Document:

Exhibit 10.43

 

ZORAN CORPORATION

AMENDED AND RESTATED

1995 EMPLOYEE STOCK
PURCHASE PLAN

(As Amended and
Restated Through August 8, 2003)

 

1.             Establishment,
Purpose and Term of Plan.

1.1           Establishment.  The Zoran Corporation 1995 Employee Stock
Purchase Plan was initially established effective December 14, 1995 (the “Effective
Date”), the effective date of the initial registration by the
Company of its Stock under Section 12 of the Exchange Act (the “Initial Plan”).  The Initial Plan was amended and restated in
its entirety as the Zoran Corporation Amended and Restated 1995 Employee Stock
Purchase Plan (the “Plan”) effective as of the date of
commencement of the first Offering under the Plan following approval of the
Plan by the stockholders of the Company on June 6, 1996.

1.2           Purpose.  The purpose of the Plan to provide Eligible
Employees of the Participating Company Group with an opportunity to acquire a
proprietary interest in the Company through the purchase of Stock.  The Company intends that the Plan shall
qualify as an “employee stock purchase plan” under Section 423 of the Code
(including any amendments or replacements of such section), and the Plan shall
be so construed.

1.3           Term of Plan.  The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.

2.             Definitions
and Construction.

2.1           Definitions.  Any term not expressly defined in the Plan
but defined for purposes of Section 423 of the Code shall have the same
definition herein.  Whenever used
herein, the following terms shall have their respective meanings set forth
below:

(a)           “Board”
means the Board of Directors of the Company. 
If one or more Committees have been appointed by the Board to administer
the Plan, “Board” also means such Committee(s).

(b)           “Code”
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.

(c)           “Committee”
means a committee of the Board duly appointed to administer the Plan and having
such powers as shall be specified by the Board.  Unless the

 

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 powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or terminate
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

 

(d)           “Company”
means Zoran Corporation, a Delaware corporation, or any successor corporation
thereto.

(e)           “Compensation”
means, with respect to an Offering Period under the Plan, all amounts paid in
cash in the form of base salary during such Offering Period before deduction
for any contributions to any plan maintained by a Participating Company and
described in Section 401(k) or Section 125 of the Code.  Compensation shall not include commissions,
overtime, bonuses, annual awards, other incentive payments, shift premiums,
reimbursements of expenses, allowances, long-term disability, workers’
compensation or any amount deemed received without the actual transfer of cash
or any amounts directly or indirectly paid pursuant to the Plan or any other
stock purchase or stock option plan.

(f)            “Eligible
Employee” means an Employee who meets the requirements set forth in
Section 5 for eligibility to participate in the Plan.

(g)           “Employee”
means any person treated as an employee (including an officer or a Director who
is also treated as an employee) in the records of a Participating Company and
for purposes of Section 423 of the Code; provided, however, that neither
service as a Director nor payment of a director’s fee shall be sufficient to
constitute employment for purposes of the Plan.

(h)           “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

(i)            “Fair Market
Value” means, as of any date, if there is then a public market for
the Stock, the closing price of a share of Stock (or the mean of the closing
bid and asked prices of a share of Stock if the Stock is so reported instead)
as reported on the National Association of Securities Dealers Automated
Quotation (“NASDAQ”) System, the NASDAQ National Market System or such
other national or regional securities exchange or market system constituting
the primary market for the Stock.  If
the relevant date does not fall on a day on which the Stock is trading on
NASDAQ, the NASDAQ National Market System or other national or regional
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be
determined by the Board, in its sole discretion.  If there is then no public market for the Stock, the Fair Market
Value on any relevant date shall be as determined by the Board without regard
to any restriction other than a restriction which, by its terms, will never
lapse.  Notwithstanding the foregoing,
the Fair Market Value per share of Stock on the Effective Date shall be deemed
to be the public offering price set forth in the final prospectus filed with
the Securities and Exchange Commission in connection with the initial public
offering of the Stock.

(j)            “Offering”
means an offering of Stock as provided in Section 6.

 

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(k)           “Offering
Date” means, for any Offering Period, the first day of such Offering
Period.

(l)            “Offering
Period” means a period determined in accordance with
Section 6.1.

(m)          “Parent
Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

(n)           “Participant”
means an Eligible Employee participating in the Plan.

(o)           “Participating
Company” means the Company or any Parent Corporation or Subsidiary
Corporation which the Board determines should be included in the Plan.  The Board shall have the sole and absolute
discretion to determine from time to time what Parent Corporations or
Subsidiary Corporations shall be Participating Companies.

(p)           “Participating
Company Group” means, at any point in time, the Company and all
other corporations collectively which are then Participating Companies.

(q)           “Purchase
Date” means, for any Purchase Period, the last day of such Purchase
Period.

(r)            “Purchase
Period” means a period determined in accordance with
Section 6.2.

(s)           “Purchase
Price” means the price at which a share of Stock may be purchased
pursuant to the Plan, as determined in accordance with Section 9.

