exv10w2



 







Exhibit
10.2




MICRO LINEAR CORPORATION




1998 NONSTATUTORY STOCK OPTION PLAN




(as amended through February 24, 2006)




     1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option Plan are:




	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.





          Options granted under the Plan will be Nonstatutory Stock Options.




     2. Definitions. As used herein, the following definitions shall apply:



          (a) “Administrator” means the Board or any of its Committees as shall be administering
the Plan, in accordance with Section 4 of the Plan.




          (b) “Applicable Laws” means the requirements relating to the administration of stock
option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan.




          (c) “Board” means the Board of Directors of the Company.




          (d) “Code” means the Internal Revenue Code of 1986, as amended.




          (e) “Committee” means a committee of Directors appointed by the Board in accordance
with Section 4 of the Plan.




          (f) “Common Stock” means the Common Stock of the Company.




          (g) “Company” means Micro Linear Corporation, a Delaware corporation.




          (h) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.




          (i) “Director” means a member of the Board.

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          (j) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.




          (k) “Employee” means any person, including Officers, employed by the Company or any
Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the
case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. 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, as of any date, the value of Common Stock determined as
follows:




               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;



               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; and



               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.



               Notwithstanding the foregoing, for purposes of setting the exercise price of a stock option at
the fair market value of the Common Stock to comply with the requirements of Section 409A or 422 of
the Code, as applicable to the stock option, the Administrator may adopt and apply any valuation
method to determine the Fair Market Value of the Common Stock which complies with the requirements
of Section 409A of the Code or Section 422 of the Code, based on guidance from the Internal Revenue
Service.



          (n) “Notice of Grant” means a written or electronic notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement.




          (o) “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.

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          (p) “Option” means a nonstatutory stock option granted pursuant to the Plan, that is
not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.




          (q) “Option Agreement” means an agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.




          (r) “Option Exchange Program” means a program whereby outstanding options are
surrendered in exchange for options with a lower exercise price.




          (s) “Optioned Stock” means the Common Stock subject to an Option.




          (t) “Optionee” means the holder of an outstanding Option granted under the Plan.




          (u) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.




          (v) “Plan” means this 1998 Nonstatutory Stock Option Plan.




          (w) “Service Provider” means an Employee including an Officer, Consultant or Director.




          (x) “Share” means a share of the Common Stock, as adjusted in accordance with Section
12 of the Plan.




          (y) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.




     3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is One Million
Five Hundred Thousand (1,500,000) Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.



          If an Option expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless the Plan has
terminated).




     4. Administration of the Plan.



          (a) Administration. The Plan shall be administered by (i) the Board or (ii) a
Committee, which committee shall be constituted to satisfy Applicable Laws.

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          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:




               (i) to determine the Fair Market Value of the Common Stock;



               (ii) to select the Service Providers to whom Options may be granted hereunder;



               (iii) to determine whether and to what extent Options are granted hereunder;



               (iv) to determine the number of shares of Common Stock to be covered by each Option granted
hereunder;



               (v) to approve forms of agreement for use under the
Plan;



               (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or the shares of Common Stock relating thereto, based in each case
on such factors as the Administrator, in its sole discretion, shall determine;



               (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option shall have declined since the date the
Option was granted;



               (viii) to institute an Option Exchange Program;



               (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;



               (x) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;



               (xi) to modify or amend each Option (subject to Section 14(b) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;



               (xii) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Option previously granted by the Administrator;



               (xiii) to determine the terms and restrictions applicable to Options;



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               (xiv) to allow Optionees to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is
to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator may deem necessary or advisable;
and



               (xv) to make all other determinations deemed necessary or advisable for administering the
Plan.



          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Optionees and any other holders of Options.




     5. Eligibility. Options may be granted to Service Providers; provided, however, that
notwithstanding anything to the contrary contained in the Plan, an Option may only be granted to an
Officer as an inducement essential to his or her initial employment with the Company.



     6. Limitation. Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee’s relationship as a Service Provider with the
Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to
terminate such relationship at any time, with or without cause.



     7. Term of Plan. The Plan shall become effective upon its adoption by the Board. It
shall continue in effect for ten (10) years, unless sooner terminated under Section 14 of the Plan.



     8. Term of Option. The term of each Option shall be stated in the Option Agreement.



     9. Option Exercise Price and Consideration.



          (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator.




          (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised.




          (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. Such consideration may
consist entirely of:



                (i) cash;



               (ii) check;



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               (iii) promissory note;



               (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have
been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a
Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;



               (v) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;



               (vi) a reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionee’s participation in any Company-sponsored deferred
compensation program or arrangement;



               (vii) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws; or



               (viii) any combination of the foregoing methods of payment.



