<PAGE>   1

                                                                   Exhibit 10.6

                              AMENDED AND RESTATED
                          CHIPS AND TECHNOLOGIES, INC.
                             1994 STOCK OPTION PLAN
                      (As Amended Through November 9, 1995)


     1. Establishment and Purpose.

        (a) Establishment. The Chips and Technologies, Inc. 1985 Stock Option
Plan was adopted on January 11, 1985 and was amended and restated on January 8,
1987 (the "Initial Plan"). The Initial Plan is amended and restated in its
entirety and renamed the Amended and Restated Chips and Technologies, Inc. 1994
Stock Option Plan (the "Plan") effective upon approval by the stockholders of
Chips and Technologies, Inc.

        (b) Purpose. The Plan is established to create additional incentive for
key employees, directors and consultants or advisors of Chips and Technologies,
Inc. and any successor corporation thereto (collectively referred to as the
"Company"), and any present or future parent and/or subsidiary corporations of
such corporation (all of whom along with the Company being individually referred
to as a "Participating Company" and collectively referred to as the
"Participating Company Group"), to promote the financial success and progress of
the Participating Company Group. For purposes of the Plan, a parent corporation
and a subsidiary corporation shall be as defined in sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended (the "Code").

     2. Administration.

        (a) Administration by Board and/or Compensation Committee. The Plan
shall be administered by the Board of Directors of the Company (the "Board")
and/or by a duly appointed committee of the Board having such powers as shall be
specified by the Board. Any subsequent references herein to the Board shall also
mean the committee if such committee has been appointed and, unless the powers
of the committee have been specifically limited, the committee shall have all of
the powers of the Board granted herein, including, without limitation, the power
to terminate or amend the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. All questions of interpretation of
the Plan or of any options granted under the Plan (an "Option") shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan and/or any Option.

        (b) Disinterested Administration. With respect to the participation in
the Plan of employees who are also officers or directors of the Company subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan shall be administered by the Board in compliance with the
"disinterested administration" requirement of Rule 16b-3, as promulgated under
the Exchange Act and amended from time to time or any successor rule or
regulation ("Rule 16b-3").



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        (c) Compliance with Section 162(m) of the Code. In the event a
Participating Company is a "publicly held corporation" as defined in paragraph
(2) of section 162(m) of the Code, as amended by the Revenue Reconciliation Act
of 1993 (P.L. 103-66), and the regulations promulgated thereunder ("Section
162(m)"), the Company may establish a committee of outside directors meeting the
requirements of Section 162(m) to approve the grant of Options which might
reasonably be anticipated to result in the payment of employee remuneration that
would otherwise exceed the limit on employee remuneration deductible for income
tax purposes pursuant to Section 162(m).

        (d) Options Authorized. Options may be either incentive stock options as
defined in section 422(a) of the Code ("Incentive Stock Options") or options not
intended to qualify as Incentive Stock Options ("Nonqualified Stock Options").

        (e) Authority of Officers. Any officer of a Participating Company shall
have the authority to act on behalf of the Company with respect to any matter,
right, obligation, or election which is the responsibility of or which is
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.

     3. Eligibility. The Options may be granted only to employees (including
officers) and directors of the Participating Company Group or to individuals who
are rendering services as consultants, advisors, or other independent
contractors to the Participating Company Group. The Board shall, in the Board's
sole discretion, determine which persons shall be granted Options (an
"Optionee"). A director of the Company shall be eligible to be granted only a
Nonqualified Stock Option unless the director is also an employee of the
Company. For purposes of the foregoing sentence, "employees" shall include
prospective employees to whom Options are granted in connection with written
offers of employment with Participating Company Group and "consultants" or
"advisors" shall include prospective consultants or advisors to whom Options are
granted in connection with written consulting or advising offers with the
Participating Company Group. An individual who is rendering services as a
consultant, advisor, or other independent contractor shall be eligible to be
granted only a Nonqualified Stock Option. An Optionee may, if otherwise
eligible, be granted additional Options.

     4. Shares Subject to Option. Options shall be options for the purchase of
the authorized but unissued Common Stock of the Company (the "Stock"), subject
to adjustment as provided in paragraph 9 below. The maximum number of shares of
Stock which may be issued under the Plan (including the Initial Plan) shall be
eighteen million two hundred thousand (18,200,000) shares. Subject to adjustment
as provided in paragraph 9 below, at any such time as a Participating Company is
a "publicly held corporation" as defined in Section 162(m), no person shall be
granted within any fiscal year of the Company Options which in the aggregate
cover more than five hundred thousand (500,000) shares (the "Per Person Limit").
In the event that any outstanding Option under the Plan (including the Initial
Plan) for any reason expires or is terminated or canceled and/or shares of Stock
subject to repurchase are repurchased by the



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Company, the shares allocable to the unexercised portion of such Option, or such
repurchased shares, may again be subject to an Option grant. Notwithstanding the
foregoing, any such shares shall be made subject to a new Option only if the
grant of such new Option and the issuance of such shares pursuant to such new
Option would not cause the plan or any Option granted under the Plan to
contravene Rule 16b-3.