(t)            “Purchase
Right”  means an option
pursuant to the Plan to purchase such shares of Stock as provided in
Section 8 which may or may not be exercised during an Offering
Period.  Such option arises from the
right of a Participant to withdraw such Participant’s accumulated payroll
deductions not previously applied to the purchase of Stock under the Plan (if
any) and terminate participation in the Plan or any Offering therein at any
time during an Offering Period.

(u)           “Stock”
means the common stock, par value $0.001, of the Company, as adjusted from time
to time in accordance with Section 4.2.

(v)           “Subsidiary
Corporation” means any present or future “subsidiary corporation” of
the Company, as defined in Section 424(f) of the Code.

2.2           Construction.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan.  Except when
otherwise indicated by the context, the singular shall include the plural, the
plural shall include the singular, and use of the term “or” shall include the
conjunctive as well as the disjunctive.

 

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3.             Administration.  The Plan shall be administered by the Board,
including any duly appointed Committee of the Board.  All questions of interpretation of the Plan or of any Purchase Right
shall be determined by the Board and shall be final and binding upon all
persons having an interest in the Plan or such Purchase Right.  Subject to the provisions of the Plan, the
Board shall determine all of the relevant terms and conditions of Purchase
Rights granted pursuant to the Plan; provided, however, that all Participants
granted Purchase Rights pursuant to the Plan shall have the same rights and
privileges within the meaning of Section 423(b)(5) of the Code.  All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.

4.             Shares
Subject to Plan.

4.1           Maximum Number of Shares Issuable.  Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be one million four hundred seventy-five thousand
(1,475,000) and shall consist of authorized but unissued or reacquired shares
of the Stock, or any combination thereof. 
If an outstanding Purchase Right for any reason expires or is terminated
or canceled, the shares of Stock allocable to the unexercised portion of such
Purchase Right shall again be available for issuance under the Plan.

4.2           Adjustments for Changes in Capital
Structure.  In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, or in the event of any merger (including a merger effected for the
purpose of changing the Company’s domicile), sale of assets or other
reorganization in which the Company is a party, appropriate adjustments shall
be made in the number and class of shares subject to the Plan, to the Offering
Share Limit set forth in Section 8.1 and to each Purchase Right and in the
Purchase Price.

5.             Eligibility.

5.1           Employees Eligible to Participate.  Any Employee of a Participating Company
is eligible to participate in the Plan except the following:

(a)           Employees
who are customarily employed by the Participating Company Group for twenty (20)
hours or less per week;

(b)           Employees
who are customarily employed by the Participating Company Group for not more
than five (5) months in any calendar year; and

(c)           Employees
who own or hold options to purchase or who, as a result of participation in the
Plan, would own or hold options to purchase, stock of the Company or of any
Parent Corporation or Subsidiary Corporation possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of
such corporation within the meaning of Section 423(b)(3) of the Code.

5.2           Leased Employees Excluded.  Notwithstanding anything herein to the
contrary, any individual performing services for a Participating Company solely
through a 

 

 

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leasing
agency or employment agency shall not be deemed an “Employee” of such
Participating Company.

 

6.             Offerings.

6.1           Offering Periods.  Except as otherwise set forth below, the
Plan shall be implemented by sequential Offerings of approximately twenty-four
(24) months duration (an “Offering Period”); provided, however that
the first Offering Period shall commence on the Effective Date and end on
October 31, 1997 (the “Initial Offering Period”).  Subsequent Offerings shall commence on the
first days of May and November of each year and end on the last days of the
second April and October, respectively, occurring thereafter.  Notwithstanding the foregoing, the Board may
establish a different term for one or more Offerings or different commencing or
ending dates for such Offerings; provided, however, that no Offering may exceed
a term of twenty-seven (27) months.  An
Employee who becomes an Eligible Employee after an Offering Period has
commenced shall not be eligible to participate in such Offering but may participate
in any subsequent Offering provided such Employee is still an Eligible Employee
as of the commencement of any such subsequent Offering.  Eligible Employees may not participate in
more than one Offering at a time.  In
the event the first or last day of an Offering Period is not a business day,
the Company shall specify the business day that will be deemed the first or
last day, as the case may be, of the Offering Period.

6.2           Purchase Periods.  Each Offering Period shall consist of four
(4) consecutive purchase periods of approximately six (6) months duration
(individually, a “Purchase Period”).  The Purchase Period commencing on the
Offering Date of the Initial Offering Period shall end on April 30, 1996.  A Purchase Period commencing on the first
day of May shall end on the last day of the next following October.  A Purchase Period commencing on the first
day of November shall end on the last day of the next following April.  Notwithstanding the foregoing, the Board may
establish a different term for one or more Purchase Periods or different
commencing or ending dates for such Purchase Periods.  In the event the first or last day of a Purchase Period is not a
business day, the Company shall specify the business day that will be deemed
the first or last day, as the case may be, of the Purchase Period.

