Document:

Exhibit 4.5

 

VERIFONE HOLDINGS,
INC.

2005 EMPLOYEE EQUITY INCENTIVE PLAN

 

1.             Purpose.

 

This plan shall be
known as the VeriFone Holdings, Inc. 2005 Employee Equity Incentive Plan
(the “Plan”).  The purpose of the Plan shall be to advance the best
interests of VeriFone Holdings, Inc. (the “Company”) and its Subsidiaries
by (i) providing certain officers and employees of, and certain other
individuals who perform services for, the Company and its Subsidiaries with
incentives to maximize stockholder value and otherwise contribute to the
success of the Company and (ii) enabling the Company to attract, retain
and reward the best available persons for positions of responsibility. 
Grants of incentive or non-qualified stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares and share units
and other stock-based awards may be made under the Plan.

 

2.             Definitions

 

(a) “Board
of Directors” and “Board” mean the board of directors of the Company.

 

(b) “California
Blue Sky Law” means the California Corporate Securities Law of 1968 and the
regulations promulgated thereunder, as amended.

 

(c) “Cause”
shall have the meaning specified in a holder’s written agreement or if not
specified therein shall mean the occurrence of one or more of the following
events as reasonably determined by the Committee:

 

(i)            Conviction
of a felony or any crime or offense lesser than a felony involving dishonesty,
disloyalty or fraud with respect to the company or any Subsidiary or any of
their respective properties or assets; or

 

(ii)           Gross negligence or willful misconduct that has caused
demonstrable and serious injury to the Company or a Subsidiary, monetary or
otherwise; or

 

(iii)          Willful refusal to perform or substantial disregard of
duties properly assigned, as determined by the Company or a Subsidiary, as the
case may be; or

 

(iv)          Breach of duty of loyalty to the Company or a Subsidiary or
other act of fraud or dishonesty with respect to the Company or a Subsidiary.

 

(d)           “Change in Control” means the
occurrence of one of the following events:

 

(i)            if
any “person” or “group” as those terms are used in Sections 13(d) and
14(d) of the Exchange Act or any successors thereto, other than an Exempt
Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act or any successor thereto), directly or indirectly, of
securities of the

 

 

Company representing 50% or more of the combined voting
power of the Company’s then outstanding securities; or

 

(ii)           during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new directors
whose election by the Board or nomination for election by the Company’s
stockholders was approved by at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election was previously so approved, cease for any reason to constitute a
majority thereof; or

 

(iii)          consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation (A) which
would result in all or a portion of the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (B) by which the corporate existence
of the Company is not affected and following which the Company’s chief
executive officer and directors retain their positions with the Company (and
constitute at least a majority of the Board); or

 

(iv)          consummation of a plan of complete liquidation of the
Company or a sale or disposition by the Company of all or substantially all the
Company’s assets, other than a sale to an Exempt Person.

 

(e) “Code” 
means the Internal Revenue Code of 1986, as amended.

 

(f) “Committee”
means the Compensation Committee of the Board, which shall consist solely of
two or more members of the Board.

 

(g) “Common
Stock” means the Common Stock, par value $0.01 per share, of the Company, and
any other shares into which such stock may be changed by reason of a
recapitalization, reorganization, merger, consolidation or any other change in
the corporate structure or capital stock of the Company.

 

(h) “Competition”
is deemed to occur if a person whose employment with the Company or its
Subsidiaries has terminated obtains a position as a full-time or part-time
employee of, as a member of the board of directors of, or as a consultant or
advisor with or to, or acquires an ownership interest in excess of 5% of, a
corporation, partnership, firm or other entity that engages in any of the
businesses of the Company or any Subsidiary with which the person was involved
in a management role at any time during his or her last five years of
employment with or other service for the Company or any Subsidiaries.

 

(i) “Disability”
means a disability that would entitle an eligible participant to payment of
monthly disability payments under any Company disability plan or as otherwise
determined by the Committee.