     5. Time for Granting Options. All Options shall be granted, if at all, on
or before August 11, 2004.

     6. Terms, Conditions and Form of Options. Subject to the provisions of the
Plan, the Board shall determine for each Option (which need not be identical)
the number of shares of Stock for which the Option shall be granted, the option
price of the Option, the exercisability of the Option, whether the Option is to
be treated as an Incentive Stock Option or as a Nonqualified Stock Option and
all other terms and conditions of the Option not inconsistent with the Plan.
Options granted pursuant to the Plan shall be evidenced by written agreements
specifying the number of shares of Stock covered thereby, in such form as the
Board shall from time to time establish, and shall comply with and be subject to
the following terms and conditions:

        (a) Option Price. The option price for each Option shall be established
in the sole discretion of the Board; provided, however, that (i) the option
price per share for an Option shall be not less than the fair market value, as
determined by the Board, of a share of Stock on the date of the granting of the
Option, and (ii) no Incentive Stock Option granted to an Optionee who at the
time the Option is granted owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of a Participating
Company within the meaning of section 422(b)(6) of the Code and/or ten percent
(10%) of the total combined value of all classes of stock of a Participating
Company (a "Ten Percent Owner Optionee") shall have an option price per share
less than one hundred ten percent (110%) of the fair market value of a share of
Stock on the date the Option is granted.

        (b) Exercise Period of Options. The Board shall have the power to set
the time or times within which each Option shall be exercisable or the event or
events upon the occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however, that (i) no
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years after the date such Option is granted and (ii) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the date such Option is granted.

        (c) Payment of Option Price. Payment of the option price for the number
of shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of shares of
the Company's stock owned by the Optionee having a value, as determined by the
Board (but without regard to any restrictions on transferability applicable to
such stock by reason of federal or state securities laws or agreements with an
underwriter for the Company), not less than the option price, (iii) if
specifically permitted by the Board and set forth in the Optionee's Option
Agreement, by the Optionee's recourse promissory



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note, (iv) by the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of an Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System), (v) by such other consideration and method of payment as the Board, in
its sole discretion, may allow, or (vi) by any combination thereof.

     The Board may at any time or from time to time, by adoption of or by
amendment to the form of Standard Option Agreement described in paragraph 7
below, or by other means, grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the option price and/or which
otherwise restrict one (1) or more forms of consideration. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares of
the Company's stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's stock. Furthermore, no promissory note shall be
permitted if an exercise using a promissory note would be a violation of any
law. Any permitted promissory note shall be due and payable not more than five
(5) years after the Option is exercised, and interest shall be payable at least
annually and be at least equal to the minimum interest rate necessary to avoid
imputed interest pursuant to all applicable sections of the Code. The Board
shall have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock acquired on
exercise of the Option and/or with other collateral acceptable to the Company.

           (x) Unless otherwise provided by the Board, an Option may not be
exercised by tender to the Company of shares of the Company's stock pursuant to
clause (ii) of this paragraph 6(c) unless such shares of the Company's stock
either have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

           (y) Unless otherwise provided by the Board, in the event the Company
at any time becomes subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.

           (z) The Company reserves, at any and all times, the right, in the
Company's sole and absolute discretion, to establish, decline to approve and/or
terminate any program and/or procedures for the exercise of Options by means of
an assignment of the proceeds of a sale of some or all of the shares of Stock to
be acquired upon such exercise pursuant to clause (iv) of this paragraph 6(c).



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    7. Standard Forms of Stock Option Agreement.

       (a) Incentive Stock Options. Unless otherwise provided for by the Board
at the time an Option is granted, an Option designated as an "Incentive Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of incentive stock option agreement attached hereto as Exhibit A and
incorporated herein by reference.

       (b) Nonqualified Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonqualified
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of nonqualified stock option agreement attached hereto as
Exhibit B and incorporated herein by reference.

       (c) Standard Term for Options. Unless otherwise provided for by the Board
in the grant of an Option, any Option granted hereunder shall be exercisable for
a term of ten (10) years.

    8. Authority to Vary Terms. The Board shall have the authority from time to
time to vary the terms of the standard forms of stock option agreement either in
connection with the grant of an individual Option or in connection with the
authorization of a new standard form or forms; provided, however, that the terms
and conditions of such revised or amended standard form or forms of stock option
agreement shall be in accordance with the terms of the Plan.

    9. Effect of Change in Stock Subject to Plan. Appropriate adjustments shall
be made in the number and class of shares of Stock subject to the Plan, to the
Per Person Limit set forth in paragraph 4 above, and to any outstanding Options
and in the option price of any outstanding Options in the event of a stock
dividend, stock split, reverse stock split, combination, reclassification, or
like change in the capital structure of the Company.

   10. Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Control
Company. For purposes of applying this Paragraph 10, the "Control Company" shall
mean the corporation whose stock is subject to the Option.

       (a) the direct or indirect sale or exchange by the stockholders of the
Control Company of all or substantially all of the stock of the Control Company
where the stockholders of the Control Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Control Company;

       (b) a merger in which the stockholders of the Control Company before such
merger do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Control Company; or




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       (c) the sale, exchange, or transfer of all or substantially all of the
Control Company's assets (other than a sale, exchange, or transfer to one or
more corporations where the stockholders of the Control Company before such
sale, exchange or transfer retain, directly or indirectly, at least a majority
of the beneficial interest in the voting stock of the corporation(s) to which
the assets were transferred).

