exv10w1



 






Exhibit
10.1




MICRO LINEAR CORPORATION




1991 STOCK OPTION PLAN




(as amended through February 24, 2006)




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




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




Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted
under the Plan.




     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 legal requirements relating to the administration of
stock option plans under state corporate and securities laws and the Code.




          (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 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 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.




 









 








          (i) “Continuous Status as an Employee or Consultant” means the employment or
consulting relationship is not interrupted or terminated by the Company, any Parent or Subsidiary.
Continuous Status as an Employee or Consultant shall not 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; provided, however, that for purposes of Incentive Stock Options, any such leave may
not exceed ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; or (ii) transfers between locations of
the Company or between the Company, its Parent, its Subsidiaries or its successor.




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




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




          (l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary 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.




          (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          (n) “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 of the National Association of
Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading
in 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;



               (ii) If the Common Stock is quoted on the NASDAQ System (but not on the Nasdaq National Market
thereof) or 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 high 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.



          (o) “Fully Diluted Shares” means the number of Shares outstanding as of January 1 of
each year assuming (i) conversion of all securities and other instruments convertible into Common
Stock and (ii) exercise of all outstanding options, warrants, and other instruments exercisable for
Common Stock or preferred stock of the Company.




          (p) “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.




          (q) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.




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




          (s) “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.




          (t) “Option” means a stock option granted pursuant to the Plan.




          (u) “Option Agreement” means a written 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.




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




          (w) “Optioned Stock” means the Common Stock subject to an Option or Stock Purchase
Right.




          (x) “Optionee” means an Employee or Consultant or who holds an outstanding Option or
Stock Purchase Right.




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




          (z) “Plan” means this Micro Linear Corporation 1991 Stock Option Plan as amended from
time to time.




 









 








          (aa) “Restricted Stock” means shares of Common Stock acquired pursuant to a grant of
Stock Purchase Rights under Section 11 below.




          (bb) “Restricted Stock Purchase Agreement” means a written agreement between the
Company and the Optionee evidencing the terms and restrictions applying to stock purchased under a
Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.




          (cc) “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.




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




          (ee) “Stock Purchase Right” means the right to purchase Common Stock pursuant to
Section 11 of the Plan, as evidenced by a Notice of Grant.




          (ff) “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 13 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 3,864,000
Shares of Common Stock plus an annual increase on each of January 1, 1998 and January 1, 1999 equal
to the lesser of (i) 750,000 shares or (ii) 4% percent of the Fully Diluted Shares. The Shares may
be authorized, but unissued, or reacquired Common Stock. However, should the Company reacquire
Shares which were issued pursuant to the exercise of an Option or Stock Purchase Right, such Shares
shall not become available for future grant under the Plan.



          If an Option or Stock Purchase Right expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall become available for
future grant under the Plan (unless the Plan has terminated); provided, however,
that Shares that have actually been issued under the Plan, whether upon exercise of an Option or
Right, shall not be returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their
original purchase price, and the original purchaser of such Shares did not receive any benefits of
ownership of such Shares, such Shares shall become available for future grant under the Plan. For
purposes of the preceding sentence, voting rights shall not be considered a benefit of Share
ownership.




     4. Administration of the Plan.



          (a) Procedure.




               (i) Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Service Providers.



 









 





               (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Options granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.



               (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.



               (iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy
Applicable Laws.



          (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, in accordance with Section 2(n) of
the Plan;



               (ii) to select the Consultants and Employees to whom Options and Stock Purchase Rights may be
granted hereunder;



               (iii) to determine whether and to what extent Options and Stock Purchase Rights or any
combination thereof, are granted hereunder;



               (iv) to determine the number of shares of Common Stock to be covered by each Option and Stock
Purchase Right 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 or Stock Purchase Rights may be exercised (which may
be based on performance criteria), and any restriction or limitation, or any waiver of forfeiture
restrictions regarding any Option or Stock Purchase Right 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 or Stock Purchase Right to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such Option or Stock
Purchase Right shall have declined since the date the Option was granted;



               (viii) to construe and interpret the terms of the Plan;



 









 





               (ix) 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;



               (x) to modify or amend each Option or Stock Purchase Right (subject to Section 15(c) 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;



               (xi) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Option or Stock Purchase Right previously granted by the Administrator;



               (xii) 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 or Stock Purchase Right
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;



               (xiii) to institute an Option Exchange Program;



               (xiv) to determine the terms and restrictions applicable to Options and Stock Purchase Rights
and any Restricted Stock; 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 or
Stock Purchase Rights.