 

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

 

(k) “Exempt
Person” means (i) GTCR Golder Rauner, L.L.C., GTCR Golder Rauner II,
L.L.C., or any of their affiliates, (ii) any person, entity or group under
the control of any party included in clause (i), (iii) any employee
benefit plan of the Company or a trustee or other administrator or fiduciary
holding securities under an employee benefit plan of the Company, or
(iv) Douglas G. Bergeron.

 

(l) “Family
Member” has the meaning given to such term in General Instructions
A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
and any successor thereto.

 

(m) “Fair
Market Value” of a share of Common Stock of the Company means, as of the date
in question, the last sale price of the stock during normal trading hours (or
if no selling price is quoted, the bid price) on the New York Stock
Exchange, Inc. or if not listed thereon, the principal securities exchange
on which the Common Stock is then listed for trading (including for this
purpose the Nasdaq National Market) (the “Market”) for the applicable trading
day or, if the Common Stock is not then listed or quoted in the Market, the
Fair Market Value shall be the fair value of the Common Stock determined in
good faith by the Board; provided, however, that for purposes of options granted
at the pricing of the Company’s initial public offering, the Fair Market Value
shall, if the Committee so determines in its discretion, be the initial public
offering price; provided further, however, that when shares received upon
exercise of an option are immediately sold in the open market, the net sale
price received may be used to determine the Fair Market Value of any shares
used to pay the exercise price or applicable withholding taxes and to compute
the withholding taxes.

 

(n) “Incentive
Stock Option” means an option conforming to the requirements of
Section 422 of the Code and any successor thereto.

 

(o) “Non-qualified
Stock Option” means any stock option other than an Incentive Stock Option.

 

(p) “Other
Company Securities” mean securities of the Company other than Common Stock,
which may include, without limitation, unbundled stock units or components
thereof, debentures, preferred stock, warrants and securities convertible into
or exchangeable for Common Stock or other property.

 

(q) “Retirement”
means retirement as defined under any Company pension plan or retirement
program or termination of one’s employment on retirement with the approval of
the Committee.

 

(r) “Stock
Options” means the Incentive Stock Options and Non-qualified Stock Options.

 

(s) “Subsidiary”
means a corporation or other entity of which outstanding shares or ownership
interests representing 50% or more of the combined voting power of such
corporation or other entity entitled to elect the management thereof, or such
lesser percentage as may be approved by the Committee, are owned directly or
indirectly by the Company.

 

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3.             Administration.

 

The Plan shall be
administered by the Committee; provided that the Board may, in its discretion,
at any time and from time to time, resolve to administer the Plan, in which
case the term “Committee” shall be deemed to mean the Board for all purposes
herein.  Subject to the provisions of the Plan, the Committee shall be
authorized to (i) select persons to participate in the Plan,
(ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
such grants will be made, (iii) certify that the conditions and restrictions
applicable to any grant have been met, (iv) modify the terms of grants
made under the Plan, (v) interpret the Plan and grants made thereunder,
(vi) make any adjustments necessary or desirable in connection with grants
made under the Plan to eligible participants located outside the United States
and (vii) adopt, amend, or rescind such rules and regulations, and
make such other determinations, for carrying out the Plan as it may deem
appropriate.  Decisions of the Committee on all matters relating to the
Plan shall be in the Committee’s sole discretion and shall be conclusive and
binding on all parties.  The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws and
rules and regulations promulgated pursuant thereto and the rules and
regulations of the principal securities exchange on which the Common Stock is
then listed for trading.  No member of the Committee and no officer of the
Company shall be liable for any action taken or omitted to be taken by such
member, by any other member of the Committee or by any officer of the Company
in connection with the performance of duties under the Plan, except for such
person’s own willful misconduct or as expressly provided by statute.

 

The expenses of the Plan
shall be borne by the Company.  The Plan shall not be required to
establish any special or separate fund or make any other segregation of assets
to assume the payment of any award under the Plan, and rights to the payment of
such awards shall be no greater than the rights of the Company’s general
creditors.

