EXHIBIT 4.2
C-CUBE MICROSYSTEMS INC.
NONQUALIFIED STOCK OPTION AGREEMENT
C-Cube Microsystems Inc. (the "Company") granted to the individual named
below an option to purchase certain shares of common stock of the Company, in
the manner and subject to the provisions of this Option Agreement.
19. DEFINITIONS:
(i) "Optionee" shall mean _____________________________________.
(ii) "Date of Option Grant" shall
mean _______________________________.
(iii) "Number of Option Shares" shall mean _________________________
shares of common stock of the Company as adjusted from time to
time pursuant to paragraph 9 below.
(iv) "Exercise Price" shall mean $________ per share as adjusted from
time to time pursuant to paragraph 9 below.
(v) "Initial Exercise Date" shall be the Initial Vesting Date.
(vi) "Initial Vesting Date" shall be the date occurring one (1) year
after __________________.
(vii) Determination of "Vested Ratio":
VESTED RATIO
Prior to Initial Vesting Date
-------------
On Initial Vesting Date,
provided the Optionee is -------------
continuously employed by a
Participating Company from
the Date of Option Grant
until the Initial Vesting Date
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PLUS
For each full month of the
Optionee's continuous -------------
employment by a Participating
Company from the Initial
Vesting Date
In no event shall the Vested Ratio
exceed 1/1 -------------
(viii) "Option Term Date" shall mean the date ten (10) years after the
Date of Option Grant.
(ix) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(x) "Company" shall mean C-Cube Microsystems Inc., a Delaware
Corporation, and any successor Corporation thereto.
(xi) "Participating Company" shall mean (i) the Company and (ii) any
present or future parent and/or subsidiary Corporation of the
Company while such Corporation is a parent or subsidiary of the
Company. For purposes of this Option Agreement, a parent
Corporation and a subsidiary Corporation shall be defined in
Section 424(e) and 424(f) of the Code.
(xii) "Participating Company Group" shall mean at any point in time all
corporations collectively which are then a Participating Company.
(xiii) "Plan" shall mean the C-Cube Microsystems Inc. Supplemental Stock
Option Plan
20. STATUS OF THE OPTION. This Option is intended to be a nonstatutory stock
option and shall not be treated as an incentive stock option within the meaning
of Section 422(b) of the Code.
21. ADMINISTRATION. All questions of interpretation concerning this Option
Agreement shall be determined 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 in the Plan, 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
determinations by the Board shall be final and binding upon all persons having
an interest in the Option. 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
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the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation or election.
22. EXERCISE OF OPTION.
(i) RIGHT TO EXERCISE. The Option shall first become exercisable on
the Initial Exercise Date. The Option shall be exercisable on and after the
Initial Exercise Date and prior to the termination of the Option in the amount
equal to the Number of Option Shares multiplied by the Vested Ratio as set forth
in paragraph 1 above less the number of shares previously acquired upon exercise
of the Option. In no event shall the Option be exercisable for more shares
than the Number of Option Shares. In addition to the foregoing, in the event
that the adoption of the Plan or any amendment of the Plan is subject to the
approval of the Company's 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 the Optionee is 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.
(ii) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 6 below, accompanied by full payment of the
exercise price for the number of shares being purchased.
(iii) FORM OF PAYMENT OF OPTION PRICE. Such payment shall be made (i)
in cash, by check, or cash equivalent, (ii) by tender to the Company of shares
of the Company's common stock owned by the Optionee having a value not less than
the option price, which either have been owned by the Optionee for more than six
(6) months or were not acquired, directly or indirectly, from the Company, (iii)
by Immediate Sales Proceeds, as defined below, or (iv) by any combination of the
foregoing. Notwithstanding the foregoing, the Option may not be exercised by
tender to the Company of shares of the Company's common 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 common
stock. "Immediate Sales Proceeds" shall mean the assignment in form acceptable
to the Company of the proceeds of a sale of some or all of the shares acquired
upon the exercise of the Option pursuant to a program and/or procedure approved
by the Company (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). The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
decline to approve any such program and/or procedures.
(iv) TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from
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payroll and any other amounts payable to the Optionee, and otherwise agrees to
make adequate provision for, any sums required to satisfy the foreign, federal
and state tax withholding obligations of the Company, if any, which arise in
connection with the Option, including, without limitation, obligations arising
upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in
whole or in part, of any shares acquired on exercise of the Option, (iii) the
operation of any law or regulation providing for the imputation of interest, or
(iv) the lapsing of any restriction with respect to any shares acquired on
exercise of the Option.
The Optionee is cautioned that the Option is not exercisable
unless the tax withholding obligations of the Company are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares or release such shares from any escrow.
(v) CERTIFICATE REGISTRATION. The certificate or certificates for
the shares as to which the Option shall be exercised shall be registered in the
name of the Optionee, or, if applicable, the heirs of the Optionee.
(vi) RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable foreign, federal or state securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the shares may then be listed. In addition, no Option may be
exercised unless (i) a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), shall at the time of exercise of the Option
be in effect with respect to the shares issuable upon exercise of the Option or
(ii) in the opinion of legal counsel to the Company, the share issuable upon
exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE
TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions
concerning this restriction should be directed to the Chief Financial Officer of
the Company. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company's legal counsel
to be necessary to the lawful issuance and sale of any shares subject to the
Option shall relieve the Company of any liability in respect of the failure to
issue or sell such shares as to which such requisite authority shall not have
been obtained. As a condition to the exercise of the Option, the Company may
require the Optionee to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by
the Company.