6.3           Governmental Approval; Stockholder
Approval. 
Notwithstanding any other provision of the Plan to the contrary, any
Purchase Right granted pursuant to the Plan shall be subject to
(a) obtaining all necessary governmental approvals or qualifications of
the sale or issuance of the Purchase Rights or the shares of Stock and
(b) obtaining stockholder approval of the Plan.  Notwithstanding the foregoing, stockholder approval shall not be
necessary in order to grant any Purchase Right granted in the Plan’s Initial
Offering Period; provided, however, that the exercise of any such Purchase
Right shall be subject to obtaining stockholder approval of the Plan.

7.             Participation
in the Plan.

7.1           Initial Participation.  An Eligible Employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements of Section 5 and delivering to the Company’s payroll office
or other office designated by the Company not later than the close of business
for such office on the last business day before such Offering Date (the “Subscription

 

 

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Date”)
a subscription agreement indicating the Employee’s election to participate in
the Plan and authorizing payroll deductions. 
An Eligible Employee who does not deliver a subscription agreement to
the Company’s payroll or other designated office on or before the Subscription
Date shall not participate in the Plan for that Offering Period or for any
subsequent Offering Period unless such Employee subsequently enrolls in the
Plan by filing a subscription agreement with the Company by the Subscription
Date for such subsequent Offering Period. 
The Company may, from time to time, change the Subscription Date as
deemed advisable by the Company in its sole discretion for proper
administration of the Plan.

 

7.2           Continued Participation.  A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (a) ceases to be an Eligible Employee,
(b) withdraws from the Plan pursuant to Section 13.2 or
(c) terminates employment as provided in Section 14.  If a Participant automatically may
participate in a subsequent Offering Period pursuant to this Section 7.2,
then the Participant is not required to file any additional subscription
agreement for such subsequent Offering Period in order to continue
participation in the Plan.   However, a
Participant may file a subscription agreement with respect to a subsequent
Offering Period if the Participant desires to change any of the Participant’s
elections contained in the Participant’s then effective subscription agreement.

8.             Right to
Purchase Shares.

8.1           Purchase Right.  Except as set forth below, during an
Offering Period each Participant in such Offering Period shall have a Purchase
Right consisting of the right to purchase that number of whole shares of Stock
arrived at by dividing Fifty Thousand Dollars ($50,000) by the Fair Market
Value of a share of Stock on the Offering Date of such Offering Period;
provided, however, that such number shall not exceed 7,500 shares (the “Offering
Share Limit”).  Shares of
Stock may only be purchased through a Participant’s payroll deductions pursuant
to Section 10.

8.2           Pro Rata Adjustment of Purchase
Right.  Notwithstanding
the foregoing, if the Board shall establish an Offering Period of less than
twenty-three and one-half (231⁄2) months in duration or more than twenty-four and
one-half (241⁄2) months in duration, (a) the dollar amount in
Section 8.1 shall be determined by multiplying $2,083.33 by the number of
months in the Offering Period and rounding to the nearest whole dollar, and (b) the
Offering Share Limit shall be determined by multiplying 312.5 shares by the
number of months in the Offering Period and rounding to the nearest whole
share.  For purposes of the preceding
sentence, fractional months shall be rounded to the nearest whole month.

9.             Purchase Price.  The Purchase Price at which each share of
Stock may be acquired in a given Offering Period pursuant to the exercise of
all or any portion of a Purchase Right granted under the Plan shall be set by
the Board; provided, however, that the Purchase Price shall not be less than
eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a
share of Stock on the Offering Date of the Offering Period, or (b) the
Fair Market Value of a share of Stock on the Purchase Date of the Offering Period.  Unless otherwise provided by the Board prior
to the commencement of an Offering Period, the Purchase Price for that Offering
Period shall be eighty-five percent (85%) of the lesser of (a) the Fair
Market Value of a share of

 

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Stock
on the Offering Date of the Offering Period, or (b) the Fair Market Value
of a share of Stock on the Purchase Date of the Offering Period.

 

10.           Accumulation of Purchase Price through Payroll
Deduction.  Shares of
Stock which are acquired pursuant to the exercise of all or any portion of a
Purchase Right for an Offering Period may be paid for only by means of payroll
deductions from the Participant’s Compensation accumulated during the Offering
Period.  Except as set forth below, the
amount of Compensation to be deducted from a Participant’s Compensation during
each pay period shall be determined by the Participant’s subscription
agreement.

10.1         Commencement of Payroll Deductions.  Payroll deductions shall commence on the first
payday following the Offering Date and shall continue to the end of the
Offering Period unless sooner altered or terminated as provided in the Plan.

10.2         Limitations on Payroll Deductions.  The amount of payroll deductions with
respect to the Plan for any Participant during any pay period shall be in one
percent (1%) increments not to exceed ten percent (10%) of the Participant’s
Compensation for such pay period. 
Notwithstanding the foregoing, the Board may change the limits on
payroll deductions effective as of a future Offering Date, as determined by the
Board.  Amounts deducted from
Compensation shall be reduced by any amounts contributed by the Participant and
applied to the purchase of Company stock pursuant to any other employee stock
purchase plan qualifying under Section 423 of the Code.