 

4.             Shares Available for the Plan.

 

Subject to adjustments as
provided in Section 15 hereof, an aggregate of 3,100,000 shares of Common
Stock (the “Shares”) may be issued pursuant to the Plan.  Such Shares may
be in whole or in part authorized and unissued or held by the Company as
treasury shares.  If any grant under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited as to any Shares, or is
tendered or withheld as to any shares in payment of the exercise price of the
grant or the taxes payable with respect to the exercise, then such unpurchased,
forfeited, tendered or withheld Shares shall thereafter be available for
further grants under the Plan.

 

Without limiting the
generality of the foregoing provisions of this Section 4 or the generality
of the provisions of Sections 3, 6 or 17 or any other section of this
Plan, the Committee may, at any time or from time to time, and on such terms
and conditions (that are consistent with and not in contravention of the other
provisions of this Plan) as the Committee may, in its sole discretion,
determine, enter into agreements (or take other actions with respect to

 

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the options) for new options containing terms
(including exercise prices) more (or less) favorable than the outstanding
options.

 

5.             Participation.

 

Participation in the Plan
shall be limited to those officers (including non-employee officers) and
employees of, and other individuals performing services for, the Company and
its Subsidiaries selected by the Committee (including participants located
outside the United States).  Nothing in the Plan or in any grant
thereunder shall confer any right on a participant to continue in the service
or employ as an officer of or in the performance of services for the Company or
a Subsidiary or shall interfere in any way with the right of the Company or a
Subsidiary to terminate the employment or performance of services or to reduce
the compensation or responsibilities of a participant at any time.  By
accepting any award under the Plan, each participant and each person claiming
under or through him or her shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.

 

Incentive Stock Options
or Non-qualified Stock Options, stock appreciation rights, restricted stock,
restricted stock units, performance shares and share units and other
stock-based awards may be granted to such persons and for such number of Shares
as the Committee shall determine (such individuals to whom grants are made
being sometimes herein called “optionees” or “grantees,” as the case may
be).  Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among eligible individuals under the Plan,
whether or not such individuals are similarly situated.  A grant of any
type made hereunder in any one year to an eligible participant shall neither
guarantee nor preclude a further grant of that or any other type to such
participant in that year or subsequent years.

 

6.             Incentive and Non-qualified
Stock Options.

 

The Committee may from
time to time grant to eligible participants Incentive Stock Options,
Non-qualified Stock Options, or any combination thereof; provided that the
Committee may grant Incentive Stock Options only to eligible employees of the
Company or its subsidiaries (as defined for this purpose in
Section 424(f) of the Code or any successor thereto).  In any
one calendar year, the Committee shall not grant to any one participant options
to purchase a number of shares of Common Stock in excess of 100,000 (as
adjusted pursuant to Section 15 hereof) except for options granted by the
Company in connection with its initial public offering, which will not exceed
125,000 (as adjusted pursuant to Section 15 hereof).  The options granted
shall take such form as the Committee shall determine, subject to the following
terms and conditions.

 

It is the Company’s
intent that Non-qualified Stock Options granted under the Plan not be
classified as Incentive Stock Options, that Incentive Stock Options be
consistent with and contain or be deemed to contain all provisions required
under Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate such
intent.  If an Incentive Stock Option granted under the Plan does not
qualify as such for any reason, then to the extent of such non-qualification,
the stock option represented thereby shall be regarded as a Non-qualified Stock
Option duly granted under the Plan, provided that such stock option otherwise meets
the Plan’s requirements for Non-qualified Stock Options.

 

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(a) Price. 
The price per Share deliverable upon the exercise of each option (“exercise
price”) may not be less than 100% of the Fair Market Value of a share of Common
Stock as of the date of grant of the option, and in the case of the grant of
any Incentive Stock Option to an employee who, at the time of the grant, owns
more than 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries, the exercise price may not be less than
110% of the Fair Market Value of a share of Common Stock as of the date of
grant of the option, in each case unless otherwise permitted by
Section 422 of the Code or any successor thereto.

