Exhibit 10.3


 


MATHSTAR, INC.


AMENDED AND RESTATED 2004
LONG-TERM INCENTIVE PLAN


 


NON-STATUTORY STOCK OPTION
AGREEMENT


 




	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
   

  
	
  GRANT
  DATE:

  	
   

  	
   

  
	
  NUMBER
  OF OPTION SHARES:

  	
   

  	
  Shares

  
	
  EXERCISE
  PRICE PER SHARE:

  	
   

  	
  $ per Share

  
	
  EXPIRATION
  DATE:

  	
   

  	
   

  






 


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


 


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


 


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


 


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


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


3.  Term and Exercise of Option.


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


 





















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


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


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


5.   Limitations on Exercise of Option.


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


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


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


 


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


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


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


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


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


 


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


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


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


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


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


 


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


 


 


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


 


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


 


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


 


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


 


	
   

  	
  COMPANY:

  	
  MathStar, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SSN:

  	
   

  	
   

  
						



 


 


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EXHIBIT A


NOTICE OF EXERCISE OF


STOCK OPTION


 


TO:


 


FROM:


 


DATE:


 


RE:          Exercise of Stock
Option


 


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


 


Check one:


 


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


 


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


 


____


 


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


 


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


 


Sincerely,


 


                                                                                                


(Signature)


 


                                                                                                


(Print or Type Name)


 


Letter and consideration


received on _______________


(effective date of exercise)


 


 


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