10.3         Election to Change or Stop Payroll
Deductions.  During an
Offering Period, a Participant may elect to increase or decrease the amount
deducted or stop deductions from his or her Compensation by filing an amended
subscription agreement with the Company on or before the “Change Notice
Date.”  The “Change Notice Date” shall
initially be the seventh (7th) day prior to the end of the first pay period for
which such election is to be effective; however, the Company may change such
Change Notice Date from time to time.  A
Participant who elects to decrease the rate of his or her payroll deductions to
zero percent (0%) shall nevertheless remain a Participant in the current Offering
Period unless such Participant subsequently withdraws from the Offering or the
Plan as provided in Sections 13.1 and 13.2, respectively, or is
automatically withdrawn from the Offering as provided in Section 13.4.

10.4         Participant Accounts.  Individual Plan accounts shall be maintained
for each Participant.  All payroll
deductions from a Participant’s Compensation shall be credited to such account
and shall be deposited with the general funds of the Company.  All payroll deductions received or held by
the Company may be used by the Company for any corporate purpose.

10.5         No Interest Paid. 
Interest shall not be paid on sums deducted from a Participant’s
Compensation pursuant to the Plan.

10.6         Company Established Procedures.  The Company may, from time to time,
establish or change (a) a minimum required payroll deduction amount for
participation in an Offering, (a) limitations on the frequency or number
of changes in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency 

 

 

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other
than U.S. dollars, (d) payroll deduction in excess of or less than the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company’s processing of subscription agreements, (e) the date(s) and
manner by which the Fair Market Value of a share of Stock is determined for
purposes of administration of the Plan, or (vi) such other limitations or
procedures as deemed advisable by the Company in the Company’s sole discretion
which are consistent with the Plan and in accordance with the requirements of
Section 423 of the Code.

 

11.           Purchase
of Shares.

11.1         Exercise of Purchase Right.  On each Purchase Date of an Offering Period,
each Participant who has not withdrawn from the Offering or whose participation
in the Offering has not terminated on or before such Purchase Date shall
automatically acquire pursuant to the exercise of the Participant’s Purchase
Right the number of whole shares of Stock arrived at by dividing the total
amount of the Participant’s accumulated payroll deductions for the Purchase
Period by the Purchase Price; provided, however, in no event shall the number
of shares purchased by the Participant during an Offering Period exceed the
number of shares subject to the Participant’s Purchase Right.  No shares of Stock shall be purchased on a
Purchase Date on behalf of a Participant whose participation in the Offering or
the Plan has terminated on or before such Purchase Date.

11.2         Return of Cash Balance.  Any cash balance remaining in the
Participant’s Plan account shall be refunded to the Participant as soon as
practicable after the Purchase Date.  In
the event the cash to be returned to a Participant pursuant to the preceding
sentence is an amount less than the amount necessary to purchase a whole share
of Stock, the Company may establish procedures whereby such cash is maintained
in the Participant’s Plan account and applied toward the purchase of shares of
Stock in the subsequent Purchase Period or Offering Period.

11.3         Tax Withholding.  At the time a Participant’s Purchase Right
is exercised, in whole or in part, or at the time a Participant disposes of
some or all of the shares of Stock he or she acquires under the Plan, the
Participant shall make adequate provision for the foreign, federal, state and
local tax withholding obligations of the Participating Company Group, if any,
which arise upon exercise of the Purchase Right or upon such disposition of
shares, respectively.  The Participating
Company Group may, but shall not be obligated to, withhold from the
Participant’s compensation the amount necessary to meet such withholding
obligations.

11.4         Expiration of Purchase Right.  Any portion of a Participant’s Purchase Right remaining
unexercised after the end of the Offering Period to which such Purchase Right
relates shall expire immediately upon the end of such Offering Period.

 

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12.           Limitations on Purchase of Shares; Rights as a
Stockholder.

12.1         Fair Market Value Limitation.  Notwithstanding any other provision of the
Plan, no Participant shall be entitled to purchase shares of Stock under the
Plan (or any other employee stock purchase plan which is intended to meet the
requirements of Section 423 of the Code sponsored by the Company or a
Parent Corporation or Subsidiary Corporation) at a rate which exceeds $25,000
in Fair Market Value, which Fair Market Value is determined for shares
purchased during a given Offering Period as of the Offering Date for such
Offering Period (or such other limit as may be imposed by the Code), for each
calendar year in which the Participant participates in the Plan (or any other
employee stock purchase plan described in this sentence).

12.2         Pro Rata Allocation.  In the event the number of shares of Stock
which might be purchased by all Participants in the Plan exceeds the number of
shares of Stock available in the Plan, the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.