 

(b) Payment. 
Options may be exercised, in whole or in part, upon payment of the exercise
price of the Shares to be acquired. Unless otherwise determined by the
Committee, payment shall be made (i) in cash (including check, bank draft,
money order or wire transfer of immediately available funds), (ii) if
approved by the Committee in connection with a Change in Control, by delivery
of a demand promissory note made by the participant in favor of the Company,
(iii) by delivery of outstanding shares of Common Stock with a Fair Market
Value on the date of exercise equal to the aggregate exercise price payable
with respect to the options’ exercise, (iv) by simultaneous sale through a
broker reasonably acceptable to the Committee of Shares acquired on exercise,
as permitted under Regulation T of the Federal Reserve Board or (v) by any
combination of the foregoing.

 

In the event a grantee
elects to pay the exercise price payable with respect to an option pursuant to
clause (iii) above, (A) only a whole number of share(s) of Common
Stock (and not fractional shares of Common Stock) may be tendered in payment,
(B) such grantee must present evidence acceptable to the Company that he
or she has owned any such shares of Common Stock tendered in payment of the
exercise price (and that such tendered shares of Common Stock have not been
subject to any substantial risk of forfeiture) for at least six months prior to
the date of exercise, and (C) Common Stock must be delivered to the
Company.  Delivery for this purpose may, at the election of the grantee,
be made either by (1) physical delivery of the certificate(s) for all such
shares of Common Stock tendered in payment of the price, accompanied by duly
executed instruments of transfer in a form acceptable to the Company, or
(2) direction to the grantee’s broker to transfer, by book entry, such
shares of Common Stock from a brokerage account of the grantee to a brokerage
account specified by the Company.  When payment of the exercise price is
made by delivery of Common Stock, the difference, if any, between the aggregate
exercise price payable with respect to the option being exercised and the Fair
Market Value of the shares of Common Stock tendered in payment (plus any
applicable taxes) shall be paid in cash.  No grantee may tender shares of
Common Stock having a Fair Market Value exceeding the aggregate exercise price
payable with respect to the option being exercised (plus any applicable taxes).

 

(c) Terms
of Options.  The term during which each option may be exercised shall
be determined by the Committee, but if required by the Code and except as
otherwise provided herein, no option shall be exercisable in whole or in part
more than seven years from the date it is granted, and no Incentive Stock
Option granted to an employee who at the time of the grant owns more than 10%
of the total combined voting power of all classes of stock of the Company or
any of its Subsidiaries shall be exercisable more than five years from the date
it is granted.  All rights to purchase Shares pursuant to an option shall,
unless sooner terminated, expire at the date

 

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designated by the Committee. 
The Committee shall determine the date on which each option shall become
exercisable and may provide that an option shall become exercisable in
installments.  The Shares constituting each installment may be purchased
in whole or in part at any time after such installment becomes exercisable,
subject to such minimum exercise requirements as may be designated by the
Committee.  Prior to the exercise of an option and delivery of the Shares
represented thereby, the optionee shall have no rights as a stockholder with
respect to any Shares covered by such outstanding option (including any
dividend or voting rights).

 

(d) Limitations
on Grants.  If required by the Code, the aggregate Fair Market Value
(determined as of the grant date) of Shares for which an Incentive Stock Option
is exercisable for the first time during any calendar year under all equity incentive
plans of the Company and its Subsidiaries (as defined in Section 422 of
the Code or any successor thereto) may not exceed $100,000.

 

(e) Termination.

 

(i)                            Death
or Disability.  If a participant ceases to be an officer or employee
of, or to perform other services for, the Company or any Subsidiary due to
death or Disability, (A) all of the participant’s options that were vested
and exercisable on the date of his or her death or Disability shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 365
days from the date of such death or Disability, but in no event after the
expiration date of the options; provided that the participant does not engage
in Competition during such 365-day period unless he or she received written
consent to do so from the Board or the Committee; and (B) all of the
participant’s options that were not vested and exercisable on the date of his
or her death or Disability shall be forfeited immediately. 
Notwithstanding the foregoing, if the Disability giving rise to the termination
of employment is not within the meaning of Section 22(e)(3) of the
Code or any successor thereto, Incentive Stock Options not exercised by such
participant within 90 days after the date of termination of employment will
cease to qualify as Incentive Stock Options and will be treated as
Non-qualified Stock Options under the Plan if required to be so treated under
the Code.