    In the event of a Transfer of Control, any unexercisable and/or unvested
portion of the outstanding Options shall be immediately exercisable and vested
as of the date thirty (30) days prior to the date of the Transfer of Control
unless the Board provides for the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"Acquiring Corporation"), to either assume the Control Company's rights and
obligations under outstanding Options or substitute options for the Acquiring
Corporation's stock for such outstanding Options. The exercise and/or vesting of
any Option that was permissible solely by reason of this paragraph 10 shall be
conditioned upon the consummation of the Transfer of Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control.

    11. Provision of Information. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.

    12. Options Non-Transferable. Unless otherwise provided by the Board, during
the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee and no Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution.

    13. Termination or Amendment of Plan and Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan and/or
any Option at any time; provided, however, that without the approval of the
Company's stockholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 9 above), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c) no expansion in the class of persons eligible
to receive Nonqualified Stock Options. In addition to the foregoing, the
approval of the Company's stockholders shall be sought for any amendment to the
Plan or an Option for which the Board deems stockholder approval necessary in
order to comply with Rule 16b-3. In any event, no amendment may adversely affect
any then outstanding Option or any unexercised portion thereof, without the
consent of the Optionee, unless such amendment is required to enable an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock Option.

    14. Continuation of Initial Plan as to Outstanding Options. Notwithstanding
any other provision to the contrary, the terms of the Initial Plan shall remain
in effect and apply to Options granted pursuant to the Initial Plan.



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    IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing is the Amended and Restated Chips and Technologies, Inc. 1994
Stock Option Plan as duly adopted by the Board of Directors of the Company on
August 11, 1994 and as subsequently amended through November 9, 1995.



                                                      --------------------------
                                                      Jeffery Anne Tatum,
                                                      Secretary



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                                   EXHIBIT A


                        INCENTIVE STOCK OPTION AGREEMENT
                                     Between
                          CHIPS AND TECHNOLOGIES, INC.
                                       and

                               -----------------

         You have been granted an option under the Amended and Restated Chips
and Technologies, Inc. 1994 Stock Option Plan (the "Plan"). This Agreement
describes the terms and conditions of your option (the "Agreement").

Number of Shares                  Your option is for                shares of 
                                  the common stock of Chips and Technologies,
                                  Inc., a Delaware corporation ("Chips").

Option Price                      You may purchase your option shares for 
                                  $               per share, which was the
                                  closing price of the common stock of Chips on
                                       , 199    .

Type of Option                    This option is intended to be an
                                  incentive stock option as provided in section
                                  422 of the Internal Revenue Code of 1986, as
                                  amended (the "Code"), but Chips does not
                                  warrant that it qualifies as such. You should
                                  consult with your own tax advisor regarding
                                  the tax effects of this Option and the
                                  requirements necessary to obtain favorable
                                  income tax treatment under section 422 of the
                                  Code.

Grant Date                        The "Grant Date" of your option is     , 19  .
                                  This is the date the Board of Directors of
                                  Chips approved your option grant.

Initial Vesting Date              The "Initial Vesting Date" of your option is
                                  , 19 . This is the date your option begins to
                                  vest.

Exercisability                    You may exercise your option immediately in
                                  its entirety after the Grant Date unless the
                                  total value of all of your incentive stock
                                  options from Chips which first become
                                  exercisable in 19__ exceeds $100,000 (see
                                  $100,000 Exercise Limitation below). However,
                                  if you buy unvested option shares, they may
                                  not be sold or otherwise transferred until
                                  they become vested (see Right of Repurchase
                                  below).

Term                              Your option will expire on , 19 , unless your
                                  employment with Chips (or a parent corporation
                                  or subsidiary corporation of Chips as defined
                                  in section 424 of the Code) is terminated as
                                  explained below, or unless Chips is involved
                                  in a "transfer of control" transaction as
                                  explained below.

Vesting of Option                 On the Initial Vesting Date,       
                                  of the option shares will be vested.
                                  Thereafter, 1/48 of the option shares will
                                  vest for each 


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                                  full month of your continuous employment with
                                  Chips (or a parent or subsidiary corporation
                                  of Chips) from the Initial Vesting Date. Your
                                  option stops vesting when your employment with
                                  Chips (or a parent corporation or subsidiary
                                  corporation of Chips) terminates. Vesting
                                  during an approved leave of absence is
                                  governed by the applicable Leave of Absence
                                  Policy in effect at the time you go on leave.

$100,000 Exercise                 The total value of all of your Chips' 
Limitation                        incentive stock options (including this 
                                  option) which are exercisable for the first
                                  time during 19__ (the value is determined at
                                  the time each option was granted) shall not
                                  exceed one hundred thousand dollars
                                  ($100,000). Such limitation on exercise shall
                                  be referred to in this Agreement as the
                                  "$100,000 Exercise Limitation." If compliance
                                  with the $100,000 Exercise Limitation will
                                  prevent you from exercising the option for any
                                  vested shares for more than thirty (30) days
                                  after the vesting date for such shares, the
                                  option shall be deemed to be two (2) options.
                                  The first option shall be for the maximum
                                  number of shares that can comply with the
                                  $100,000 Exercise Limitation without
                                  preventing the option from being exercisable
                                  as to vested shares. The second option, which
                                  shall not be treated as an incentive stock
                                  option, shall be for the balance of the shares
                                  subject to the option and shall be exercisable
                                  on the same terms and at the same time as set
                                  forth in this Agreement. Unless otherwise
                                  specified in your notice of exercise, the
                                  first option shall be deemed to be exercised
                                  first and then the second option shall be
                                  deemed to be exercised.

