Exhibit 10.46


 


 


 


OAK TECHNOLOGY, INC.


 


OUTSIDE DIRECTOR
NON-QUALIFIED STOCK OPTION AGREEMENT


 


 


 


                THIS
OUTSIDE DIRECTOR STOCK OPTION AGREEMENT (this “Agreement”)
by and between Oak Technology, Inc., a Delaware corporation (the “Company”),
and                  (the “Director”), is made as of                (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”) pursuant to
which stock options are granted to non-employee directors of the Company, which
are intended to be non-qualified stock options (that is, options not intended
to be 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.                  Pursuant to the Plan, a
non-qualified stock option has been granted to the Director.  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 Director 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, the Fair
Market Value of the Common Stock as of the Date of Grant, 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
Section 4 or 5.2 hereof, this Option and all rights of the Director 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 Director understands that under current law he or she will recognize
ordinary income for federal income tax purposes in connection with exercise of
this Option in an amount equal to the excess (if any) of the Fair Market Value
of the shares of Common Stock so purchased (determined as of the date of such
exercise) over the exercise price paid for such shares.


 


                3.                   Exercise and Vesting
Schedule.  Subject
to the remaining provisions of this Agreement, each Option or part of that
Option shall be exercisable as it vests. 
The Date of Grant is referred to herein as the “Start Date” of the
Option.  Each Option granted pursuant to
this Agreement shall vest as to twenty-four percent (24%) of the shares covered
by the Option on the one-year anniversary of the Start Date of the Option and
as to an additional two percent (2%) of the shares covered by the Option on
each subsequent monthly anniversary of the Start Date thereafter for so long as
the Director is an Eligible Director (as defined in Section 4).  Notwithstanding anything to the contrary in
this Section 3 or in Section 4, in the event that the Director has
not yet vested twenty-four percent (24%) of the Option and the Director is not
re-elected at the Company’s Annual Stockholders’ Meeting immediately following
the Start Date of the Option, twenty-four percent (24%) of


 

















 


the Option shall accelerate
and become immediately exercisable.  The
Director may cumulate each installment and exercise the same, in whole or in
part, after it vests and becomes exercisable, at any time prior to expiration
of the term of the Option.  All further
vesting ceases upon the Termination Date (as defined in Section 4).  In no event shall the Option be exercisable
for more shares than the number of shares set forth in Section 1.


 


                                      3.1            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).


 


                                      3.2             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 Cessation of
Service as a Director. 
An Option may be exercised after the date (the “Termination Date”) on
which a Director ceases to be a member of the Board (referred to as ceasing to
be an “Eligible
Director”) only as set forth below:


 


                                      4.1                 Death.  If a Director ceases to be an Eligible
Director because of the death of the Director, the Option may, for a period of
twelve (12) months following the Termination Date, be exercised in accordance
with Section 6.2 to the extent it was exercisable by the Director on the
Termination Date.


 


                                      4.2                 Disability.  If the Director ceases to be an Eligible
Director because of a Disability, the Director may, within twelve (12) months
following the Termination Date, exercise the Option to the extent it was exercisable
by the Director on the Termination Date unless the Director dies prior thereto,
in which event the Director shall be treated as though the Director’s death
occurred on the date the Director ceased to be an Eligible Director resulting
from such Disability and the provisions of Section 4.1 above shall apply.


 


                                      4.3                 Other Termination.  If the Director ceases to be an Eligible
Director for any reason other than provided in Sections 4.1 or 4.2 above,
the Director or the Director’s estate may, within three (3) months after the
Termination Date, exercise the Option to the extent it was exercisable by the
Director on the Termination Date.


 


                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 vesting of all Options granted pursuant to the Plan shall
accelerate and the Options shall become immediately exercisable in full prior
to the consummation of such Change of Control at such times and on such
conditions as the Board shall determine. 
Furthermore, 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 outstanding Options (which, for purposes of this Section 5.2, shall
include Options that become immediately exercisable and vested as provided
above) not exercised by the Director prior to the consummation of the Change of
Control or substitute options for the Acquiring Corporation’s stock for such
outstanding 


 

















 


Options.  Any Options which are neither assumed nor
substituted for by the Acquiring Corporation in connection with the Change of
Control nor exercised prior to the consummation of the Change of Control shall
terminate and cease to be outstanding as of the effective 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 Director.


 


                                                             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 Director.  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 Director; 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 Director 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
Director nor any person claiming under or through the Director 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
Director 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 Director 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 Director
elects to purchase.  The Company’s
obligation to deliver shares upon the exercise of this Option shall be subject
to the Director’s satisfaction of all applicable federal, state, local and
foreign income and employment tax withholding requirements, if any.  The Director may satisfy any such
withholding obligations, in whole or in part, by delivery of shares of the
Company’s Common Stock already owned by the Director and which are not subject
to repurchase, forfeiture, vesting or other similar requirements or
restrictions.  The Fair Market Value of
any such shares used to satisfy such withholding obligations shall be
determined as of the date the amount of tax to be withheld is to be
determined.  Upon receipt of such Notice
of Exercise and of payment of the purchase price (and payment of any 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 Director’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 Board 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 Director and a
broker-dealer that is a member of the National Association of Securities
Dealers (a “NASD Dealer”) whereby the Director 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 Director and a NASD Dealer whereby the Director 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 Director’s death, this Option shall be exercised
only by the Director’s executor(s) or administrator(s) or the person or persons
to whom this Option is transferred under the Director’s will or, if the
Director 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
Director, be exercisable only by the Director and shall not be transferable or
assignable by the Director in whole or in part other than by will or the laws
of descent and distribution.  If the
Director 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 Continue as a
Director.  Nothing
contained in this Agreement shall confer upon the Director any right to
continue to serve as a director or employee of the Company or any Parent or
Subsidiary of the Company.  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 to result in the Director ceasing to be an Eligible Director for
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 Director acknowledges receipt of a copy of the Plan (a copy
of which is attached hereto as Exhibit B).  The Director 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 Director 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. 
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.


 


                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 Director 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 Director 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
Director 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 Director and the Director’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
Director.


 


                16.                 Integrated Agreement.  This Agreement and the Plan constitute the
entire understanding and agreement of the Director and the Company with respect
to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Director 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 Director 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
Director 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:

  	
  DIRECTOR:

  
	
   

  	
   

  
	
  OAK TECHNOLOGY, INC.

  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
  By:

  	
  John Edmunds

  	
   

  	
  Name Printed:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Chief Financial Officer & VP Finance

  	
   

  	
  Address:

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
  139 Kifer Court

  Sunnyvale, CA  94086