OAK TECHNOLOGY, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT")
by and between Oak Technology, Inc., a Delaware corporation (the "COMPANY"), and
___________(the "EMPLOYEE"), is made as of the ____________________ (such date
being sometimes referred to herein as the "DATE OF GRANT").
R E C I T A L S
A. The Company has adopted and implemented its 1994 Stock Option
Plan (the "PLAN") permitting the grant of stock options to employees and
consultants of the Company or any Parent or Subsidiary (each as defined in
the Plan) of the Company, some of which are intended to be non-qualified
stock options in that they do not qualify as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "CODE"), to purchase shares of the authorized but unissued Common Stock
or treasury shares of the Company, $0.001 par value ("COMMON STOCK").
B. The Board of Directors of the Company (the "BOARD") or the
Committee (as defined in the Plan) (subsequent references herein to the Board
shall also mean the Committee, if such Committee has been appointed) has
authorized the granting of a non-qualified stock option to Employee, thereby
allowing Employee to acquire an ownership interest (or increase his or her
existing ownership interest) in the Company. Unless otherwise defined in this
Agreement or the context otherwise requires, all capitalized terms used in
this Agreement shall have the respective meanings assigned to those terms in
the Plan.
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in
consideration of the mutual covenants hereinafter set forth, the parties
hereby agree as follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option to purchase an aggregate of up to
_______ shares of the Company's Common Stock at the exercise price of $____ per
share, upon the terms and conditions set forth herein (such purchase right being
sometimes referred to herein as "the Option" or "this Option").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 4 or 5.2 hereof, this Option and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the
shares then subject to this Agreement at 5:00 p.m. Pacific time on
______________. This Option is a non-qualified stock option in that it is not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code. Accordingly, the Employee understands that under
current law he or she will recognize ordinary income for federal income tax
purposes upon exercise of this Option in an amount equal
to the excess (if any) of the Fair Market Value (as defined in the Plan) of
the shares of Common Stock so purchased over the exercise price paid for such
shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable as follows:
3.1 FIRST INSTALLMENT. Commencing upon the date occurring twelve
(12) months after the Date of Grant (the "INITIAL EXERCISE DATE"), the
Employee may exercise this Option for up to twenty-four percent (24%) of the
shares covered hereby (rounded up to the nearest whole number of shares).
3.2 SUBSEQUENT INSTALLMENTS. Upon the date occurring one (1)
month after the Initial Exercise Date, and continuing thereafter on each
subsequent monthly anniversary of the Initial Exercise Date, the Employee may
exercise this Option for up to an additional two percent (2%) of the shares
covered hereby (rounded up to the nearest whole number of shares), so that
this Option shall become fully exercisable as of ______________. In no event
shall the Option be exercisable for more shares than the number of shares set
forth in Section 1.
3.3 CUMULATIVE NATURE OF EXERCISE SCHEDULE. The exercise dates
specified above refer to the earliest dates on which this Option may be
exercised with respect to the stated percentages of the Common Stock covered
by this Option, and this Option may be exercised with respect to all or any
part of any such percentage of the total shares at any time on or after such
dates (until the expiration date specified in Section 2 above or any earlier
termination of this Option pursuant to Section 4 or 5.2 of this Agreement).
Except as permitted in Section 4, the Employee must be and remain in the
employ of the Company, or of any Parent or Subsidiary of the Company, during
the entire period commencing with the date of grant of this Option and ending
with each of the periods appearing in the above schedule in order to exercise
this Option with respect to the shares applicable to any such period. Any
references in this Agreement to the Employee's employment with the Company
shall be deemed to refer also to the Employee's employment with any Parent or
Subsidiary of the Company, as applicable.
3.4 OVERRIDING LIMITATION ON TIME FOR EXERCISE. Notwithstanding
any other provisions of this Agreement, the Option may not be exercised after
the expiration of ten (10) years from the Date of Grant.
4. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination of the
Employee's employment with the Company (or with any Parent or Subsidiary of the
Company), the Employee's right to exercise this Option shall be limited in the
manner set forth in this Section 4 (and this Option shall terminate in the event
not so exercised), and subject to the limitation provided in Section 3.4.