Right of Repurchase               You can buy shares that have not yet
                                  vested. The number of shares you buy over and
                                  above your vested shares are "unvested
                                  shares." They may not be sold or otherwise
                                  transferred until they become vested.

                                  If your employment with Chips (or a parent
                                  corporation or subsidiary corporation of
                                  Chips) terminates for any reason, with or
                                  without cause while you are holding unvested
                                  shares, or if you or your legal representative
                                  attempts to sell, exchange, transfer, pledge,
                                  or otherwise dispose of any unvested shares
                                  (other than pursuant to an "ownership change"
                                  as defined below), Chips may buy those
                                  unvested shares back from you at the option
                                  price you originally paid. If Chips wishes to
                                  exercise its right to repurchase the unvested
                                  shares, it must give you notice within 60 days
                                  after (i) the termination of your employment,
                                  or exercise of the option, if later, or (ii)
                                  Chips has received notice of the attempted
                                  disposition. Chips must exercise its right to
                                  repurchase the unvested shares, if at all, for
                                  all of the unvested shares, except as Chips
                                  and you otherwise agree. However, Chips will
                                  not repurchase your unvested shares if you


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                                  transfer your unvested shares to your
                                  ancestors, descendants, or spouse or to a
                                  trustee for their benefit, provided that the
                                  transferee agrees in writing to take the
                                  shares subject to Chips' right of repurchase.
                                  In the event Chips is unable to exercise the
                                  right of repurchase under the provisions of
                                  Section 160 of the Delaware General
                                  Corporation Law, or the corresponding
                                  provisions of other applicable law, Chips has
                                  the right to assign the right of repurchase to
                                  one or more persons as may be selected by
                                  Chips' Board of Directors.

                                  To ensure that the unvested shares will be
                                  available for repurchase, you are required to
                                  deposit the certificate for the shares with an
                                  escrow agent designated by Chips under the
                                  terms and conditions of an escrow agreement
                                  approved by Chips.

                                  If Chips exercises its right to repurchase
                                  your unvested shares, payment by Chips to the
                                  escrow agent on behalf of you or your legal
                                  representative will be made in cash within 60
                                  days after the date of the mailing of the
                                  written notice. For purposes of this payment,
                                  cancellation of any outstanding promissory
                                  note that you have previously delivered to
                                  Chips will be treated as payment in cash to
                                  the extent of the unpaid principal and any
                                  accrued interest canceled. Within 30 days
                                  after payment by Chips, the escrow agent will
                                  give the shares which Chips has purchased to
                                  Chips and give the payment received from Chips
                                  to you.

                                  The certificates for unvested shares have
                                  stamped on them a special legend referring to
                                  Chips' right of repurchase. As your vesting
                                  percentage increases, you may request, at
                                  reasonable intervals, that Chips exchange
                                  those legended shares which have vested for
                                  shares that are freely transferable.

Transfer of Control               The following events constitute an
                                  "ownership change" of Chips: (1) the direct or
                                  indirect sale or exchange by Chips'
                                  stockholders of all or substantially all of
                                  Chips' stock; (2) a merger in which Chips is a
                                  party; or (3) the sale, exchange, or transfer
                                  of all or substantially all of Chips' assets
                                  (other than a sale, exchange, or transfer to
                                  one or more corporations where Chips'
                                  stockholders before such sale, exchange, or
                                  transfer retain, directly or indirectly, at
                                  least a majority of the beneficial interest in
                                  the voting stock of the corporation(s) to
                                  which the assets were transferred).

                                  A "transfer of control" of Chips means an
                                  ownership change in which Chips' stockholders
                                  before such ownership change do not retain,
                                  directly or indirectly, at least a majority of
                                  the beneficial interest in Chips' voting
                                  stock.


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                                  In the event of a transfer of control, all
                                  shares acquired upon exercise of your option
                                  shall become vested shares effective 30 days
                                  prior to the transfer of control, unless the
                                  Chips' Board of Directors arranges with the
                                  surviving, continuing, successor, or
                                  purchasing corporation, as the case may be,
                                  for such corporation to assume Chips' rights
                                  and obligations under this Agreement or
                                  substitute its own option for your Chips'
                                  option. Your option will terminate effective
                                  as of the date of the transfer of control to
                                  the extent that your option is neither
                                  exercised as of the date of the transfer of
                                  control nor assumed by the surviving,
                                  continuing, successor, or purchasing
                                  corporation, as the case may be.

Regular Termination               If your employment with Chips (or a parent
                                  corporation or subsidiary corporation of
                                  Chips) terminates for any reason, with or
                                  without cause, your option, to the extent
                                  unexercised, may be exercised (to purchase
                                  vested shares only) within 30 days after the
                                  date of your termination.

Restrictions on                   You may not sell shares that you acquire by 
Resale: General                   exercising your option at any time you are in 
                                  possession of material inside information
                                  concerning Chips. In addition, sales of shares
                                  that you acquire by exercising your option
                                  will be governed by Chips' employee trading
                                  policy, as in effect at the time of the
                                  proposed sale.

Restrictions on                   If you are an officer of Chips, shares that 
Resale: Officers                  you acquire by exercising your option may only
                                  be sold during the officers' trading
                                  restriction period. This period commences on
                                  the third business day following the release
                                  of quarterly financial results and ends
                                  twenty-one days thereafter, unless extended by
                                  Chips' President or Chief Financial Officer.


Notice of Exercise                When you wish to exercise your option, you 
                                  must send an executed Notice of Exercise to:

                                                   Chips and Technologies, Inc.
                                                   2950 Zanker Road
                                                   San Jose, California 95134
                                                   Attn:  Financial Services 1-7

                                  Your notice must specify how many whole shares
                                  you wish to purchase, and must contain such
                                  representations and agreements as to your
                                  investment intent with respect to the shares
                                  as may be required by Chips. Your notice must
                                  be delivered in person or by certified mail to
                                  Chips' Stock Administrator prior to the
                                  expiration date of the term of the Option,
                                  accompanied by an executed copy of the then
                                  current form of escrow instructions, if you
                                  are exercising your option for unvested
                                  shares, and full payment of the option 



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<PAGE>   12
                                  price for the number of shares being
                                  purchased. The Notice of Exercise is effective
                                  when it is received by Chips. Chips will not
                                  be required to issue fractional shares upon
                                  the exercise of your option.

Form of Payment                   When you submit your Notice of
                                  Exercise, you must include payment of the
                                  option price for the number of shares you are
                                  purchasing. Payment may be made in one (or a
                                  combination of two or more) of the following
                                  forms:

                                      -   Your personal check, a cashier's
                                          check, or a money order;

                                      -   Irrevocable directions to a securities
                                          broker approved by Chips to sell your
                                          option shares and to deliver all or a
                                          portion of the sale proceeds to Chips
                                          in payment of the option price. (The
                                          balance of the sales proceeds, if any,
                                          will be delivered to you.) The
                                          directions must be given by signing a
                                          form provided by Chips.

Withholding Taxes                 In order to exercise your option, you must 
                                  make arrangements to pay any federal and state
                                  withholding taxes that may be due as a result
                                  of the option exercise. In the future, at any
                                  time requested by Chips, you must make
                                  arrangements to pay any federal or state
                                  withholding taxes that may be due as a result
                                  of any transfer of any shares acquired on
                                  exercise of your option, the operation of any
                                  federal or state law providing for the
                                  imputation of interest, or the lapse of any
                                  restriction with respect to any shares
                                  acquired on exercise of your option.

Certificate Registration          The certificate or certificates issued upon 
                                  the exercise of your option will be registered
                                  in your name.

Restriction on Grant              The grant of your option and the issuance of 
of Option and Issuance            shares upon the exercise of the option are 
of Shares                         subject to compliance with all applicable
                                  requirements of federal or state law with
                                  respect to such securities. Your option may
                                  not be exercised if the issuance of shares
                                  upon such exercise would constitute a
                                  violation of any applicable federal or state
                                  securities law or other law or regulations. As
                                  a condition to the exercise of your option,
                                  Chips may require you to make any
                                  representation or warranty to Chips as may be
                                  necessary or


                                       5
<PAGE>   13
                                  appropriate to evidence compliance with any
                                  applicable law or regulation. Chips may place
                                  legends on the certificates for your option
                                  shares referring to any applicable federal or
                                  state securities law restrictions.

Restriction on Issuance           In the event that the adoption of any 
of Shares to Section 16           amendment of the Plan is subject to the 
Insiders                          approval of Chips' stockholders in order for 
                                  the option to comply with the requirements of 
                                  Rule 16b-3, promulgated under the Securities
                                  Exchange Act of 1934, as amended (the
                                  "Exchange Act"), the option shall not be
                                  exercisable prior to such stockholder approval
                                  if you are subject to Section 16(b) of the
                                  Exchange Act, unless the Board, in its sole
                                  discretion, approves the exercise of the
                                  option prior to such stockholder approval.

Transfer of Option                Prior to your death, only you may
                                  exercise your option, and you cannot transfer
                                  or assign your option. However, you may
                                  dispose of your option in your will.

                                  Regardless of any marital property settlement
                                  agreement, Chips is not obligated to honor a
                                  Notice of Exercise from your former spouse,
                                  nor is Chips obligated to recognize your
                                  former spouse's interest in your option in any
                                  other way.

Changes in Stock                  Appropriate adjustments shall be made in the 
Subject to the Option             number, exercise price and class of shares of
                                  stock subject to the option in the event of a
                                  stock dividend, stock split, reverse stock
                                  split, combination, reclassification or like
                                  change in the capital structure of Chips.

                                  In the event of any such change in the capital
                                  structure of Chips, any and all new
                                  substituted or additional securities to which
                                  you are entitled by reason of your ownership
                                  of the shares acquired upon exercise of your
                                  option will be immediately subject to Chips'
                                  right of repurchase with the same force and
                                  effect as the shares subject to the right of
                                  repurchase immediately before such event (see
                                  Right of Repurchase above).

Employee Rights                   Your option or this Agreement do not
                                  give you the right to be retained as an
                                  employee by Chips (or a parent corporation or
                                  subsidiary corporation of Chips). Chips
                                  reserves the right to terminate your
                                  employment at any time, with or without
                                  cause.

Stockholder Rights                You, or your estate or heirs, have no
                                  rights as a stockholder of Chips until a
                                  certificate for your option shares has been
                                  issued. No adjustments are made for dividends
                                  or other rights if the applicable record date
                                  occurs prior to the date your stock
                                  certificate is issued, except in the event of
                                  a change in the stock subject to the option as
                                  described above.