 

(ii)                           Retirement.  If a participant
ceases to be an officer or employee of, or to perform other services for, the
Company or any Subsidiary upon the occurrence of his or her Retirement,
(A) all of the participant’s options that were vested and exercisable on
the date of Retirement shall remain exercisable for, and shall otherwise
terminate at the end of, a period of 180 days after the date of Retirement, but
in no event after the expiration date of the options; provided that the
participant does not engage in Competition during such 180 day period unless he
or she receives written consent to do so from the Board or the Committee; and
(B) all of the participant’s options that were not vested and exercisable
on the date of Retirement shall be forfeited immediately.  Notwithstanding
the foregoing, Incentive Stock Options not exercised by such participant within
90 days after Retirement will cease to qualify as Incentive Stock Options and
will be treated as

 

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Non-qualified Stock Options under
the Plan if required to be so treated under the Code.

 

(iii)                          Discharge for Cause.  If a
participant ceases to be an officer or employee of, or to perform other
services for, the Company or a Subsidiary due to Cause, all of the participant’s
options shall expire and be forfeited immediately upon such cessation, whether
or not then vested and exercisable.

 

(iv)                          Change in Control.  In the
event of a Change in Control, the Committee may cancel and terminate all or any
portion of any option not exercised in connection therewith.

 

(v)                           Other
Termination.  Unless otherwise determined by the Committee, if a
participant ceases to be an officer or employee of, or to otherwise perform
services for, the Company or a Subsidiary for any reason other than death,
Disability, Retirement or Cause, (A) all of the participant’s options that
were vested and exercisable on the date of such cessation shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 90
days after the date of such cessation, but in no event after the expiration
date of the options; provided that the participant does not engage in
Competition during such 90-day period unless he or she receives written consent
to do so from the Board or the Committee; and (B) all of the participant’s
options that were not vested and exercisable on the date of such cessation
shall be forfeited immediately upon such cessation.

 

7.             Restricted
Stock.

 

The Committee may at any
time and from time to time grant Shares of restricted stock under the Plan to
such participants and in such amounts as it determines.  Each grant of
Shares of restricted stock shall specify the applicable restrictions on such
Shares, the duration of such restrictions (which shall be at least six months
except as otherwise determined by the Committee or provided in the third
paragraph of this Section 7), and the time or times at which such
restrictions shall lapse with respect to all or a specified number of Shares
that are part of the grant.

 

The participant will be
required to pay the Company the aggregate par value of any Shares of restricted
stock (or such larger amount as the Board may determine to constitute capital
under Section 154 of the Delaware General Corporation Law, as amended, or
any successor thereto) within ten days of the date of grant, unless such Shares
of restricted stock are treasury shares.  Unless otherwise determined by
the Committee, certificates representing Shares of restricted stock granted
under the Plan will be held in escrow by the Company on the participant’s
behalf during any period of restriction thereon and will bear an appropriate
legend specifying the applicable restrictions thereon, and the participant will
be required to execute a blank stock power therefor.  Except as otherwise
provided by the Committee, during such period of restriction the participant
shall have all of the rights of a holder of Common Stock, including but not
limited to the rights to receive dividends and to vote, and any stock or other
securities

 

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received as a distribution with respect to such
participant’s restricted stock shall be subject to the same restrictions as
then in effect for the restricted stock.

 

Except as otherwise
provided by the Committee, if a participant ceases to be an officer or employee
of, or to otherwise perform services for, the Company and its Subsidiaries due
to death, Disability or Retirement during any period of restriction, all
restrictions on Shares of restricted stock granted to such participant shall
lapse.  At such time as a participant ceases to be an officer or employee of,
or otherwise performing services for, the Company or its Subsidiaries for any
other reason, all Shares of restricted stock granted to such participant on
which the restrictions have not lapsed shall be immediately forfeited to the
Company.

 

8.             Restricted Stock Units; Deferred
Stock Units.

 

The Committee may at any
time and from time to time grant restricted stock units under the Plan to such
participants and in such amounts as it determines.  Each grant of
restricted stock units shall specify the applicable restrictions on such units,
the duration of such restrictions (which shall be at least six months except as
otherwise determined by the Committee or provided in the third paragraph of
this Section 8), and the time or times at which such restrictions shall
lapse with respect to all or a specified number of units that are part of the
grant.