     5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted
to Employees and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option or Stock Purchase
Right may be granted additional Options or Stock Purchase Rights.



     6. Limitations.



          (a) Each Option shall be designated in the Notice of Grant as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent
that the aggregate Fair Market Value:




               (i) of Shares subject to an Optionee’s incentive stock options granted by the Company, any
Parent or Subsidiary, which



 









 





               (ii) become exercisable for the first time during any calendar year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), incentive stock options shall be
taken into account in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time of grant.



          (b) Neither the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee any
right with respect to continuing the Optionee’s employment or consulting relationship with the
Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to
terminate such employment or consulting relationship at any time, with or without cause.




          (c) The following limitations shall apply to grants of Options and Stock Purchase Rights to
Employees:




               (i) No Employee shall be granted, in any fiscal year of the Company, Options and Stock
Purchase Rights to purchase more than 250,000 Shares.



               (ii) The foregoing limitations shall be adjusted proportionately in connection with any change
in the Company’s capitalization as described in Section 13 hereof.



               (iii) If an Option or Stock Purchase Right is canceled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described in Section 13
hereof, the canceled Option or Stock Purchase Right will be counted against the limit set forth in
Section 6(c)(i) hereof. For this purpose, if the exercise price of an Option or Stock Purchase
Right is reduced, the transaction will be treated as a cancellation of the Option or Stock Purchase
Right and the grant of a new Option or Stock Purchase Right.



     7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 19 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 15 of the Plan.



     8. Term of Option. The term of each Option shall be stated in the Notice of Grant;
provided, however, that the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. However, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the Notice of Grant.



     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, subject to the following:




 









 








               (i) In the case of an Incentive Stock Option



                    (A) granted to an Employee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.



                    (B) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.



               (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.



               (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of
less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or
other corporate transaction.



          (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. In so doing, the
Administrator may specify that an Option may not be exercised until the completion of a service
period.




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




               (i) cash,



               (ii) check,



               (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 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) delivery of a properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price,



               (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) any combination of the foregoing methods of payment, or



               (viii) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.



          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 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 stock certificate evidencing such Shares is 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 stock certificate 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 stock certificate is issued, except as provided in Section 13 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.



          (b) Termination of Employment or Consulting Relationship. In the event an Optionee’s
Continuous Status as an Employee or Consultant terminates (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
determined by the Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of termination (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant). In the case of an Incentive Stock Option, the


 









 







           Administrator shall determine such period of time (in no event to exceed ninety (90) days from
the date of termination) when the Option is granted. 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 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.




          Notwithstanding the above, in the event of an Optionee’s change in status from Consultant or
Director to Employee or Employee or Director to Consultant, an Optionee’s Continuous Status as a
Director or Consultant shall not automatically terminate solely as a result of such change in
status. However, in such event, an Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option three months and one day following such change of status from an Employee to a Consultant.




          (c) Disability of Optionee. In the event an Optionee’s Continuous Status as an
Employee or Consultant terminates as a result of the Optionee’s Disability, the Optionee may
exercise his or her Option, but only within twelve (12) months from the date of such termination,
and only to the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such Option as set forth in
the Notice of Grant). 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
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. In the event of the death of an Optionee, the Option may be
exercised, at any time within twelve (12) months following the date of death (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 acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the Option at the date of
death. 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 the Plan.
If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.