                                       6
<PAGE>   14
Applicable Law                    This Agreement will be interpreted and 
                                  enforced under the laws of the State of
                                  California.

Other Agreements                  The text of the Plan is
                                  incorporated in this Agreement by reference.
                                  This Agreement and the Plan constitute the
                                  entire understanding between you and Chips
                                  regarding your option. Any prior agreements,
                                  understandings, commitments, or negotiations
                                  concerning your option are superseded.

Binding Effect                    This Agreement shall inure to
                                  the benefit of and be binding upon the parties
                                  hereto and their respective heirs, executors,
                                  administrators, successors and assigns.

Amendment                         Chips may at any time amend or terminate the
                                  Plan and/or your Option. However, no amendment
                                  or termination may adversely affect your
                                  option without your consent, unless such
                                  amendment is necessary in order to enable the
                                  option to qualify as an incentive stock
                                  option.

Time of Expiration                Whenever there is a reference in
                                  this Agreement to a date when your option
                                  expires, the option will expire on that date
                                  at 5:00 p.m. local time in San Jose,
                                  California.

         By signing this Agreement, you agree to all of the terms and conditions
described above and in the Plan, including Chips' right to repurchase unvested
shares.

                                                    CHIPS AND TECHNOLOGIES, INC.

                                                    By:
                                                       -------------------------

                                                    OPTIONEE

                                                       -------------------------

                                       7
<PAGE>   15

                                    EXHIBIT B

                       NONQUALIFIED STOCK OPTION AGREEMENT
                                     Between
                          CHIPS AND TECHNOLOGIES, INC.
                                       and

                                 --------------

         You have been granted an option under the Amended and Restated Chips
and Technologies, Inc. 1994 Stock Option Plan (the "Plan"). This Agreement
describes the terms and conditions of your option (the "Agreement").

Number of Shares                    Your option is for       shares of the 
                                    common stock of Chips and Technologies,
                                    Inc., a Delaware corporation ("Chips").

Option Price                        You may purchase your option
                                    shares for $    per share, which was the
                                    closing price of the common stock of Chips
                                    on           , 199 .

Type of Option                      This option is intended to be
                                    a nonqualified stock option and will not be
                                    treated as an incentive stock option as
                                    provided in section 422 of the Internal
                                    Revenue Code of 1986, as amended (the
                                    "Code").

Grant Date                          The "Grant Date" of your option is
                                              , 19 . This is the date the Board
                                    of Directors of Chips approved your option 
                                    grant.

Initial Vesting Date                The "Initial Vesting Date" of your option is
                                              , 19 . This is the date your 
                                    option begins to vest.

Exercisability                      You may exercise your option immediately in
                                    its entirety after the Grant Date. However,
                                    if you buy unvested option shares, they may
                                    not be sold or otherwise transferred until
                                    they become vested (see Right of Repurchase
                                    below).

Term                                Your option will expire on           , 19  ,
                                    unless your employment or service with Chips
                                    (or a parent corporation or subsidiary
                                    corporation of Chips as defined in section
                                    424 of the Code) is terminated as explained
                                    below, or unless Chips is involved in a
                                    "transfer of control" transaction as
                                    explained below.

Vesting of Option                   On the Initial Vesting Date,          of 
                                    the option shares will be vested.
                                    Thereafter, 1/48 of the option shares will
                                    vest for each full month of your continuous
                                    employment or service with Chips (or a
                                    parent or subsidiary corporation of Chips)
                                    from the Initial Vesting Date. Your option
                                    stops vesting when your employment or
                                    service with Chips (or a parent corporation
                                    or subsidiary corporation of Chips)
                                    terminates. Vesting during an approved leave
                                    of absence is


                                       1
<PAGE>   16
                                    governed by the applicable Leave of Absence
                                    Policy in effect at the time you go on
                                    leave.

Right of Repurchase                 You can buy shares that have
                                    not yet vested. The number of shares you buy
                                    over and above your vested shares are
                                    "unvested shares." They may not be sold or
                                    otherwise transferred until they become
                                    vested.

                                    If your employment or service with Chips (or
                                    a parent corporation or subsidiary
                                    corporation of Chips) terminates for any
                                    reason, with or without cause while you are
                                    holding unvested shares, or if you or your
                                    legal representative attempts to sell,
                                    exchange, transfer, pledge, or otherwise
                                    dispose of any unvested shares (other than
                                    pursuant to an "ownership change" as defined
                                    below), Chips may buy those unvested shares
                                    back from you at the option price you
                                    originally paid. If Chips wishes to exercise
                                    its right to repurchase the unvested shares,
                                    it must give you notice within 60 days after
                                    (i) the termination of your employment or
                                    service, or exercise of the option, if
                                    later, or (ii) Chips has received notice of
                                    the attempted disposition. Chips must
                                    exercise its right to repurchase the
                                    unvested shares, if at all, for all of the
                                    unvested shares, except as Chips and you
                                    otherwise agree. However, Chips will not
                                    repurchase your unvested shares if you
                                    transfer your unvested shares to your
                                    ancestors, descendants, or spouse or to a
                                    trustee for their benefit, provided that the
                                    transferee agrees in writing to take the
                                    shares subject to Chips' right of
                                    repurchase. In the event Chips is unable to
                                    exercise the right of repurchase under the
                                    provisions of Section 160 of the Delaware
                                    General Corporation Law, or the
                                    corresponding provisions of other applicable
                                    law, Chips has the right to assign the right
                                    of repurchase to one or more persons as may
                                    be selected by Chips' Board of Directors.

                                    To ensure that the unvested shares will be
                                    available for repurchase, you are required
                                    to deposit the certificate for the shares
                                    with an escrow agent designated by Chips
                                    under the terms and conditions of an escrow
                                    agreement approved by Chips.

                                    If Chips exercises its right to repurchase
                                    your unvested shares, payment by Chips to
                                    the escrow agent on behalf of you or your
                                    legal representative will be made in cash
                                    within 60 days after the date of the mailing
                                    of the written notice. For purposes of this
                                    payment, cancellation of any outstanding
                                    promissory note that you have previously
                                    delivered to Chips will be treated as
                                    payment in cash to the extent of the unpaid
                                    principal and any accrued interest canceled.
                                    Within 30 days after payment by Chips, the
                                    escrow agent will give the shares which
                                    Chips has purchased to Chips and give the
                                    payment received from Chips to you.



                                       2
<PAGE>   17
                                    The certificates for unvested shares have
                                    stamped on them a special legend referring
                                    to Chips' right of repurchase. As your
                                    vesting percentage increases, you may
                                    request, at reasonable intervals, that Chips
                                    exchange those legended shares which have
                                    vested for shares that are freely
                                    transferable.

Transfer of Control                 The following events constitute an 
                                    "ownership change" of Chips: (1) the direct
                                    or indirect sale or exchange by Chips'
                                    stockholders of all or substantially all of
                                    Chips' stock; (2) a merger in which Chips is
                                    a party; or (3) the sale, exchange, or
                                    transfer of all or substantially all of
                                    Chips' assets (other than a sale, exchange,
                                    or transfer to one or more corporations
                                    where Chips' stockholders before such sale,
                                    exchange, or transfer retain, directly or
                                    indirectly, at least a majority of the
                                    beneficial interest in the voting stock of
                                    the corporation(s) to which the assets were
                                    transferred).

                                    A "transfer of control" of Chips means an
                                    ownership change in which Chips'
                                    stockholders before such ownership change do
                                    not retain, directly or indirectly, at least
                                    a majority of the beneficial interest in
                                    Chips' voting stock.

                                    In the event of a transfer of control, all
                                    shares acquired upon exercise of your option
                                    shall become vested shares effective 30 days
                                    prior to the transfer of control, unless the
                                    Chips' Board of Directors arranges with the
                                    surviving, continuing, successor, or
                                    purchasing corporation, as the case may be,
                                    for such corporation to assume Chips' rights
                                    and obligations under this Agreement or
                                    substitute its own option for your Chips'
                                    option. Your option will terminate effective
                                    as of the date of the transfer of control to
                                    the extent that your option is neither
                                    exercised as of the date of the transfer of
                                    control nor assumed by the surviving,
                                    continuing, successor, or purchasing
                                    corporation, as the case may be.

Regular Termination                 If your employment or service
                                    with Chips (or a parent corporation or
                                    subsidiary corporation of Chips) terminates
                                    for any reason, with or without cause, your
                                    option, to the extent unexercised, may be
                                    exercised (to purchase vested shares only)
                                    within 30 days after the date of your
                                    termination.

Restrictions on                     You may not sell shares that you acquire by 
Resale: General                     exercising your option at any time you are 
                                    in possession of material inside information
                                    concerning Chips. In addition, sales of
                                    shares that you acquire by exercising your
                                    option will be governed by Chips' employee
                                    trading policy, as in effect at the time of
                                    the proposed sale.

Restrictions on                     If you are an officer of Chips, shares that 
Resale: Officers                    you acquire by exercising your option may 
                                    only be sold during the officers' trading




                                       3
<PAGE>   18
                                    restriction period. This period commences on
                                    the third business day following the release
                                    of quarterly financial results and ends
                                    twenty-one days thereafter, unless extended
                                    by Chips' President or Chief Financial
                                    Officer.

Notice of Exercise                  When you wish to exercise your option, you 
                                    must send an executed Notice of Exercise to:

                                                Chips and Technologies, Inc.
                                                2950 Zanker Road
                                                San Jose, California 95134
                                                Attn: Financial Services 1-7

                                    Your notice must specify how many whole
                                    shares you wish to purchase, and must
                                    contain such representations and agreements
                                    as to your investment intent with respect to
                                    the shares as may be required by Chips. Your
                                    notice must be delivered in person or by
                                    certified mail to Chips' Stock Administrator
                                    prior to the expiration date of the term of
                                    the Option, accompanied by an executed copy
                                    of the then current form of escrow
                                    instructions, if you are exercising your
                                    option for unvested shares, and full payment
                                    of the option price for the number of shares
                                    being purchased. The Notice of Exercise is
                                    effective when it is received by Chips.
                                    Chips will not be required to issue
                                    fractional shares upon the exercise of your
                                    option.

Form of Payment                     When you submit your Notice of
                                    Exercise, you must include payment of the
                                    option price for the number of shares you
                                    are purchasing. Payment may be made in one
                                    (or a combination of two or more) of the
                                    following forms:

                                       -   Your personal check, a cashier's
                                           check, or a money order;

                                       -   Irrevocable directions to a
                                           securities broker approved by Chips
                                           to sell your option shares and to
                                           deliver all or a portion of the sale
                                           proceeds to Chips in payment of the
                                           option price. (The balance of the
                                           sales proceeds, if any, will be
                                           delivered to you.) The directions
                                           must be given by signing a form
                                           provided by Chips.