 

Each restricted stock
unit shall be equivalent in value to one share of Common Stock and shall
entitle the participant to receive from the Company at the end of the vesting
period (the “Vesting Period”) applicable to such unit one Share, unless the
participant elects in a timely fashion to defer the receipt of such Shares, as
provided below.  Restricted stock units may be granted without payment of
cash or consideration to the Company; provided that participants shall be
required to pay to the Company the aggregate par value of the Shares received
from the Company within ten days of the issuance of such Shares unless such
Shares are treasury shares.

 

Except as otherwise
provided by the Committee, during the restriction period the participant shall
not have any rights as a shareholder of the Company; provided that the
participant shall have the right to receive accumulated dividends or
distributions with respect to the corresponding number of shares of Common
Stock underlying each restricted stock unit at the end of the Vesting Period,
unless such restricted stock units are converted into deferred stock units, in
which case such accumulated dividends or distributions shall be paid by the
Company to the participant at such time as the deferred stock units are
converted into Shares.

 

Except as otherwise
provided by the Committee, if a participant ceases to be an officer or employee
of, or to otherwise perform services for, the Company or any Subsidiary due to
death, Disability or Retirement during any period of restriction, all
restrictions on restricted stock units granted to such participant shall
lapse.  At such time as a participant ceases to be an officer or employee
of, or otherwise performing services for, the Company or any Subsidiary for any
other reason, all restricted stock units granted to such participant on which
the restrictions have not lapsed shall be immediately forfeited to the Company.

 

A participant may elect
by written notice to the Company, which notice must be made before the later of
(i) the close of the tax year preceding the year in which the restricted

 

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stock units are granted or (ii) 30 days of first
becoming eligible to participate in the Plan (or, if earlier, the last day of
the tax year in which the participant first becomes eligible to participate in
the plan) and on or prior to the date the restricted stock units are granted,
to defer the receipt of all or a portion of the Shares due with respect to the
vesting of such restricted stock units; provided that the Committee may impose
such additional restrictions with respect to the time at which a participant
may elect to defer receipt of Shares subject to the deferral election, and any
other terms with respect to a grant of restricted stock units to the extent the
Committee deems necessary to enable the participant to defer recognition of
income with respect to such units until the Shares underlying such units are
issued or distributed to the participant.  Upon such deferral, the
restricted stock units so deferred shall be converted into deferred stock
units.  Except as provided below, delivery of Shares with respect to
deferred stock units shall be made at the end of the deferral period set forth
in the participant’s deferral election notice (the “Deferral Period”). 
Deferral Periods shall be no less than one year after the vesting date of the
applicable restricted stock units.

 

Except as otherwise provided
by the Committee, during such Deferral Period the participant shall not have
any rights as a shareholder of the Company; provided that, the participant
shall have the right to receive accumulated dividends or distributions with
respect to the corresponding number of shares of Common Stock underlying each
deferred stock unit at the end of the Deferral Period when such deferred stock
units are converted into Shares.

 

Except as otherwise
provided by the Committee, if a Participant ceases to be an officer or employee
of, or to otherwise perform services for, the Company or any Subsidiary upon
his or her death prior to the end of the Deferral Period, the participant shall
receive payment in Shares in respect of such participant’s deferred stock units
which would have matured or been earned at the end of such Deferral Period as
if the applicable Deferral Period had ended as of the date of such participant’s
death.

 

Except as otherwise
provided by the Committee, if a participant ceases to be an officer or employee
of, or to otherwise perform services for, the Company or any Subsidiary upon
becoming disabled (as defined under Section 409A(a)(2)(C) of the
Code) or Retirement or for any other reason except termination for Cause prior
to the end of the Deferral Period, the participant shall receive payment in
Shares in respect of such participant’s deferred stock units at the end of the
applicable Deferral Period or on such accelerated basis as the Committee may
determine, to the extent permitted by regulations issued under
Section 409A(a)(3) of the Code.

