Exhibit 10.3

 

MATHSTAR, INC.

AMENDED AND RESTATED 2004 LONG-TERM INCENTIVE PLAN

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

 

 

 

OPTIONEE:

 

 

GRANT DATE:

 

 

NUMBER OF OPTION SHARES:

 

Shares

EXERCISE PRICE PER SHARE:

 

$ per Share

EXPIRATION DATE:

 

 

 

                THIS AGREEMENT is made as of the Grant Date set forth above by
and between MathStar, Inc., a Delaware corporation (the “Company”), and the
Optionee named above, who has provided services to the Company or an Affiliate
of the Company as an employee, consultant, independent contractor, or other
service provider (the “Optionee”).

 

                The Company desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock, par value $.01 per share (the “Common
Stock”), as hereinafter provided, to carry out the purpose of the MathStar, Inc.
Amended and Restated 2004 Long-Term Incentive Plan (the “Option Plan”).

 

                NOW, THEREFORE, in consideration of the mutual cove­nants
hereinafter set forth, and for other good and valuable consideration, the
parties hereby agree as follows:

 

1.  Grant of Option.  The Company hereby grants to the Optionee the right and
option (the “Option”) to purchase all or any part of the aggregate number of
shares of Common Stock set forth above (the “Option Shares”) (such number being
subject to adjustment as provided in Section 8 hereof) on the terms and subject
to the conditions set forth in this Agreement.  This Option is not intended to
be an “incentive stock option” within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).

2.  Purchase Price.  The per share purchase price of the Option Shares shall be
the Exercise Price Per Share set forth above (such Exercise Price Per Share
being subject to adjustment as provided in Section 8 hereof).

3.  Term and Exercise of Option.

(a)  The term of this Option shall commence on the Grant Date set forth above
and shall continue until the Expiration Date set forth above, unless earlier
terminated as provided herein.

 

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(b)  Subject to the earlier termination of this Option pursuant to its terms and
to the terms of the Plan, this Option shall vest and become exercisable as
follows but only if the Optionee then is an employee, consultant, independent
contractor, or other service provider of the Company or an Affiliate:  the
Option shall vest as to ___________ percent (_____%) of the Option Shares on
___________, as to _____________ percent (_____%) of the Option Shares on
____________, and as to an additional _________________ percent (____%) of the
Option Shares on _______________.

(c)  To exercise this Option, the Optionee shall give written notice to the
Company, to the attention of its President or other designated agent, in
substantially the form attached hereto as Exhibit A, and the Optionee shall
deliver payment in full for the Option Shares with respect to which this Option
is then being exercised, as provided in Section 4(a) below.

(d)  Neither the Optionee nor the Optionee’s legal representatives, legatees or
distributees, as the case may be, will be, or will be deemed to be, a holder of
any Option Shares for any purpose unless and until certificates for such Option
Shares are issued to the Optionee or the Optionee’s legal representatives,
legatees or distributees under the terms of the Option Plan.

5.   Limitations on Exercise of Option.

(a)  The exercise of this Option will be contingent upon receipt from the
Optionee (or the purchaser acting under Section 7 below) of the full Exercise
Price of such Option Shares.  Payment of the Exercise Price shall be made in
cash or by a certified or cashier’s check.  However, in its sole discretion, the
Company may accept shares of Common Stock of the Company that have been owned by
the Optionee for at least six (6) months, having an aggregate Fair Market Value
on the date of exercise which is not less than the total Exercise Price, or a
combination of cash and such shares of Common Stock, in payment of the Exercise
Price.  No Option Shares will be issued until full payment therefor has been
made and the Optionee has executed any and all agreements that the Company may
require the Optionee to execute.

(b)  The issuance of Option Shares upon the exercise of this Option shall be
subject to all applicable laws, rules, and regulations.  If, in the opinion of
the Board of Directors of the Company or a Committee of the Board of Directors,
(i) the listing, registration, or qualification of the Option Shares upon any
securities exchange or under any state or federal law, (ii) the consent or
approval of any regulatory body, or (iii) an agreement of the Optionee with
respect to the disposition of the Option Shares, is necessary or desirable as a
condition to the issuance or sale of the Option Shares, this Option shall not be
exercised and/or Option Shares shall not be sold unless and until such listing,
registration, qualification, consent, approval or agreement is effected or
obtained in form satisfactory to the Board of Directors or the Committee.