12.3         Rights as a Stockholder and
Employee.  A Participant
shall have no rights as a stockholder by virtue of the Participant’s
participation in the Plan until the date of the issuance of a stock certificate
for the shares of Stock being purchased pursuant to the exercise of the
Participant’s Purchase Right.  No
adjustment shall be made for cash dividends or distributions or other rights
for which the record date is prior to the date such stock certificate is
issued.  Nothing herein shall confer
upon a Participant any right to continue in the employ of the Participating
Company Group or interfere in any way with any right of the Participating
Company Group to terminate the Participant’s employment at any time.

13.           Withdrawal.

13.1         Withdrawal From an Offering.  A Participant may withdraw from an Offering
by signing and delivering to the Company’s payroll or other designated office a
written notice of withdrawal on a form provided by the Company for such
purpose.  Such withdrawal may be elected
at any time prior to the end of an Offering Period; provided, however, if a
Participant withdraws after a Purchase Date, the withdrawal shall not affect
shares of Stock acquired by the Participant on such Purchase Date.  Unless otherwise indicated, withdrawal from
an Offering shall not result in a withdrawal from the Plan or any succeeding
Offering therein.  By withdrawing from
an Offering effective as of the close of a given Purchase Date, a Participant
may have shares of Stock purchased on such Purchase Date and immediately
commence participation in the new Offering commencing immediately after such
Purchase Date.  A Participant is
prohibited from again participating in an Offering at any time following
withdrawal from such Offering.  The
Company may impose, from time to time, a requirement that the notice of
withdrawal be on file with the Company’s payroll office or other designated
office for a reasonable period prior to the effectiveness of the Participant’s
withdrawal from an Offering.

13.2         Withdrawal from the Plan.  A Participant may withdraw from the Plan by
signing and delivering to the Company’s payroll office or other designated
office a written notice of withdrawal on a form provided by the Company for
such purpose.  Withdrawals made after a
Purchase Date shall not affect shares of Stock acquired by the Participant on
such Purchase Date.

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  In the event a Participant voluntarily
elects to withdraw from the Plan, the Participant may not resume participation
in the Plan during the same Offering Period, but may participate in any
subsequent Offering under the Plan by again satisfying the requirements of
Sections 5 and 7.1.  The Company
may impose, from time to time, a requirement that the notice of withdrawal be
on file with the Company’s payroll office or other designated office for a
reasonable period prior to the effectiveness of the Participant’s withdrawal
from the Plan.

 

13.3         Return of Payroll Deductions.  Upon a Participant’s withdrawal from an
Offering or the Plan pursuant to Sections 13.1 or 13.2, respectively, the
Participant’s accumulated payroll deductions which have not been applied toward
the purchase of shares of Stock shall be returned as soon as practicable after
the withdrawal, without the payment of any interest, to the Participant, and
the Participant’s interest in the Offering or the Plan, as applicable, shall
terminate.  Such accumulated payroll
deductions may not be applied to any other Offering under the Plan.

13.4         Automatic Withdrawal From an
Offering.  If the Fair
Market Value of a share of Stock on a Purchase Date of an Offering (other than
the final Purchase Date of such Offering) is less than the Fair Market Value of
a share of Stock on the Offering Date for such Offering, then every Participant
shall automatically (a) be withdrawn from such Offering at the close of
such Purchase Date and after the acquisition of shares of Stock for such
Purchase Period and (b) be enrolled in the Offering commencing on the
first business day subsequent to such Purchase Period.  A Participant may elect not to be
automatically withdrawn from an Offering Period pursuant to this
Section 13.4 by delivering to the Company not later than the close of
business on the last day before the Purchase Date a written notice indicating
such election.

13.5         Waiver of Withdrawal Right.  The Company may, from time to time,
establish a procedure pursuant to which a Participant may elect, at least six
(6) months prior to a Purchase Date, to have all payroll deductions accumulated
in his or her Plan account as of such Purchase Date applied to purchase shares
of Stock under the Plan, and (a) to waive his or her right to withdraw
from the Offering or the Plan and (b) to waive his or her right to increase,
decrease, or cease payroll deductions under the Plan from his or her
Compensation during the Purchase Period ending on such Purchase Date.  Such election shall be made in writing on a
form provided by the Company for such purpose and must be delivered to the
Company not later than the close of business on the day preceding the date
which is six (6) months before the Purchase Date for which such election is to
first be effective.

14.           Termination
of Employment or Eligibility. 
Termination of a Participant’s employment with the Company for any
reason, including retirement, disability or death or the failure of a
Participant to remain an Eligible Employee, shall terminate the Participant’s
participation in the Plan immediately. 
In such event, the payroll deductions credited to the Participant’s Plan
account since the last Purchase Date shall, as soon as practicable, be returned
to the Participant or, in the case of the Participant’s death, to the
Participant’s legal representative, and all of the Participant’s rights under
the Plan shall terminate.  Interest
shall not be paid on sums returned to a Participant pursuant to this
Section 14.  A Participant whose
participation has been so terminated may again become eligible to participate
in the Plan by again satisfying the requirements of Sections 5 and 7.1.

 

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15.           Transfer
of Control.