 

Except as otherwise
provided by the Committee, if a participant ceases to be an officer or employee
of, or to otherwise perform services for, the Company or any Subsidiary due to
termination for Cause such participant shall immediately forfeit any deferred
stock units which would have matured or been earned at the end of the
applicable Deferral Period.

 

Except as otherwise
provided by the Committee, in the event of a Change in Control that also
constitutes a “change in the ownership or effective control of” the Company, or
a change in the ownership of a substantial portion of the Company’s assets (in
each case as determined under regulations issued pursuant to
Section 409A(a)(2)(A)(v) of the Code), a participant shall receive
payment in Shares in respect of such participant’s deferred stock units

 

10

 

which would have matured or been earned at the end of
the applicable Deferral Period as if such Deferral Period had ended immediately
prior to the Change in Control; provided, however, that if an event that
constitutes a Change in Control hereunder does not constitute a “change in
control” under Section 409A of the Code (or the regulations promulgated
thereunder), no payments with respect to the deferred stock units shall be made
under this paragraph to the extent such payments would constitute an
impermissible acceleration under Section 409A of the Code.

 

9.             Performance Awards.

 

Performance awards may be
granted to participants at any time and from time to time as determined by the
Committee.  The Committee shall have complete discretion in determining
the size and composition of performance awards granted to a participant. 
The period over which performance is to be measured (a “performance cycle”)
shall commence on the date specified by the Committee and shall end on the last
day of a fiscal year specified by the Committee.  A performance award
shall be paid no later than the 15th day of the third month
following the completion of a performance cycle.  Performance awards may
include (i) specific dollar-value target awards (ii) performance
units, the value of each such unit being determined by the Committee at the
time of issuance, and/or (iii) performance Shares, the value of each such
Share being equal to the Fair Market Value of a share of Common Stock.

 

The value of each
performance award may be fixed or it may be permitted to fluctuate based on a
performance factor (e.g., return on equity) selected by the Committee.

 

The Committee shall
establish performance goals and objectives for each performance cycle on the
basis of such criteria and objectives as the Committee may select from time to
time, including, without limitation, the performance of the participant, the
Company, one or more of its Subsidiaries or divisions or any combination of the
foregoing.  During any performance cycle, the Committee shall have the
authority to adjust the performance goals and objectives for such cycle for
such reasons as it deems equitable.

 

The Committee shall
determine the portion of each performance award that is earned by a participant
on the basis of the Company’s performance over the performance cycle in
relation to the performance goals for such cycle. The earned portion of a
performance award may be paid out in Shares, cash, Other Company Securities, or
any combination thereof, as the Committee may determine.

 

A participant must be an
officer or employee of, or otherwise perform services for, the Company or its
Subsidiaries at the end of the performance cycle in order to be entitled to
payment of a performance award issued in respect of such cycle; provided,
however, that except as otherwise determined by the Committee, if a participant
ceases to be an officer or employee of, or to otherwise perform services for,
the Company and its Subsidiaries upon his or her death, Retirement, or
Disability prior to the end of the performance cycle, the participant shall
earn a proportionate portion of the performance award based upon the elapsed portion
of the performance cycle and the Company’s performance over that portion of
such cycle.

 

11

 

In the event of a Change
in Control, a participant shall earn no less than the portion of the
performance award that the participant would have earned if the applicable
performance cycle(s) had terminated as of the date of the Change in Control.

 

10.           Withholding Taxes.

 

(a) Participant
Election.  Unless otherwise determined by the Committee, a participant
may elect to deliver shares of Common Stock (or have the Company withhold
shares acquired upon exercise of an option) to satisfy, in whole or in part,
the amount the Company is required to withhold for taxes in connection with the
exercise of an option.  Such election must be made on or before the date
the amount of tax to be withheld is determined.  Once made, the election
shall be irrevocable.  The fair market value of the shares to be withheld
or delivered will be the Fair Market Value as of the date the amount of tax to
be withheld is determined. In the event a participant elects to deliver or have
the Company withhold shares of Common Stock pursuant to this
Section 10(a), such delivery or withholding must be made subject to the
conditions and pursuant to the procedures set forth in
Section 6(b) with respect to the delivery or withholding of Common
Stock in payment of the exercise price of options.