6.   Nontransferability of Option.  This Option shall not be transferable by the

 

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Optionee other than by will or the laws of descent and distribution, and during
the lifetime of the Optionee, this Option shall be exercisable only by the
Optionee.

7.   Termination of Optionee as an Employee, Consultant, Independent contractor,
or other Service Provider for “Cause”.  Upon termination of Optionee as an
Employee, Consultant, Independent contractor, or other Service Provider with the
Company or an Affiliate for “cause” (as “cause” is determined in the sole
discretion of the Board or the Committee), this Option shall automatically
terminate and be immediately forfeited, whether or not vested, and neither the
Optionee nor the Optionee’s heirs, personal representatives, successors or
assigns shall have any rights with respect to this Option.

8.   Death of Optionee.  If the Optionee dies , this Option may be exercised to
the same extent that the Optionee would have been entitled to exercise it at the
date of death and may be exercised within a period of one (1) year after the
date of death, but in no case later than the Expiration Date set forth above. 
In such event, this Option shall be exercisable only by the executors or
administrators of the Optionee or by the person or persons to whom the
Optionee’s rights under the Option shall pass by the Optionee’s will or the laws
of descent and distribution.  Any portion of an Option that is not exercisable
at the time of an Optionee’s death shall automatically terminate.

9.   Adjustments.  In the event of any change in the outstanding shares of
Common Stock by reason of any stock dividend, stock split, reverse stock split,
reclassification, combination, exchange of shares, or other similar
recapitalization of the Company, there shall be an appropriate and proportionate
adjustment to the number of Option Shares and the per share Exercise Price Per
Share hereunder so that the Optionee then shall receive for the aggregate
Exercise Price paid by the Optionee upon exercise of this Option the number of
shares the Optionee would have received if this Option had been exercised before
such recapitalization event occurred.  No adjustment shall be made under this
Section 9 upon the issuance by the Company of any warrants, rights, or options
to acquire additional Common Stock or of securities convertible into Common
Stock unless such warrants, rights, options or convertible securities are issued
to all shareholders of the Company on a proportionate basis.

10.                Effect of Certain Transactions. Notwithstanding any provision
in this Option to the contrary, at the time of the occurrence of any of the
events described in Sections 10(a) through (d) below, the portion of the Option
that is not vested shall immediately and automatically vest, and the Option
shall be automatically converted into an Option to acquire the kind and amount
of shares of stock or other securities or property that the Optionee would have
owned or have been entitled to receive immediately after the occurrence of the
event, had the Option been exercised in full immediately before the effective
date of such event; provided, however, that the Expiration Date of the Option
shall remain unchanged, and, in any such case, appropriate adjustment shall be
made in the application of the provisions of this Option with respect to the
rights and interests thereafter of the Optionee, to the end that the provisions
set forth in this Option shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the exercise of this Option:

 

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(a)  The sale, lease, exchange or other transfer, directly or indirectly, of all
or substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company,

(b)  The approval by the Company’s shareholders of any plan or proposal for the
liquidation or dissolution of the Company;

(c)  Any person or entity becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (“Exchange
Act”)), directly or indirectly, of more than fifty percent (50%) of the combined
voting power of the outstanding securities of the Company ordinarily having the
right to vote at elections of directors who were not beneficial owners of at
least fifty percent (50%) of such combined voting power as of the date the
Company’s Board of Directors adopted the Option Plan; and

(d)  A merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to the effective date of such
merger or consolidation have, solely on account of ownership of securities of
the Company at such time, “beneficial ownership” (as defined in Rule 13d-3 under
the Exchange Act) immediately following the effective date of such merger or
consolidation of securities of the surviving company representing less than
fifty percent (50%) of the combined voting power of the surviving corporation’s
then outstanding securities ordinarily having the right to vote at elections of
directors.