                                       4
<PAGE>   19
Withholding Taxes                   In order to exercise your option, you must 
                                    make arrangements to pay any federal and
                                    state withholding taxes that may be due as a
                                    result of the option exercise. In the
                                    future, at any time requested by Chips, you
                                    must make arrangements to pay any federal or
                                    state withholding taxes that may be due as a
                                    result of any transfer of any shares
                                    acquired on exercise of your option, the
                                    operation of any federal or state law
                                    providing for the imputation of interest, or
                                    the lapse of any restriction with respect to
                                    any shares acquired on exercise of your
                                    option.

Certificate Registration            The certificate or certificates
                                    issued upon the exercise of your option will
                                    be registered in your name.

Restriction on Grant                The grant of your option and the issuance of
of Option and Issuance              shares upon the exercise of the option are 
of Shares                           subject to compliance with all applicable 
                                    requirements of federal or state law with
                                    respect to such securities. Your option may
                                    not be exercised if the issuance of shares
                                    upon such exercise would constitute a
                                    violation of any applicable federal or state
                                    securities law or other law or regulations.
                                    As a condition to the exercise of your
                                    option, Chips may require you to make any
                                    representation or warranty to Chips as may
                                    be necessary or appropriate to evidence
                                    compliance with any applicable law or
                                    regulation. Chips may place legends on the
                                    certificates for your option shares
                                    referring to any applicable federal or state
                                    securities law restrictions.

Restriction on Issuance             In the event that the adoption of any 
of Shares to Section 16             amendment of the Plan is subject to the 
Insiders                            approval of Chips' stockholders in order for
                                    the option to comply with the requirements
                                    of Rule 16b-3, promulgated under the
                                    Securities Exchange Act of 1934, as amended
                                    (the "Exchange Act"), the option shall not
                                    be exercisable prior to such stockholder
                                    approval if you are subject to Section 16(b)
                                    of the Exchange Act, unless the Board, in
                                    its sole discretion, approves the exercise
                                    of the option prior to such stockholder
                                    approval.

Transfer of Option                  Prior to your death, only you may
                                    exercise your option, and you cannot
                                    transfer or assign your option. However, you
                                    may dispose of your option in your will.

                                    Regardless of any marital property
                                    settlement agreement, Chips is not obligated
                                    to honor a Notice of Exercise from your
                                    former spouse, nor is Chips obligated to
                                    recognize your former spouse's interest in
                                    your option in any other way.


                                       5
<PAGE>   20
Changes in Stock                    Appropriate adjustments shall be made in the
Subject to the Option               number, exercise price and class of shares 
                                    of stock subject to the option in the event
                                    of a stock dividend, stock split, reverse
                                    stock split, combination, reclassification
                                    or like change in the capital structure of
                                    Chips.

                                    In the event of any such change in the
                                    capital structure of Chips, any and all new
                                    substituted or additional securities to
                                    which you are entitled by reason of your
                                    ownership of the shares acquired upon
                                    exercise of your option will be immediately
                                    subject to Chips' right of repurchase with
                                    the same force and effect as the shares
                                    subject to the right of repurchase
                                    immediately before such event (see Right of
                                    Repurchase above).

Employee Rights                     Your option or this Agreement do not
                                    give you the right to be retained as an
                                    employee by Chips (or a parent corporation
                                    or subsidiary corporation of Chips). Chips
                                    reserves the right to terminate your
                                    employment at any time, with or without
                                    cause.

Stockholder Rights                  You, or your estate or heirs, have no
                                    rights as a stockholder of Chips until a
                                    certificate for your option shares has been
                                    issued. No adjustments are made for
                                    dividends or other rights if the applicable
                                    record date occurs prior to the date your
                                    stock certificate is issued, except in the
                                    event of a change in the stock subject to
                                    the option as described above.

Applicable Law                      This Agreement will be interpreted and 
                                    enforced under the laws of the State of
                                    California.

Other Agreements                    The text of the Plan is incorporated in 
                                    this Agreement by reference. This Agreement
                                    and the Plan constitute the entire
                                    understanding between you and Chips
                                    regarding your option. Any prior agreements,
                                    understandings, commitments, or negotiations
                                    concerning your option are superseded.

Binding Effect                      This Agreement shall inure to the
                                    benefit of and be binding upon the parties
                                    hereto and their respective heirs,
                                    executors, administrators, successors and
                                    assigns.

Amendment                           Chips may at any time amend or terminate the
                                    Plan and/or your Option. However, no
                                    amendment or termination may adversely
                                    affect your option without your consent.

Time of Expiration                  Whenever there is a reference
                                    in this Agreement to a date when your option
                                    expires, the option will expire on that date
                                    at 5:00 p.m. local time in San Jose,
                                    California.



                                       6
<PAGE>   21
         By signing this Agreement, you agree to all of the terms and conditions
described above and in the Plan, including Chips' right to repurchase unvested
shares.

                                              CHIPS AND TECHNOLOGIES, INC.

                                              By:  __________________________


                                              OPTIONEE

                                              By: __________________________



                                       7