4.1 DEATH. If the Employee's employment is terminated by death,
the Employee's estate may, for a period of twelve (12) months following the
date of such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination. The Employee's
estate shall mean the Employee's legal representative upon death or any
person who acquires the right to exercise the Option by reason of such death
in accordance with Section 6.2.
4.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following the date of such termination,
exercise the Option to the extent it was
exercisable by the Employee on the date of such termination unless the
Employee dies prior thereto, in which event the Employee shall be treated as
though the Employee had died on the date of retirement and the provisions of
Section 4.1 above shall apply.
4.3 DISABILITY. If the Employee's employment is terminated
because of a Disability, the Employee may, within twelve (12) months
following the date of such termination, exercise the Option to the extent it
was exercisable by the Employee on the date of such termination unless the
Employee dies prior to the expiration of such period, in which event the
Employee shall be treated as though the Employee's death occurred on the date
of termination because of Disability and the provisions of Section 4.1 above
shall apply.
4.4 OTHER TERMINATION. If the Employee's employment is
terminated for any reason other than provided in Sections 4.1, 4.2 and 4.3
above, the Employee or the Employee's estate may, within three (3) months
after the date of the Employee's termination, exercise the Option to the
extent it was exercisable by the Employee on the date of such termination.
4.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the event
the Employee leaves the employ of the Company to become an employee of any
Parent or Subsidiary of the Company or if the Employee leaves the employ of
any such Parent or Subsidiary to become an employee of the Company or of
another Parent or Subsidiary, the Employee shall be deemed to continue as an
employee of the Company for all purposes of this Agreement for so long as
employment with a Parent or Subsidiary continues.
5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CHANGE OF CONTROL.
5.1 STOCK SPLITS AND SIMILAR EVENTS. Appropriate adjustments
shall be made in the number and class of shares of capital stock subject to
the Plan as described in Section 2 of the Plan and to any outstanding Options
and in the exercise price of any outstanding Options in the event of a stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or like change in the capital structure of the Company. In
the event a majority of the shares which are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or
otherwise become shares of another corporation (the "NEW SHARES"), the
Company may unilaterally amend such Options to provide that each Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares subject to and the exercise price of each Option shall be adjusted in
a fair and equitable manner.
5.2 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), shall either assume the Company's rights and obligations under
outstanding Options or substitute options for the Acquiring Corporation's
stock for such outstanding Options. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change of
Control nor exercised as of the date of the Change of Control shall terminate
and cease to be outstanding effective as of the date of the Change of
Control. A "CHANGE OF CONTROL" shall be deemed to have occurred in the event
any of the following occurs with respect to the Company:
5.2.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the 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 Company after such sale or exchange.
5.2.2 a merger or consolidation in which the Company is
not the surviving corporation, other than a merger or consolidation with a
wholly-owned Subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the Stockholders of the Company and the Options are assumed or substituted by
the Acquiring Corporation, which assumption or substitution shall be binding
on the Employee.
5.2.3 a merger or consolidation in which the Company is
the surviving corporation where the stockholders of the Company before such
merger or consolidation do not retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the Company after
such merger or consolidation.
5.2.4 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange,
or transfer to one (1) or more Subsidiaries of the Company.
5.2.5 a liquidation or dissolution of the Company.
5.2.6 any other transaction which qualifies as a
"corporate transaction" under Section 424 of the Code wherein the
stockholders of the Company give up all of their equity interest in the
Company (except for the acquisition, sale or transfer of all or substantially
all of the outstanding shares of the Company).
5.3 BOARD'S DETERMINATION FINAL AND BINDING UPON EMPLOYEE. To
the extent that the foregoing adjustments in this Section 5 relate to stock
or securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
The Company agrees to give notice of any such adjustment to the Employee;
provided, however, that any such adjustment shall be effective and binding
for all purposes hereof whether or not such notice is given or received.
5.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as hereinabove
expressly provided in this Section 5, no additional rights shall accrue to
the Employee by reason of any subdivision or combination of shares of the
capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or of
stock of another corporation, and any issue by the Company of shares of stock
of any class or of securities convertible into shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or exercise price of shares subject to the Option.
Neither the Employee nor any person claiming under or through the Employee
shall be, or have any of the rights or privileges of, a stockholder of the
Company in respect of any of the shares issuable upon the exercise of this
Option, unless and until this Option is properly and lawfully exercised and a
certificate representing the shares so purchased is duly issued and delivered
to the Employee or to his or her estate.