     11. Stock Purchase Rights.



          (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan,
it shall advise the offeree in writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the offeree shall be
entitled to purchase, the price to be paid, and the time within which the offeree must accept such
offer, which shall in no event exceed six (6) months from the date upon which the Administrator
made the


 









 







determination to grant the Stock Purchase Right. The offer shall be accepted by execution of
a Restricted Stock Purchase Agreement in the form determined by the Administrator.




          (b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted
Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the purchaser’s employment with the Company for any reason (including
death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock
purchase agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall
lapse at a rate determined by the Administrator.




          (c) Other Provisions. The Restricted Stock Purchase March 25, 1997 Agreement shall
contain such other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion. In addition, the provisions of Restricted
Stock Purchase Agreements need not be the same with respect to each purchaser.




          (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a shareholder, and shall be a shareholder
when his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the
Plan.




     12. Non-Transferability of Options and Stock Purchase Rights. Unless determined
otherwise by the Administrator, an Option or Stock Purchase Right 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 or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as the Administrator
deems appropriate.



     13. Adjustments Upon Changes in Capitalization, Dissolution or Merger.



          (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 Stock
Purchase Right, and the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase
Right, as well as the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, 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 or Stock Purchase Right.




          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option or Stock Purchase Right has not been
previously exercised, it will terminate immediately prior to the consummation of such proposed
action. The Board may, in the exercise of its sole discretion in such instances, declare that any
Option or Stock Purchase Right shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his or her Option or Stock Purchase Right as to all or any part of
the Optioned Stock, including Shares as to which the Option or Stock Purchase Right would not
otherwise be exercisable.




          (c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option and Stock Purchase Right may be assumed or an equivalent option or right may be
substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.
In the event the successor corporation does not assume or substitute the Options and Stock Purchase
Rights, then the Administrator shall provide for the Optionee to fully vest in and have the right
to exercise the Option or Stock Purchase Right as to all or a portion of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If the Administrator
makes an Option or Stock Purchase Right exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Administrator shall notify the Optionee that the Option or
Stock Purchase Right shall be fully vested and exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Stock Purchase Right will terminate upon the expiration
of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or right confers the
right to purchase, for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.




     14. Date of Grant. The date of grant of an Option or Stock Purchase Right shall be,
for all purposes, the date on which the Administrator makes the determination granting such Option
or Stock Purchase Right, 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.



 









 





     15. Amendment and Termination of the Plan.



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




          (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Sections 162(m) and 422 of the Code
(or any successor rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is listed or quoted).
Such shareholder approval, if required, shall be obtained in such a manner and to such a degree as
is required by the applicable law, rule or regulation.




          (c) 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.




     16. Conditions Upon Issuance of Shares.



          (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the
issuance and delivery of such Shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. The Plan,
and the Options and Stock Purchase Rights 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 or Stock
Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right
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.




     17. Liability of Company.



          (a) 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.




          (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option or
Stock Purchase Right exceeds, as of the date of grant, the number of Shares which may be issued
under the Plan without additional shareholder approval, such Option or Stock Purchase shall


 









 







be void with respect to such excess Optioned Stock, unless shareholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 15(b) of the Plan.




     18. 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.



     19. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the manner and to the degree required under
applicable federal and state law.




 









 









MICRO LINEAR CORPORATION




1991 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:1
	 	[Nonstatutory Stock Option/Incentive 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.





 




			
	1	 	If this is an incentive stock option under
Section 422 of the Internal Revenue Code, it (plus your other outstanding
incentive stock options) cannot be first exercisable for more than
$100,000 in any calendar year. Any excess over $100,000 is a nonstatutory
stock option.




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



     (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 administrator of the Plan or the Chief Financial Officer of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all


-2-









 







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.




          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


-3-









 







honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered
at the time of exercise.




          (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 a merger of the Company with or into another corporation,
or the sale of substantially all of the assets of the Company.




     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



-4-









 







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 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
	 	 	 	 
	 
	 	 	 	 
	 


	 	 	 	 






-5-









 






EXHIBIT A




MICRO LINEAR CORPORATION




1991 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 1991 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: