SiliconBeat

Two more Silicon Valley companies joined the ranks of those offering to exchange some of their employees underwater options with options repriced at more current market rates. On Friday, Smart Modular, the Fremont maker of electronic subsystems, filed its preliminary proxy, which included a proposal to reprice options for its employees — those that are left after the company finishes laying off the 19 percent of its workforce that it said it would back in September.

Under Smart Modular’s proposal, certain employees would be permitted to exchange options with an exercise price higher than $4 for a lesser number of options with an exercise price equal to the fair market value of the shares on the day the exchange offer is completed.  Officers and directors would not be eligible to participate in the option exchange.

Options on some 3.4 million shares would be eligible, with the exchange ratio growing with the exercise price of the old options. One new option would be granted for every 2.6 old options priced from $4.01 to $6, for example, while one new options would be exchanged for every 7.1 options priced from $10.01 to $15.

Also asking their shareholders to approve an option exchange program at its upcoming shareholder meeting was Integrated Silicon Solution, which proposes to exchange options priced at $6 or more. (Executive officers and and directors would not be allowed to paricipate.)

If all eligible options are exchanged, options to buy about 2.9 million shares will be surrendered and canceled, while new options covering approximately 490,769 shares would be issued.

The proposed exchange ratios ranged from one new option for every 5 options priced from $6 to $6.80 that are exchanged, while it would take 15 options priced at $13.81 or higher to get one new option at the updated price.

Last week, Marvel Technology announced its plans to exchange underwater options for shares of restricted stock instead.