5.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
6. MANNER OF EXERCISE.
6.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Employee by completing, executing and delivering to the
Company a Notice of Exercise (the "NOTICE OF EXERCISE"), in substantially the
form attached hereto as Exhibit A, which Notice of Exercise shall specify the
number of shares of Common Stock which the Employee elects to purchase. The
Company's obligation to deliver shares upon the exercise of this Option shall
be subject to the Employee's satisfaction of all applicable federal, state,
local and foreign income and employment tax withholding requirements, if any.
Upon receipt of such Notice of Exercise and of payment of the purchase price
(and payment of applicable taxes as provided above), the Company shall, as
soon as reasonably possible and subject to all other provisions hereof,
deliver certificates for the shares of Common Stock so purchased, registered
in the Employee's name or in the name of his or her legal representative (if
applicable). Payment of the purchase price upon any exercise of the Option
shall be made by check acceptable to the Company or in cash; provided,
however, that the Committee may, in its sole and absolute discretion, accept
any other legal consideration to the extent permitted under applicable laws
and the Plan including, without limitation, consummation of an immediate sale
proceeds transaction ("IMMEDIATE SALE PROCEEDS"), which transaction may be
executed (a) through a "same day sale" commitment from the Employee and a
broker-dealer that is a member of the National Association of Securities
Dealers (a "NASD DEALER") whereby the Employee irrevocably elects to exercise
the Option and to sell a portion of the shares of Common Stock so purchased
under the Option to pay for the aggregate exercise price, and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
aggregate exercise price directly to the Company or (b) through a "margin"
commitment from the Employee and a NASD Dealer whereby the Employee
irrevocably elects to exercise the Option and to pledge the shares of Common
Stock so purchased to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the aggregate exercise price, and
whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the aggregate exercise price directly to the Company.
6.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Employee's death, this Option shall be exercised only by the
Employee's executor(s) or administrator(s) or the person or persons to whom
this Option is transferred under the Employee's will or, if the Employee
shall fail to make testamentary disposition of this Option, under the
applicable laws of descent and distribution. Any such transferee exercising
this Option must furnish the Company with (1) written Notice of Exercise and
relevant information as to his, her or its status, (2) evidence satisfactory
to the Company to establish the validity of the transfer of this Option and
compliance with any laws or regulations pertaining to said transfer, and (3)
written acceptance of the terms and conditions of this Option as contained in
this Agreement.
7. NON-TRANSFERABLE. The Option shall, during the lifetime of the
Employee, be exercisable only by the Employee and shall not be transferable
or assignable by the Employee in whole or in part other than by will or the
laws of descent and distribution. If the Employee shall make any such
purported transfer or assignment of the Option, such assignment shall be null
and void and of no force or effect whatsoever.
8. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not be
exercised and the Company shall not be obligated to deliver any certificates
evidencing shares of Common Stock hereunder if the issuance of shares upon
such exercise would constitute a violation of any applicable requirements of:
(i) the Securities Act of 1933, as amended, (ii) the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), (iii) applicable state or foreign
securities laws, (iv) any applicable listing requirement of any stock
exchange on which the Company's Common Stock is then listed, and (v) any
other law or regulation applicable to the issuance of such shares. Nothing
herein shall be construed to require the Company to register or qualify any
securities under applicable federal, state or foreign securities laws, or
take any action to secure an exemption from such registration and
qualification for the issuance of any securities upon the exercise of the
Option. To the extent deemed necessary by the Company's counsel, shares of
Common Stock issued upon exercise of this Option shall include such legends
as in the opinion of the Company's counsel may be required by applicable
federal, state and foreign securities laws.
9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of employment by the Company, or by any Parent or Subsidiary of
the Company, or (ii) limit in any way the right of the Company, or of any
Parent or Subsidiary, to terminate the Employee's employment at any time.
Except to the extent the Company and Employee shall have otherwise agreed in
writing, Employee's employment shall be terminable by the Company (or by a
Parent or Subsidiary, if applicable) at will. The Board in its sole
discretion shall determine whether any leave of absence or interruption in
service (including an interruption during military service) shall be deemed a
termination of employment for the purposes of this Agreement.
10. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the
terms and conditions of, the Plan. The Employee acknowledges receipt of a
copy of the Plan (a copy of which is attached hereto as Exhibit B). The
Employee represents that he or she is familiar with the terms and conditions
of the Plan, and hereby accepts the Option subject to all of the terms and
conditions thereof, which terms and conditions shall control to the extent
inconsistent in any respect with the provisions of this Agreement. The
Employee hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Board as to any questions arising under
the Plan or under this Agreement.
11. INTENT TO COMPLY WITH SEC RULE 16b-3. With respect to Insiders,
transactions under this Agreement are intended to comply with all applicable
conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of this Agreement or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board. Moreover, in the event this Agreement does not
include a provision required by Rule 16b-3 to be stated herein, such
provision shall be deemed automatically to be incorporated by reference into
this Agreement insofar as Insiders are concerned.
12. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail,
return receipt requested, deposited in the United States mail with postage
thereon fully prepaid, addressed to the other party at the addresses
indicated on the signature page hereof or as otherwise provided below.
Service of any such notice or other communication so made by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to
which such notices or other communications are thereafter to be addressed or
delivered.
13. FURTHER ASSURANCES. The Employee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms
and intent of this Agreement and, when required or permitted by any provision
of this Agreement to transfer all or any portion of the Common Stock
purchased hereunder to the Company (and its assignees), the Employee shall
deliver such Common Stock endorsed in blank or accompanied by Stock
Assignments Separate from Certificate endorsed in blank, so that title
thereto will pass by delivery alone. Any sale or transfer by the Employee of
the Common Stock to the Company (and its assignees) shall be made free of any
and all claims, encumbrances, liens and restrictions of every kind, other
than those imposed by this Agreement.
14. SUCCESSORS. Except to the extent the same is specifically limited
by the terms and provisions of this Agreement, this Agreement is binding upon
the Employee and the Employee's successors, heirs and personal
representatives, and upon the Company, its successors and assigns.
15. TERMINATION OR AMENDMENT. Subject to the terms and conditions of
the Plan, the Board may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of
the Employee.
16. INTEGRATED AGREEMENT. This Agreement and the Plan constitute the
entire understanding and agreement of the Employee and the Company with
respect to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein.
To the extent contemplated herein, the provisions of this Agreement shall
survive any exercise of the Option and shall remain in full force and effect.
17. OTHER MISCELLANEOUS TERMS. Titles and captions contained in this
Agreement are inserted only as a matter of convenience and for reference, and
in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of California,
irrespective of its choice of law principles.
18. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has
determined not to obtain such advice, having had adequate opportunity to do
so) regarding the federal, state and/or foreign income tax consequences of
the receipt and exercise of the Option and of the disposition of Common Stock
acquired upon exercise hereof. The Employee acknowledges that he or she has
not relied and will not rely upon any advice or representation by the Company
or by its employees or representatives with respect to the tax treatment of
the Option.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY: EMPLOYEE:
OAK TECHNOLOGY, INC.
a Delaware Corporation
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Signature Signature
By: Name Printed:
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Its: Chief Financial Officer Address:
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U.S.A.
EXHIBIT A
FORM OF NOTICE OF EXERCISE
FOR OAK TECHNOLOGY, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
Oak Technology, Inc.
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Attention: Corporate Secretary
Re: NOTICE OF EXERCISE OF STOCK OPTION
Ladies and Gentlemen:
I hereby exercise, as of ____________________, ____, my stock option
(granted _____________, ______) to purchase ______________ shares (the
"OPTION SHARES") of the Common Stock of Oak Technology, Inc., a Delaware
corporation (the "COMPANY"). Payment of the option price of $________________
is attached to this notice.
I understand that to the extent deemed necessary by the Company's
counsel, the certificate(s) representing the Option Shares, whether upon
initial issuance or any transfer thereof, shall bear on their face such
legends, prominently stamped or printed thereon in capital letters, as in the
opinion of the Company's counsel may be required by applicable federal, state
and foreign securities laws.
I further understand that I may suffer adverse tax consequences as a
result of my purchase or disposition of the Option Shares. I represent that
I have consulted with any tax consultant(s) I deem advisable in connection
with the purchase or disposition of the Option Shares and that I am not
relying on the Company for any tax advice.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Exercise as of the date set forth below.
Signed:
Dated: