EXHIBIT 10.3
FORM OF
AFFILIATE AGREEMENT
This Affiliate Agreement (this "AGREEMENT") is made and entered into as
of May 28, 1996, between C-Cube Microsystems Inc., a Delaware corporation
("C-CUBE"), DiviCom Inc., a Delaware corporation ("DIVICOM"), and the
undersigned affiliate ("STOCKHOLDER") of DiviCom.
RECITALS
A. Concurrently with the execution of this Agreement, C-Cube and
DiviCom have entered into an Agreement and Plan of Reorganization (the
"REORGANIZATION AGREEMENT") which provides, among other things, for the
merger (the "MERGER") of DiviCom with and into C-Cube Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of C-Cube ("MERGER SUB").
Pursuant to the Merger, all outstanding capital stock of DiviCom will be
canceled and extinguished and be converted automatically into the right to
receive shares of C-Cube Common Stock pursuant to the Reorganization
Agreement.
B. The Stockholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"))
of such number of shares of the outstanding capital stock of DiviCom as is
indicated on the final page of this Agreement (the "SHARES").
NOW THEREFORE, the parties agree as follows:
1. TAX TREATMENT: RULE 145. Stockholder understands and agrees that
it is intended that the Merger will be treated as a "reorganization" for
federal income tax purposes. Stockholder further understands and agrees that
Stockholder may be deemed to be an "affiliate" of DiviCom within the meaning
of Rule 145 ("RULE 145") promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), although nothing contained herein should be construed as
an admission of such fact.
2. RELIANCE UPON REPRESENTATIONS, WARRANTIES AND COVENANTS.
Stockholder has been informed that the treatment of the Merger as a
reorganization for federal income tax purposes requires that former
stockholders of DiviCom maintain a meaningful continuing equity ownership
interest in C-Cube after the Merger. Stockholder understands that the
representations, warranties and covenants of Stockholder set forth herein
will be relied upon by C-Cube, DiviCom and their respective counsel.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER.
Stockholder represents, warrants and covenants as follows:
(a) Stockholder has full power and authority to execute this
Agreement, to make the representations, warranties and covenants herein
contained and to perform Stockholder's obligations hereunder.
(b) Set forth below the signatures below is the number of Shares
owned by Stockholder, including all Shares as to which Stockholder has sole
or shared voting or investment power and all rights, options and warrants to
acquire DiviCom Capital Stock owned or held by Stockholder.
(c) The shares of C-Cube Common Stock issued to Stockholder as
consideration in the Merger, and any C-Cube securities issued in exchange
therefor, are hereinafter referred to as "Restricted Securities". The
Stockholder agrees, in addition to the limitations set forth in Section 3(d),
that as to a portion of the Restricted Securities representing two-thirds of
all Restricted Securities acquired by Stockholder less the amount contained
in the Escrow Fund pursuant to the Reorganization Agreement in respect of
Stockholder, Stockholder will not, for a period of 270 days from the date of
this Agreement, sell, transfer, exchange, pledge (except in connection with a
bona fide loan transaction), make charitable contributions in respect of, or
otherwise dispose of such portion of the Restricted Securities (or any
option, right or other interest with respect thereto).
(d) Notwithstanding the foregoing, Stockholder will not sell,
transfer, exchange, pledge (except in connection with a bona fide loan
transaction) or make charitable contributions in respect of, or otherwise
dispose of any Restricted Securities (or any interest with respect thereto),
unless: (i) such transaction is permitted pursuant to Rule 145(c) and 145(d)
under the Securities Act; or (ii) counsel representing Stockholder, which
counsel is reasonably satisfactory to C-Cube, shall have advised C-Cube in a
written opinion letter reasonably satisfactory to C-Cube and C-Cube's legal
counsel, and upon which C-Cube and its legal counsel may rely, that no
registration under the Securities Act would be required in connection with
such transaction; or (iii) a registration statement under the Securities Act
covering the Restricted Securities (or interests with respect thereto)
proposed to be disposed of, describing the manner and terms of the proposed
disposition, and containing a current prospectus, shall have been filed with
the SEC and made effective under the Securities Act; or (iv) an authorized
representative of the SEC shall have rendered written advice to Stockholder
(sought by Stockholder or counsel to Stockholder, with a copy thereof and all
other related communications delivered to C-Cube) to the effect that the SEC
would take no action, or that the staff of the SEC would not recommend that
the SEC take any action, with respect to the proposed disposition if
consummated.
(e) Stockholder has no present plan or intent to sell, transfer,
exchange, pledge (other than in a preexisting bona fide margin account) or
otherwise dispose of, including a distribution by a corporation to its
stockholders (but excluding transactions among family members for tax or
estate planning purposes or among corporate affiliates, and transfers
occurring by operation of law or
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pursuant to court order) any of the shares of C-Cube Common Stock that
Stockholder may acquire in connection with the Merger. If any of
Stockholder's representations in this subsection (e) cease to be true at any
time prior to the Effective Time of the Merger, Stockholder will deliver to
each of DiviCom and C-Cube, prior to the Effective Time of the Merger, a
written statement to that effect, signed by Stockholder.
4. RULES 144 AND 145. From and after the Effective Time of the Merger
and for so long as is necessary in order to permit Stockholder to sell the
C-Cube Common Stock held by Stockholder pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Securities Act, C-Cube will use its
best efforts to file on a timely basis all reports required to be filed by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended,
referred to in paragraph (c)(1) of Rule 144 under the Securities Act.
5. LIMITED RESALES. Stockholder understands that, in addition to the
restrictions imposed under Section 4, the provisions of Rule 145 limit
Stockholder's public resales of Restricted Securities, in the manner set
forth in subsections (a), (b) and (c) below:
(a) Unless and until the restriction "Cut-off" provisions of Rule
145(d)(2) or Rule 145(d)(3) set forth below become available, public resales
of Restricted Securities may only be made by Stockholder in compliance with
the requirements of Rule 145(d)(1). Rule 145(d)(1) permits such resales
only: (i) while C-Cube meets the public information requirements of Rule
144(c); (ii) in broker's transactions or in transactions with a market maker;
and (iii) where the aggregate number of Restricted Securities sold at any
time together with all sales of restricted C-Cube Common Stock sold for
Stockholder's account during the preceding three (3) month period does not
exceed the greater of (A) one percent (1%) of the C-Cube Common Stock
outstanding or (B) the average weekly volume of trading in C-Cube Common
Stock on all national securities exchanges, or reported through the automated
quotation system of a registered securities association, during the four (4)
calendar weeks preceding the date of receipt of the order to execute the sale.
(b) Stockholder may make unrestricted sales of Restricted
Securities pursuant to Rule 145(d)(2) if: (i) Stockholder has beneficially
owned (within the meaning of Rule 144(d) under the Securities Act) the
Restricted Securities for at least two (2) years after the Effective Time of
the Merger; (ii) Stockholder is not an affiliate of C-Cube; and (iii) C-Cube
meets the public information requirements of Rule 144(c).
(c) Stockholder may make unrestricted resales of Restricted
Securities pursuant to Rule 145(d)(3) if Stockholder has beneficially owned
(within the meaning of Rule 144(d) under the Securities Act) the Restricted
Securities for at least three (3) years and is not, and has not been for at
least three (3) months, an affiliate of C-Cube.
(d) C-Cube acknowledges that the provisions of Section 5(c) will
be satisfied as to any sale by the undersigned of the Restricted Securities
pursuant to Rule 145(d), by a broker's letter and a letter from the
undersigned with respect to that sale stating that each of the
above-described
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requirements of Rule 145(d)(1) has been met or is inapplicable by virtue of
Rule 145(d)(2) or Rule 145(d)(3); PROVIDED, HOWEVER, that C-Cube has no
reasonable basis to believe that such sales were not made in compliance with
such provisions of Rule 145(d).
6. LEGENDS. Stockholder also understands and agrees that stop
transfer instructions will be given to C-Cube's transfer agent with respect
to certificates evidencing the Restricted Securities and that there will be
placed on the certificate evidencing the Restricted Securities legends
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE OTHER CONDITIONS SPECIFIED IN THAT CERTAIN AFFILIATE
AGREEMENT DATED AS OF MAY __, 1996, AMONG C-CUBE MIRCROSYSTEMS INC.,
DIVICOM INC. AND THE PERSON OR ENTITY NAMED THEREIN. A COPY OF SUCH
AFFILIATE AGREEMENT MAY BE INSPECTED BY THE HOLDER OF THIS CERTIFICATE
AT THE OFFICES OF C-CUBE MICROSYSTEMS INC., OR C-CUBE MICROSYSTEMS
INC. WILL FURNISH, WITHOUT CHARGE, A COPY THEREOF TO THE HOLDER OF
THIS CERTIFICATE UPON WRITTEN REQUEST THEREFOR."
C-Cube agrees to remove promptly such stop transfer instructions and legend
upon full compliance with this Agreement by the undersigned, including,
without limitation, a sale or transfer of C-Cube Common Stock permitted under
Section 3.
7. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to Article VIII of the Reorganization Agreement.
8. COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9. BINDING AGREEMENT. This Agreement will inure to the benefit of and
be binding upon and enforceable against the parties and their successors and
assigns, including administrators, executors, representatives, heirs,
legatees and devisees of Stockholder and pledgees holding Restricted
Securities as collateral.
10. WAIVER. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
11. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and
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enforced in accordance with the internal laws of the State of Delaware.
12. ATTORNEYS' FEES. In the event of any legal actions or proceeding
to enforce of interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding results
in a final judgment.
13. EFFECT OF HEADINGS; DEFINITION OF TERMS. The Section headings
herein are for convenience only and shall not affect the construction or
interpretation of this Agreement. Capitalized terms that are not defined
herein shall have the meanings set forth in the Reorganization Agreement.
14. THIRD PARTY RELIANCE. Counsel to the parties shall be entitled to
rely upon this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to
be duly executed on the day and year first above written.
C-CUBE MICROSYSTEMS INC. STOCKHOLDER:
By: ___________________________ By: ___________________________
Name: _________________________ Name: _________________________
Title: ________________________ Stockholder's Address for Notice:
_______________________________
DIVICOM INC.
_______________________________
By: ___________________________ _______________________________
Title: ________________________ Shares beneficially owned:
____________ shares of
DiviCom Common Stock
____________ shares of
DiviCom Series A Preferred Stock
____________ shares of
DiviCom Series B Preferred Stock
[Signature Page to Affiliate Agreement]
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