(vii) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
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23. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during the
lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative any may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in paragraph 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.
24. TERMINATION OF THE OPTION. The Option shall terminate and may no longer be
exercised on the first to occur of (a) the Option Term Date as defined above,
(b) the last date for exercising the Option following termination of employment
as described in paragraph 7 below, or (c) upon a Transfer of Control as
described in paragraph 8 below.
25. TERMINATION OF EMPLOYMENT.
(i) TERMINATION OF THE OPTION. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability within the meaning of Section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
(3) months after the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. If the Optionee's employment with
the Participating Company Group is terminated because of death or disability of
the Optionee within the meaning of Section 422(c) of the Code, the Option, to
the extent unexercised, and exercisable by the Optionee (or the Optionee's legal
representative) at any time prior to the expiration of six (6) months from the
date on which the Optionee's employment terminated, but in any event no later
than the Option Term Date. The Optionee's employment shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee's termination of employment.
(ii) TERMINATION OF EMPLOYMENT DEFINED. For purposes of this
paragraph 7, the Optionee's employment shall be deemed to have terminated either
upon an actual termination of employment or upon the Optionee's employer ceasing
to be a Participating Company.
(iii) EXERCISE PREVENTED BY LAW. Except as provided in this paragraph
7, the Option shall terminate and may not be exercised after the Optionee's
employment with the Participating Company Group terminates unless the exercise
of the Option in accordance with this paragraph 7 is prevented, the Option shall
remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date.
(iv) OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment, or (iii) the Option Term Date.
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(v) LEAVE OF ABSENCE. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if an only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.
(vi) APPLICATION TO CONSULTANTS. For purposes of this Option
Agreement, in the event an Optionee is a consultant but not an employee of a
Participating Company at the time the Option is granted, termination of the
Optionee's status as a consultant of the Participating Company shall be deemed
to be termination of the Optionee's employment.
26. 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 Company:
(a) a merger or consolidation in which the Company is not the
surviving Corporation;
(b) 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;
(c) 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 subsidiary corporations (as defined in Section 2.1 above) of the
Company);
(d) 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; or
(e) a liquidation or dissolution of the Company.
In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or purchasing
Corporation or parent Corporation thereof, as the case may be (the "Acquiring
Corporation"), for the Acquiring Corporation to assume the Company's rights and
obligations under the Option or substitute options for the Acquiring
Corporation's stock for the Option. To the extent the Option is neither assumed
or substituted for by the Acquiring Corporation in connection with the Transfer
in Control nor exercised as of the date of the Transfer of Control, the Option
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control.
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27. EFFECT OF CHANGE IN STOCK SUBJECT TO THE OPTION. Appropriate adjustments
shall be made in the 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, 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 the Option are exchanged
for, converted into, or otherwise become (whether or not pursuant to a Transfer
of Control) shares of another Corporation (the "New Shares"), the Company may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the number of shares and the
exercise price shall be adjusted in a fair and equitable manner.
28. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionee shall have no rights as
a stockholder with respect to any shares covered by the Option until the date of
the issuance of a certificate or certificates for the shares for which the
Option has been exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 9
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.
29. LEGENDS. The Company may at any time place legends referencing any
applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to effectuate the provisions
of this paragraph.
30. BINDING EFFECT. This Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
31. TERMINATION OF AMENDMENT. The Board, including any duly appointed
committee of 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
Optionee.
32. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
33. APPLICABLE LAW. This Option Agreement shall be governed by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within the State of
California.
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C-CUBE MICROSYSTEMS INC.
By:
--------------------------------
Title: Chief Financial Officer
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
Date:
--------------------------- -------------------------------------
(Signature)
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NONQUALIFIED STOCK OPTION
EXERCISE FORM
C-Cube Microsystems Inc.
1778 McCarthy Boulevard
Milpitas, California 95035
Attention: Chief Financial Officer
Gentlemen and Ladies:
The undersigned optionee (the "Optionee") was granted a nonqualified stock
option (the "Option") to purchase shares of the common stock of C-Cube
Microsystems Inc. (The "Company") on __________________, 19__, pursuant to the
Company's Supplemental Stock Option Plan (the "Plan") and pursuant to the
Nonqualified Stock Option Agreement (the "Option Agreement"). The Optionee
hereby elects to exercise the Option as to __________ shares of the common stock
of the Company (the "Shares").
Enclosed herewith is full payment for the Shares in the manner set forth in the
Option Agreement. The Optionee authorizes payroll withholding and otherwise
will make adequate provision for foreign, federal and state tax withholding
obligations of the Company, if any, as more fully set forth in the Option
Agreement.
The Optionee agrees that the Shares are being acquired by the Optionee in
accordance with and subject to the terms, provisions and conditions of the
Supplemental Option Agreement, to all of which the Optionee hereby expressly
assents. These agreements shall inure to the benefit of and be binding upon the
Optionee's heirs, executor, administrators, successors and assigns.
The Optionee's address of record is:
-------------------------
-------------------------
and the Optionee's Social Security Number is:
-------------------------
Very truly yours,
- ------------------------
Receipt of the above is hereby acknowledged.
C-Cube Microsystems Inc.
By:
------------------------
Title: Chief Financial Officer
Dated:
------------------------
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