligations that
may arise in connection with such purchase.

(e) RESTRICTIONS ON TRANSFER OF SHARES. No Shares awarded or sold
under the Plan may be sold or otherwise transferred or disposed of by the
Offeree during the one hundred eighty (180) day period following the
effective date of a

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registration statement covering securities of the Company filed under the
Securities Act of 1933. Subject to the preceding sentence, any Shares
awarded or sold under the Plan shall be subject to such special conditions,
rights of repurchase, rights of first refusal and other transfer restrictions
as the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Purchase Agreement and shall apply in addition to any
general restrictions that may apply to all holders of Shares. To the extent
required by applicable law, any service-based vesting conditions shall not be
less rapid than the schedule set forth in Section 7(e).

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions
of the Plan and may be subject to any other terms and conditions which are
not inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.

(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.

(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of
grant, except as otherwise provided in Section 4(b). The Exercise Price of a
Nonstatutory Option shall not be less than eighty-five percent (85%) of the
Fair Market Value of a Share on the date of grant, except as otherwise
provided in Section 4(b). Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee in its
sole discretion. The Exercise Price shall be payable in a form described in
Section 8.

(d) WITHHOLDING TAXES. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Committee may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee
shall also make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with the disposition of Shares
acquired by exercising an Option.

(e) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is

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to become exercisable. To the extent required by applicable law, an Option
shall become exercisable no less rapidly than the rate of twenty percent
(20%) per year for each of the first five years from the date of grant.
Subject to the preceding sentence, the vesting of any Option shall be
determined by the Committee in its sole discretion.

(f) TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant,
except as otherwise provided in Section 4(b). Subject to the preceding
sentence, the Committee at its sole discretion shall determine when an Option
is to expire.

(g) NONTRANSFERABILITY. No Option shall be transferable by the
Optionee other than by will or by the laws of descent and distribution. An
Option may be exercised during the lifetime of the Optionee only by him or by
his guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

(h) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Stock Option
Agreement shall set forth the extent to which the Optionee shall have the
right to exercise the Option following termination of the Optionee's service
with the Company and its Subsidiaries. Such provisions shall be determined
in the sole discretion of the Committee, need not be uniform among all
Options issued pursuant to the Plan, and may reflect distinctions based on
the reasons for termination of employment. Notwithstanding the foregoing, to
the extent required by applicable law, each Option shall provide that the
Optionee shall have the right to exercise the vested portion of any Option
held at termination for at least 30 days following termination of service
with the Company for any reason other than "cause" (within the meaning of the
rules of the California Department of Corporations), and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.

(i) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate
for such Shares.

(j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price.

(k) RESTRICTIONS ON TRANSFER OF SHARES. No Shares issued upon exercise
of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the
effective date of a registration statement covering securities of the Company
filed under the Securities Act of 1933. Subject to the preceding

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<PAGE>

sentence, any Shares issued upon exercise of an Option shall be subject to
such rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions shall be set
forth in the applicable Stock Option Agreement and shall apply in addition to
any restrictions that may apply to holders of Shares generally.

SECTION 8. PAYMENT FOR SHARES.

(a) GENERAL RULE. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b),
(c) and (d) below.

(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already
been owned by the Optionee or the Optionee's representative for any time
period specified by the Committee and which are surrendered to the Company in
good form for transfer. Such Shares shall be valued at their Fair Market
Value on the date when the new Shares are purchased under the Plan.

(c) PROMISSORY NOTES. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and
conditions of such note shall be determined by the Committee. The Committee
may require that the Optionee pledge his or her Shares to the Company for the
purpose of securing the payment of such note. In no event shall the stock
certificate(s) representing such Shares be released to the Optionee until
such note is paid in full.

(d) CASHLESS EXERCISE. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all
or in part by delivery (on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell Shares and to deliver
all or part of the sale proceeds to the Company in payment of the aggregate
Exercise Price.

SECTION 9. ADJUSTMENT OF SHARES.

(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect
on the value of Shares, a combination or consolidation of the outstanding
Stock into a lesser number of Shares, a recapitalization, a reclassification
or a similar occurrence, the Committee shall make appropriate adjustments in
one or more of (i) the number of Shares available for future grants of
Options or other rights to acquire Shares under Section 5, (ii) the number of
Shares covered by each

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outstanding Option or other right to acquire Shares or (iii) the Exercise
Price of each outstanding Option or the Purchase Price of each other right to
acquire Shares.

(b) REORGANIZATIONS. In the event that the Company is a party to a
merger or reorganization, outstanding Options or other rights to acquire
Shares shall be subject to the agreement of merger or reorganization.

(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any
dividend, or (iii) any other increase or decrease in the number of shares of
stock of any class. Any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
the number or Exercise Price of Shares subject to an Option, or the number or
Purchase Price of shares subject to any other right to acquire Shares. The
grant of an Option or other right to acquire Shares pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.

SECTION 10. LEGAL REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange on
which the Company's securities may then be listed, and the Company has
obtained the approval or favorable ruling from any governmental agency which
the Company determines is necessary or advisable.

SECTION 11. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any Option granted or other right to
acquire Shares awarded under the Plan, shall be construed to give any person
any right to become, to be treated as, or to remain an Employee. The Company
and its Subsidiaries reserve the right to terminate any person's Service at
any time and for any reason.

SECTION 12. DURATION AND AMENDMENTS.

(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board

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of Directors, subject to the approval of the Company's shareholders. In the
event that the shareholders fail to approve the Plan within twelve (12)
months after its adoption by the Board of Directors, any Option grants or
other right to acquire Shares already made shall be null and void, and no
additional Option grants or other right to acquire Shares shall be made after
such date. The Plan shall terminate automatically ten (10) years after its
adoption by the Board of Directors and may be terminated on any earlier date
pursuant to Subsection (b) below.

(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations
under any Option granted or other right to acquire Shares awarded before
amendment of the Plan shall not be materially altered, or impaired adversely,
by such amendment, except with consent of the Optionee or Offeree. An
amendment of the Plan shall be subject to the approval of the Company's
shareholders only to the extent required by applicable laws, regulations or
rules.

(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or
any amendment thereof, shall not affect any Share previously issued or Option
previously granted under the Plan.

SECTION 13. EXECUTION.

To record the adoption of the Plan by the Board of Directors as of
February 6, 1998, the Company has caused its authorized officer to execute
the same.

SAND MICROELECTRONICS, INC.

By
-------------------------------------
Ravi Naidu
Chief Financial Officer

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EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Registration
Statement on Form S-8 pertaining to the Award Software International, Inc.
1997 Equity Incentive Plan, the Award Software International, Inc. 1995 Stock
Option Plan, the Award Software International, Inc. Employee Stock Purchase
Plan, the Sand Microelectronics, Inc. Non-Qualified Stock Option Plan, and
the Sand Microelectronics, Inc. 1998 Stock Plan of Phoenix Technologies, Ltd.
of our report dated October 21, 1997, with respect to the consolidated
financial statements and schedule of Phoenix Technologies, Ltd. included in
its Annual Report (Form 10-K) for the year ended September 30, 1997, filed
with the Securities and Exchange Commission. The consolidated financial
statements and schedule of Phoenix Technologies, Ltd. included in its Annual
Report (Form 10-K) for year ended September 30, 1997 will be restated to
reflect the combined financial results of Phoenix Technologies, Ltd. and
Award Software International, Inc. to give effect to the Merger of the two
companies, which was consummated on September 24, 1998, using pooling of
interests method of accounting.

/s/ ERNST & YOUNG, L.L.P.

San Jose, California
September 30, 1998

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement of
Phoenix Technologies Ltd. on Form S-8 for shares of common stock outstanding
under the Award Software International, Inc. 1997 Equity Incentive Plan, 1995
Stock Option Plan and Employee Stock Purchase Plan and outstanding under the
Sand Microelectronics, Inc. Non-Qualified Stock Option Plan and 1998 Stock
Plan of our report dated October 27, 1995, on our audit of the consolidated
financial statements and financial statement schedule of Phoenix Technologies
Ltd. for the year ended September 30, 1995, appearing in the Annual Report on
Form 10-K of Phoenix Technologies, Ltd. for the year ended September 30,
1997, filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1934.

/s/ PricewaterhouseCoopers LLP

San Jose, California
September 30, 1998