15.1         Definitions.

(a)           An
“Ownership
Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: 
(i) the direct or indirect sale or exchange in a single or series
of related transactions by the stockholders of the Company of more than fifty
percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company a party; (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.

(b)           A “Transfer of
Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, the “Transaction”) wherein the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the “Transferee Corporation(s)”), as the case
may be.  For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation, an
interest resulting from ownership of the voting stock of one or more
corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one
or more subsidiary corporations.  The
Board shall have the right to determine whether multiple sales or exchanges of
the voting stock of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

15.2         Effect of Transfer of Control on
Purchase Rights.  In the
event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the “Acquiring
Corporation”), may assume the Company’s rights and obligations under
the Plan or substitute substantially equivalent Purchase Rights for stock of
the Acquiring Corporation.  If the
Acquiring Corporation elects not to assume or substitute for the outstanding
Purchase Rights, the Board may, in its sole discretion and notwithstanding any
other provision herein to the contrary, adjust the Purchase Date of the then
current Purchase Period to a date on or before the date of the Transfer of
Control, but shall not adjust the number of shares of Stock subject to any
Purchase Right.  All Purchase Rights
which are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control. 
Notwithstanding the foregoing, if the corporation the stock of which is
subject to the outstanding Purchase Rights immediately prior to an Ownership
Change Event described in Section 15.1(a)(i) constituting a Transfer of Control
is the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power
of its voting stock is held by another corporation or by other corporations
that are members of an affiliated group within the meaning of Section 1504(a)
of the Code without regard to the provisions of Section 1504(b) of the Code,
the outstanding Purchase Rights shall not terminate unless the Board otherwise
provides in its sole discretion.

 

11

 

16.           Nontransferability of Purchase Rights.  A Purchase Right may not be transferred in
any manner otherwise than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only by the
Participant.  The Company, in its
absolute discretion, may impose such restrictions on the transferability of the
shares purchasable upon the exercise of a Purchase Right as it deems
appropriate and any such restriction shall be set forth in the respective
subscription agreement and may be referred to on the certificates evidencing
such shares.

17.           Reports.  Each Participant who exercised all or part of his or her Purchase
Right for a Purchase Period shall receive, as soon as practicable after the
Purchase Date of such Purchase Period, a report of such Participant’s Plan
account setting forth the total payroll deductions accumulated, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the remaining cash balance to be refunded or retained in the
Participant’s Plan account pursuant to Section 11.2, if any.  Each Participant shall be provided
information concerning the Company equivalent to that information generally
made available to the Company’s common stockholders.

18.           Restriction on Issuance of Shares.  The issuance of shares under the Plan shall
be subject to compliance with all applicable requirements of foreign, federal
or state law with respect to such securities. 
A Purchase Right 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.  In addition, no Purchase Right may be exercised unless (a) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the
Purchase Right may be issued in accordance with the terms of an applicable
exemption from the registration requirements of said Act.  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 under the Plan 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 a Purchase Right, the Company may require the
Participant 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.

19.           Legends.  The Company may at any time place legends or other identifying
symbols referencing any applicable foreign, federal or state securities law
restrictions or any provision convenient in the administration of the Plan on
some or all of the certificates representing shares of Stock issued under the
Plan.  The Participant shall, at the
request of the Company, promptly present to the Company any and all
certificates representing shares acquired pursuant to a Purchase Right in the
possession of the Participant in order to carry out the provisions of this
Section.  Unless otherwise specified by
the Company, legends placed on such certificates may include but shall not be
limited to the following:

                “THE
SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE
REGISTERED HOLDER UPON

 

12

 

 THE PURCHASE
OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY
THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED
HOLDER HEREOF MADE ON OR BEFORE               ,
19  .  THE REGISTERED
HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED
HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE.”

20.           Notification of Sale of Shares.  The Company may require the Participant to
give the Company prompt notice of any disposition of shares acquired by
exercise of a Purchase Right within two years from the date of granting such
Purchase Right or one year from the date of exercise of such Purchase
Right.  The Company may require that
until such time as a Participant disposes of shares acquired upon exercise of a
Purchase Right, the Participant shall hold all such shares in the Participant’s
name (and not in the name of any nominee) until the lapse of the time periods
with respect to such Purchase Right referred to in the preceding sentence.  The Company may direct that the certificates
evidencing shares acquired by exercise of a Purchase Right refer to such
requirement to give prompt notice of disposition.

21.           Amendment or Termination of the Plan.  The Board may at any time amend or terminate
the Plan, except that (a) such termination shall not affect Purchase
Rights previously granted under the Plan, except as permitted under the Plan,
and (b) no amendment may adversely affect a Purchase Right previously
granted under the Plan (except to the extent permitted by the Plan or as may be
necessary to qualify the Plan as an employee stock purchase plan pursuant to
Section 423 of the Code or to obtain qualification or registration of the
shares of Stock under applicable foreign, federal or state securities
laws).  In addition, an amendment to the
Plan must be approved by the stockholders of the Company within twelve (12)
months of the adoption of such amendment if such amendment would authorize the
sale of more shares than are authorized for issuance under the Plan or would
change the definition of the corporations that may be designated by the Board
as Participating Companies.

22.           Continuation of Initial Plan as to Outstanding
Purchase Rights.  Any
other provision of the Plan to the contrary notwithstanding, the terms of the
Initial Plan shall remain in effect and apply to all Purchase Rights granted
pursuant to the Initial Plan.

                IN
WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing
sets forth the Zoran Corporation Amended and Restated 1995 Employee Stock
Purchase Plan as duly adopted by the Board of Directors and amended and
restated through June 4, 2003.

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Secretary

  
	
   

  	
   

  

13

 

PLAN
HISTORY

	
  October 13, 1995

  	
   

  	
  Board adopts the initial Plan, with an initial
  reserve of 150,000 shares.

  
	
   

  	
   

  	
   

  
	
  December 14, 1995

  	
   

  	
  Effective date of stockholder action by consent
  without meeting, approving Plan, with an initial reserve of
  150,000 shares.

  
	
   

  	
   

  	
   

  
	
  December 14, 1995

  	
   

  	
  The Plan initially was effective December 14,
  1995, the effective date of the initial registration by the Company of its
  Stock under Section 12 of the Exchange Act.  Effective date of a 1-for-3 reverse stock split.  (Numbers presented above reflect an
  adjustment.)

  
	
   

  	
   

  	
   

  
	
  January 24, 1996

  	
   

  	
  Subject to stockholder approval, Board amends and
  restates the Plan to increase the number of shares subject to a purchase
  right and to eliminate a limit on the number of shares purchasable in a calendar
  year less than the calendar year limit imposed by Section 423 of the
  Code.  The amended and restated Plan
  will be effective as of the date of commencement of the first offering under
  the Plan following approval by the stockholders.

  
	
   

  	
   

  	
   

  
	
  May 23, 1996

  	
   

  	
  Stockholders approve Plan, as amended
  January 24, 1996.

  
	
   

  	
   

  	
   

  
	
  April 23, 1997

  	
   

  	
  Board amends Plan to increase share reserve by
  150,000 shares to 300,000 shares and to permit increases in the
  rate of payroll deductions.

  
	
   

  	
   

  	
   

  
	
  June 6, 1997

  	
   

  	
  Stockholders approve amendment increasing share
  reserve.

  
	
   

  	
   

  	
   

  
	
  April 28, 1999

  	
   

  	
  Board amends Plan to increase share reserve by
  100,000 shares to 400,000 shares.

  
	
   

  	
   

  	
   

  
	
  July 16, 1999

  	
   

  	
  Stockholders approve amendment increasing share
  reserve.

  
	
   

  	
   

  	
   

  
	
  June 18, 2000

  	
   

  	
  Board amends Plan to increase share reserve by
  100,000 shares to 500,000 shares.

  
	
   

  	
   

  	
   

  
	
  July 18, 2000

  	
   

  	
  Stockholders approve amendment increasing share.

  
	
   

  	
   

  	
   

  
	
  April 17, 2001

  	
   

  	
  Board amends Plan to increase share reserve by
  50,000 shares to 550,000 shares.

  
	
   

  	
   

  	
   

  
	
  June
  29, 2001

  	
   

  	
  Stockholders
  approve amendment increasing share reserve.

  
	
   

  	
   

  	
   

  
	
  April
  21, 2002

  	
   

  	
  Board
  amends Plan to increase share reserve by 50,000 shares to 600,000 shares.

  
	
   

  	
   

  	
   

  

 

 

14

 

 

	
  May
  22, 2002

  	
   

  	
  Effective
  date of a 3-for-2 stock split, resulting in an adjusted share reserve of
  900,000 and adjusted Offer Share Limit of 7,500 shares.

  
	
   

  	
   

  	
   

  
	
  June
  21, 2002

  	
   

  	
  Stockholders
  approve amendment increasing share reserve to 900,000 shares.

  
	
   

  	
   

  	
   

  
	
  June
  4, 2003

  	
   

  	
  Board
  amends Plan to increase share reserve by 575,000 shares to 1,475,000 shares.

  
	
   

  	
   

  	
   

  
	
  August
  8, 2003

  	
   

  	
  Stockholders
  approve amendment increasing share reserve to 1,475,000 shares.

  
	
   

  	
   

  	
   

  

 

 

15

 

ZORAN CORPORATION

1995 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION
AGREEMENT

o                                    Original
Application for participation commencing with the Offering Period beginning
_________________________, 200     .

o                                    Change
in Percentage of Payroll Deductions effective with the pay period ending
_________________________, 200     .

I hereby elect to
participate in the 1995 Employee Stock Purchase Plan (the “Plan”) of Zoran Corporation
(the “Company”)
and subscribe to purchase shares of the Company’s common stock as determined in
accordance with the terms of the Plan.

I hereby authorize
payroll deductions in the amount of
                  
percent (in 1% increments not to exceed 10%) of my “Compensation” (as defined in
the Plan) from each paycheck throughout the “Offering Period” (as defined
in the Plan) in accordance with the terms of the Plan.  I understand that these payroll deductions
will be accumulated for the purchase of shares of common stock of the Company
at the applicable purchase price determined in accordance with the Plan.  I further understand that, except as
otherwise set forth in the Plan, shares will be purchased for me automatically
on the last day of each Purchase Period unless I withdraw from the Plan or from
the Offering by giving written notice to the Company or unless I terminate
employment.

I further
understand that I will automatically participate in each subsequent Offering
which commences immediately after the last day of an Offering in which I am
participating under the Plan until such time as I file with the Company a
notice of withdrawal from the Plan on such form as may be established from time
to time by the Company or I terminate employment.

Shares purchased
for me under the Plan should be issued in the name set forth below.  (I understand that shares may be issued
either in my name alone or together with my spouse as community property or in
joint tenancy.)

	
  NAME:

  	
   

  
	
  ADDRESS:

  	
   

  
	
   

  
	
  MY SOCIAL SECURITY NUMBER:

  	
   

  
				

 

I hereby authorize
withholding from my compensation in order to satisfy the foreign, federal,
state and local tax withholding obligations, if any, which may arise upon my
purchase of shares under the Plan and/or upon my disposition of shares I
acquired under the Plan.  I hereby agree
that until I dispose of the shares, unless otherwise permitted by the Company,
I will hold all shares I acquire under the Plan in the name entered above (and
not in the name of any nominee) for at least two (2) years from the first day
of the Offering Period in which, and at least one (1) year from the Purchase
Date on which, I acquired such shares. 
I further agree that I will promptly notify the Chief Financial Officer
of the Company in writing of any transfer of such shares prior to the end of
the periods referred to in the preceding sentence.

I am familiar with
the provisions of the Plan and hereby agree to participate in the Plan subject
to all of the provisions thereof.  I
understand that the Board of Directors of the Company reserves the right to
amend the Plan and my right to purchase stock under the Plan as may be
necessary to qualify the Plan as an employee stock purchase plan as defined in
Section 423 of the Internal Revenue Code of 1986, as amended, or to obtain
qualification or registration of the Company’s common stock to be issued out of
the Plan under applicable foreign, federal and state securities laws.  I understand that the effectiveness of this
subscription agreement is dependent upon my eligibility to participate in the
Plan.

	
  Date:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
  Name Printed

  	
   

  
						

 

 

 

ZORAN CORPORATION

1995 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

 

I hereby elect to
withdraw from the offering of the common stock of Zoran Corporation (the “Company”)
under the Company’s 1995 Employee Stock Purchase Plan (the “Plan”)
which began on _________________________, 200      and
in which I am currently participating (the “Current Offering”).

Make one election under
section A and one election under section B:

A.                                   Current
Offering.  As to my participation in
the current purchase period (the “Current Purchase Period”) of the Current
Offering under the Plan, I elect as follows (check one):

o                                    1.             I elect to terminate
my participation in the Current Purchase Period immediately.

                                                                                                I
hereby request that all payroll deductions credited to my account under the
Plan (if any) not previously used to purchase shares under the Plan shall not
be used to purchase shares on the last day of the Current Purchase Period.  Instead, I request that all such amounts be
paid to me as soon as practicable.  I
understand that this election immediately terminates my interest in the Current
Offering.

o                                    2.             I elect to terminate
my participation in the Current Offering following my purchase of shares on the
last day of the Current Purchase Period.

                                                                                                I
hereby request that all payroll deductions credited to my account under the
Plan (if any) not previously used to purchase shares under the Plan shall be
used to purchase shares on the last day of the Current Purchase Period.  I understand that this election will
terminate my interest in the Current Offering immediately following such
purchase.  I request that any cash
balance remaining in my account under the Plan after my purchase of shares be
returned to me as soon as practicable.

                I
understand that if no election is made as to participation in the Current
Offering under the Plan, I will be deemed to have elected to participate in the
Current Offering.

B.                                     Future
Offerings.  As to my participation
in future offerings of common stock under the Plan, I elect as follows (check
one):

o                                    1.             I elect to
participate in future offerings under the Plan.

                                                                                                I
understand that by making this election I will participate in the next offering
under the Plan commencing subsequent to the Current Offering, and in each
subsequent offering commencing immediately after the last day of an offering in
which I participate, until such time as I elect to withdraw from the Plan or
from any such subsequent offering.

o                                    2.             I elect not to
participate in future offerings under the Plan.

                                                                                                I
understand that by making this election I terminate my interest in the Plan and
that no further payroll deductions will be made unless I elect in accordance
with the Plan to become a participant in another offering under the Plan.

I understand that
if no election is made as to participation in future offerings under the Plan,
I will be deemed to have elected to participate in such future offerings.

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
  Name Printed: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

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