     10. Exercise of Option.



          (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement. An Option may not be
exercised for a fraction of a Share.




               An Option shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator
and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall
be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued)
such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.



               Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.



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          (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a
Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his
or her Option, but only within such period of time as is specified in the Option Agreement, and
only to the extent that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee’s termination. If, on the date of termination, the Optionee is not vested
as to his or her entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.




          (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement, to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the
date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option shall revert to 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 the Plan.




          (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may
be exercised within such period of time as is specified in the Option Agreement (but in no event
later than the expiration of the term of such Option as set forth in the Notice of Grant), by the
Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of death. In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionee’s termination. If, at the time of death, the Optionee is not vested
as to his or her entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or administrator of
the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the
Optionee’s will or the laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.




          (e) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Option previously granted based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that such offer is made.




     11. Non-Transferability of Options . Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as the Administrator
deems appropriate.



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	12.	 	Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.





          (a) Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company shall not be deemed
to have been “effected without receipt of consideration.” Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock subject to an
Option.




          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior
to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which
the Option would not otherwise be exercisable. In addition, the Administrator may provide that any
Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and
in the manner contemplated. To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed action.




          (c) Change of Control. Upon or in connection with an acquisition of the Company in a
transaction or series of related transactions consisting of a merger, purchase of outstanding
stock, sale of all or substantially all of the Company’s assets, or other form of business
acquisition or combination, and which results in a change in control of the Company (the
“Acquisition”), all rights to exercise this Option or to acquire any shares of stock hereunder
shall automatically terminate except as provided in this Section. At such time prior to the
consummation of the Acquisition as the Committee shall designate by written notice to the Optionee,
the Optionee or other person then entitled to exercise this Option shall have the right to exercise
the vested, unexercised portion of this Option which would, but for this Section, otherwise be
vested and exercisable as of the date on which the Acquisition occurs. If
provision is made in writing in connection with the Acquisition for the assumption of this
Option, or the substitution for this Option of an option covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments, if any, in accordance
with the applicable provisions of the Plan as to the number and kind of shares optioned and their
exercises prices, then the Optionee shall elect in writing, within time limits as may be designated
in written notice from the


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Committee to the Optionee, to accept the assumed or substituted option
arrangements, or, in lieu thereof, to exercise the Option to the extent permitted under this
Section, but the Optionee shall not be entitled in any event to accept the benefits, in whole or in
part, of both of those alternatives. The Optionee agrees that failure to timely accept or exercise
rights under this Section by written confirmation designated in form and substance by the Committee
shall forever bar and release any rights otherwise granted to the Optionee under this Section or
other provisions of this Option. The Optionee shall have no right to require that this Option be
assumed or replaced with a substitute option in connection with any Acquisition.




     13. Date of Grant. The date of grant of an Option shall be, for all purposes, the
date on which the Administrator makes the determination granting such Option, or such other later
date as is determined by the Administrator. Notice of the determination shall be provided to each
Optionee within a reasonable time after the date of such grant.



     14. Amendment and Termination of the Plan.



          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.




          (b) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to options granted under the Plan prior to
the date of such termination.




     15. Conditions Upon Issuance of Shares.



          (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance. The Plan,
and the Options granted under the Plan,
shall be governed by the substantive laws of the State of Delaware
but not the rules and laws of that state dealing with the choice of
law.




          (b) Investment Representations. As a condition to the exercise of an Option the
Company may require the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.



     16. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.




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     17. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.




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MICRO LINEAR CORPORATION




1998 NONSTATUTORY STOCK OPTION PLAN




STOCK OPTION AGREEMENT




     Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.



I. NOTICE OF STOCK OPTION GRANT




     [Optionee’s Name and Address]



     You have been granted an option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Option Agreement, as follows:



	 	 	 
	Grant Number
	 	 
	 
	 
	 
	 	 
	Date of Grant
	 	 
	 
	 
	 
	 	 
	Vesting Commencement Date
	 	 
	 
	 
	 
	 	 
	Exercise Price per Share
	 	$
	 
	 
	 
	 	 
	Total Number of Shares Granted
	 	 
	 
	 
	 
	 	 
	Total Exercise Price
	 	$
	 
	 
	 
	 	 
	Type of Option:
	 	Nonstatutory Stock Option
	 
	 	 
	Term/Expiration Date:
	 	Fifth-year anniversary of Date of Grant.
	 
	 	 
	Vesting Schedule:
	 	 






     Subject to the Optionee continuing to be a Service Provider on such dates, this Option shall
vest and become exercisable as to one-fourth (1/4th) of the Optioned Stock six months
following the above Date of Grant, and as to an additional one-twenty-fourth (1/24th) of
the Optioned Stock following each month of continuous service with the Company thereafter.



     Notwithstanding the foregoing, the following special vesting provisions shall apply to this
Option:



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     (i) In the event that the employment of the Optionee with the Company is terminated within the
first six (6) months following the above Date of Grant for reasons other than “Cause” (as defined
below), then the vesting of the Optioned Stock shall be accelerated six months.



     (ii) In the event of a “Change of Control” (as defined below) of the Company and the successor
corporation does not assume, or substitute a replacement stock option for, this Option, then the
vesting of the Option Stock shall be accelerated in full.



     (iii) In the event of a “Change of Control” (as defined below) and the employment of the
Optionee with the successor corporation or its affiliate is involuntarily terminated for reasons
other than “Cause” (as defined below) within twelve (12) months of the Change of Control, then the
vesting of the Optioned Stock shall become accelerated in full.



     Termination Period:



     This Option may be exercised for thirty (30) days after Optionee ceases to be a Service
Provider. Upon the death or Disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.



II. AGREEMENT




     1. Grant of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an
option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the
terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section
14(b) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.



     2. Exercise of Option.



          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Option Agreement.




          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to [Title]. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.




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          No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.




     3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:



          (a) cash;




          (b) check;




          (c) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or




          (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.




     4. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.



     5. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the
terms of this Option Agreement.



     6. Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.



          (a) Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of an NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to withhold from his or
her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.




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          (b) Disposition of Shares. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes.




     7. Entire Agreement; Governing Law. The Plan is incorporated herein by reference.
The Plan and this Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee’s interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not the choice of law
rules, of Delaware.



     8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.



     9. Definitions. Solely for purposes of this Option, the following terms shall have
the meanings given them below:



          (a) “Cause” shall mean the occurrence of any one of the following as determined in good faith
by the Company or its successor corporation: (i) Optionee’s continuous failure to perform his or
her regular duties after fifteen (15) calendar days written notice from the Company or successor
corporation of the failure, (ii) Optionee’s intentional misconduct or gross negligence in the
performance of Optionee’s duties for the Company, (iii) Optionee’s intentional failure to comply
with the employment policies and rules and regulations of the Company or successor corporation,
(iv) Optionee’s commission of a material fraud against or a material intentional misrepresentation
to the Company or the successor corporation, or (v) the Optionee’s misappropriation of the assets
of the Company or successor corporation.




          (b) “Change of Control” shall mean an “Acquisition” as defined in Section 12(c) of the Plan.



     By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of the Plan and
this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and
fully understands all provisions of the Plan and Option Agreement. Optionee hereby



-4-









 







agrees to accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Plan and Option Agreement. Optionee further
agrees to notify the Company upon any change in the residence address indicated below.



	 	 	 	 	 
	OPTIONEE	 	MICRO LINEAR CORPORATION
	 
	 	 	 	 
	 


	 	By:	 	 
	 

	 	 	 	 
	Signature
	 	 	 	 
	 
	 	 	 	 
	 


	 	Title:	 	 
	 

	 	 	 	 
	Print Name
	 	 	 	 
	 
	 	 	 	 
	 

Residence Address

	 	 	 	 
	 
	 	 	 	 
	 


	 	 	 	 






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EXHIBIT A




MICRO LINEAR CORPORATION




1998 NONSTATUTORY STOCK OPTION PLAN




EXERCISE NOTICE




Micro Linear Corporation

2050 Concourse Drive

San Jose, CA 95131




Attention: [Title]




     1. Exercise of Option. Effective as of today, ___, 20___, the undersigned
(“Purchaser”) hereby elects to purchase ___shares (the “Shares”) of the Common Stock of
Micro Linear Corporation (the “Company”) under and pursuant to the 1998 Nonstatutory Stock Option
Plan (the “Plan”) and the Stock Option Agreement dated                                         , 2006 (the “Option
Agreement”). The purchase price for the Shares shall be $                                        , as required by the
Option Agreement.



     2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase
price for the Shares.



     3. Representations of Purchaser. Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their
terms and conditions.



     4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be
issued to the Optionee as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 12 of the Plan.



     5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.



 









 





     6. Entire Agreement; Governing Law. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Purchaser with respect to the subject
matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a
writing signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of Delaware.



	 	 	 
	Submitted by:

	 	Accepted by:
	 
	 	 
	PURCHASER

	 	MICRO LINEAR CORPORATION
	 
	 	 
	 


	 	 

	Signature
	 	 
	 
	 	 
	 

	 	 
	Print Name

	 	Name
	 
	 	 
	 

	 	 
	 

	 	Title
	 


	 	 
	Date Received
	 	 






	 	 	 	 	 
	Address: