C-CUBE MICROSYSTEMS INC.
SUPPLEMENTAL STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
* to attract and retain the best available personnel for
positions of substantial responsibility,
* to provide additional incentive to eligible Employees and
Consultants, and
* to promote the success of the Company's business.
Nonstatutory Stock Options may be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under U. S. state corporate laws,
U.S. federal and state securities laws, the Code and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted
under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means C-Cube Microsystems Inc., a Delaware
corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged
by the Company to render services and who is compensated for such services,
provided that the term "Consultant" shall not include any person who is
also an officer or Director of the Company.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person employed by the Company other
than any person who is an officer or Director of the Company.
(l) "FAIR MARKET VALUE" means, as of any date, the closing sales
price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last market trading day prior to
the time of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable.
(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.
(n) "NOTICE OF GRANT" means a written notice evidencing certain
terms and conditions of an individual Option grant. The Notice of Grant is
part of the Option Agreement.
(o) "OPTION" means a stock option granted pursuant to the Plan.
(p) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(q) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(r) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.
(s) "PLAN" means this Supplemental Stock Option Plan.
(t) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(u) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 800,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan
has terminated).
4. ADMINISTRATION OF THE PLAN
(a) ADMINISTRATION. The Plan shall be administered by (i) the Board
or (ii) a Committee designated by the Board, which Committee shall be
constituted to satisfy Applicable Laws. Once appointed, such Committee
shall serve in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom Options
may be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Option or the shares of
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(ix) to modify or amend each Option (subject to Section
15(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to
Employees and Consultants. If otherwise eligible, an Employee or
Consultant who has been granted an Option may be granted additional
Options. Notwithstanding anything to the contrary contained in the Plan,
Options may not be granted to officers or Directors under this Plan.
6. LIMITATIONS. Neither the Plan nor any Option shall confer upon
an Optionee any right with respect to continuing the Optionee's employment
or consulting relationship with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
7. TERM OF PLAN. The Plan shall become effective upon its adoption
by the Board. It shall continue in effect until terminated under Section
15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the
Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including
the method of payment. Such consideration may consist entirely of:
(i) cash or cash equivalent;
(ii) check;
(iii) recourse promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than
six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares
as to which said Option shall be exercised;
(v) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or
(vii) any combination of the foregoing methods of
payment.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is
exercised.
(b) TERMINATION OF EMPLOYMENT. Upon termination of an
Optionee's status as an Employee or Consultant (other than as a result of
the Optionee's death or Disability), the Optionee may exercise his or her
Option, but only within three (3) months or such other period of time as
the Administrator shall specify from the date of such termination and,
unless determined otherwise by the Administrator, only to the extent that
the Optionee was entitled to exercise it at the date of such termination
(and in no event later than the expiration of the term of such Option as
set forth in the Option Agreement). To the extent that Optionee was not
entitled to exercise an Option at the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
For purposes of this Section 10(b), an Employee's change of status from
Employee to Consultant or from Consultant to Employee shall not, unless
specified otherwise by the Administrator, be considered a termination of
status as an Employee or Consultant.
(c) DISABILITY OF OPTIONEE. Upon termination of an Optionee's
status as an Employee or Consultant as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within
six (6) months or such other time period as the Administrator shall specify
from the date of such termination, and, unless determined otherwise by the
Administrator, only to the extent that the Optionee was entitled to
exercise it at the date of such termination (and in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement). To the extent that Optionee was not entitled to exercise an
Option at the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within
the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of an Optionee's death
within three (3) months of the termination of employment, the Optionee's
estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but
only within six (6) months or such other time period as the Administrator
shall specify following the date of death, and, unless determined otherwise
by the Administrator, only to the extent that the Optionee was entitled to
exercise it at the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). To the
extent that Optionee was not entitled to exercise an Option at the date of
death, and to the extent that the Optionee's estate or a person who
acquired the right to exercise such Option does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
11. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, OR
TRANSFER IN CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common
Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option, as well as the price per
share of Common Stock covered by each such outstanding Option shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. To the extent it has not been previously exercised,
an Option will terminate immediately prior to the consummation of such
proposed action.
(c) TRANSFER OF CONTROL.
(i) 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 shareholders 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 Subsidiaries);
(d) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company where the shareholders 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.
(ii) In the event of a Transfer of Control of the Company,
each outstanding Option will be assumed or an equivalent option
substituted by the successor corporation or a parent or Subsidiary of the
successor corporation (the "Successor Corporation"). In the event that an
Option is not assumed or substituted for, such Option shall terminate as of
the date of the Transfer of Control. For the purposes of this paragraph,
the Option shall be considered assumed if, following the Transfer of
Control, the option confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option immediately prior to the
Transfer of Control the consideration (whether stock, cash, or other
securities or property) received in the Transfer of Control by holders of
Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
Transfer of Control was not solely common stock of the Successor
Corporation, the Administrator may, with the consent of the Successor
Corporation, provide for the consideration to be received upon the exercise
of the Option for each Share of Optioned Stock subject to the Option to be
solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the
Transfer of Control.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each
Optionee within a reasonable time after the date of such grant.
14. WITHHOLDING TAXES. In accordance with any applicable
administrative guidelines it establishes, the Administrator may allow a
purchaser to pay the amount of taxes required by law to be withheld as a
result of a purchase of Shares, by withholding from any payment of Common
Stock due as a result of such purchase, or by permitting the purchaser to
deliver to the Company, Shares having a Fair Market Value, as determined by
the Administrator, equal to the amount of such required withholding taxes.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights
of any Optionee, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the
Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
17. LIABILITY OF COMPANY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, 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.
18. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.