Notwithstanding any provision in the Option Plan or this Option Agreement to the
contrary, the Board of Directors or the Committee shall not have the power or
right, either before or after the occurrence of an event described in
subparagraphs (a) through (d) above, to rescind, modify or amend the provisions
of this Section 10 without the consent of the Optionee.

 

                11.  Limitation on Payments and Benefits.  Notwithstanding
anything in this Agreement to the contrary, if any of the payments or benefits
to be made or provided in connection with this Agreement, together with any
other payments, benefits or awards which you have the right to receive from the
Company, or any corporation which is a member of an “affiliated group” (as
defined in Section 1504(a) of the Code without regard to Section 1504(b) of the
Code) of which the Company is a member (“Affiliate”), constitute an “excess
parachute payment” (as defined in Section 280G(b) of the Code), such payments,
benefits or awards to be made or provided in connection with this Agreement, or
any other agreement between you and the Company or its Affiliates, may be
reduced, eliminated, modified or waived to the extent necessary to prevent all,
or any portion, of such payments, benefits or awards from becoming “excess
parachute payments” and therefore subject to the excise tax imposed under
Section 4999 of the Code.  The Optionee will have the sole right and discretion
to determine whether the payments, benefits or awards to be made or provided in
connection with this Agreement, or any other agreement between the Optionee and
the Company, should be reduced, whether or not such other agreement with the
Company or an Affiliate expressly addresses the potential application of Section
280G or Section 4999 of the Code (including, without limitation, that “payments”
under such agreement be reduced).  The Optionee will also have the right to
designate the particular payments, benefits or awards that are to be

 

 

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reduced, eliminated, modified or waived; provided that no such adjustment will
be made if it results in additional expense to the Company in excess of expenses
the Company would have experienced if no adjustment had been made.  The
determination as to whether any such decrease in the payments or benefits is
necessary must be made in good faith by legal counsel or a certified public
accountant selected by you and reasonably acceptable to the Company, and such
determination will be conclusive and binding upon you and the Company.  The
Company will pay or reimburse you on demand for the reasonable fees, costs and
expenses of the counsel or accountant selected to make the determinations under
this Section 11.

 

                12.  Interpretation.  The interpretation and construction of any
provision of the Option Plan and this Option shall be made by the Board of
Directors or the Committee and shall be final, conclusive and binding on the
Optionee and all other persons.

 

                13.  Definitions; Option Plan Governs.  Any capitalized term
used herein that is not expressly defined herein shall have the meaning ascribed
to it in the Option Plan.  This Option is in all respects subject to and
governed by all of the provisions of the Option Plan.

 

                IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by its duly authorized officer, and the Optionee
has executed this Agreement as of the Grant Date set forth above.

 

 

COMPANY:

MathStar, Inc.

 

 

 

 

 

By

 

 

 

 

 

 

Its:

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SSN:

 

 

 

 

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EXHIBIT A

NOTICE OF EXERCISE OF

STOCK OPTION

 

TO:

 

FROM:

 

DATE:

 

RE:          Exercise of Stock Option

 

                I hereby exercise my option to purchase                        
 shares of Common Stock at $______ per share (total exercise price of $ 
                ).  This notice is given in accordance with the terms of my
Non-Statutory Stock Option Agreement (“Agreement”) dated ________________.  The
option price and vested amount is in accordance with Sections 2 and 3 of the
Agreement.

 

Check one:

 

____                    Enclosed is cash, or a cashier’s or certified check
payable to MathStar, Inc. for the total exercise price of the shares being
purchased.

 

____                    Attached is a certificate(s) for
                                           shares of common stock duly endorsed
in blank and surrendered for the exercise price of the shares being purchased.*

 

____

 

                                                *The use of each of these
alternatives is subject to the approval of MathStar, Inc.

 

                Please prepare the stock certificate in the following name(s):

 

Sincerely,

 

                                                                                               

(Signature)

 

                                                                                               

(Print or Type Name)

 

Letter and consideration

received on _______________

(effective date of exercise)

 

 

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