 

(b) Company
Requirement.  The Company may require, as a condition to any grant or
exercise under the Plan or to the delivery of certificates for Shares issued
hereunder, that the grantee make provision for the payment to the Company,
either pursuant to Section 10(a) or this Section 10(b), of
federal, state or local taxes of any kind required by law to be withheld with respect
to any grant or delivery of Shares.  The Company, to the extent permitted
or required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or delivery of Shares under the Plan.

 

11.           Written Agreement; Vesting.

 

Unless the
Committee determines otherwise, each employee to whom a grant is made under the
Plan shall enter into a written agreement with the Company that shall contain
such provisions, including without limitation vesting requirements, consistent
with the provisions of the Plan, as may be approved by the Committee. 
Unless the Committee determines otherwise and except as otherwise provided in
Sections 6, 7, 8 and 9 in connection with certain occurrences of termination,
no grant under this Plan may be exercised, and no restrictions relating thereto
may lapse, within six months of the date such grant is made.

 

12.           Transferability.

 

Unless the Committee
determines otherwise, no option granted under the Plan shall be transferable by
a participant other than by will or the laws of descent and distribution or to
a participant’s Family Member by gift or a qualified domestic relations order
as defined by the Code.  Unless the Committee determines otherwise, an
option may be exercised only by the optionee or grantee thereof; by his or her
Family Member if such person has acquired the option by gift or qualified domestic
relations order; by the executor or administrator of the estate of any of the
foregoing or any person to whom the option is transferred by will or the laws
of descent

 

12

 

and distribution; or by the guardian or legal
representative of any of the foregoing; provided that Incentive Stock Options
may be exercised by any Family Member, guardian or legal representative only if
permitted by the Code and any regulations thereunder.  All provisions of
this Plan shall in any event continue to apply to any option granted under the
Plan and transferred as permitted by this Section 12, and any transferee
of any such option shall be bound by all provisions of this Plan as and to the
same extent as the applicable original grantee.

 

13.           Listing, Registration and
Qualification.

 

If the Committee
determines that the listing, registration or qualification upon any securities
exchange or under any law of Shares subject to any option is necessary or
desirable as a condition of, or in connection with, the granting of same or the
issue or purchase of Shares thereunder, no such option may be exercised in
whole or in part, no such performance award may be paid out, and no Shares may
be issued, unless such listing, registration or qualification is effected free
of any conditions not acceptable to the Committee.

 

14.           Transfer of Employee.

 

The transfer of an
employee from the Company to a Subsidiary, from a Subsidiary to the Company, or
from one Subsidiary to another shall not be considered a termination of
employment; nor shall it be considered a termination of employment if an
employee is placed on military or sick leave or such other leave of absence
which is considered by the Committee as continuing intact the employment relationship.

 

15.           Adjustments.

 

In the event of a
reorganization, recapitalization, stock dividend, stock split or reverse stock
split, combination or other reclassification affecting the Shares or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company or to reflect any distributions
to holders of Common Stock other than regular cash dividends, the Committee
shall make such adjustment as it deems appropriate in the number and kind of Shares,
Options or other property available for issuance or granting under the Plan
(including, without limitation, the total number of Options available for
granting under the Plan pursuant to Section 4), in the number and kind of
Options, stock appreciation rights, restricted stock, restricted stock units,
performance shares and share units and other stock-based awards, and in the
exercise price of outstanding Options provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Any such adjustment shall be final,
conclusive and binding for all purposes of the Plan.  Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to any option.  After any adjustment
made pursuant to this paragraph, the number of shares subject to each
outstanding option shall be rounded to the nearest whole number.

 

13

 

Unless the options held
by a participant are terminated in accordance with Section 6(e)(iv) above,
after the consummation of any “Corporate Transaction” (as defined in Treasury
Regulation §1.424-1(a)(3))), if the requirements of Treasury Regulation
§1.424-1 would be met with respect to the substitution or assumption of such
option assuming the option were an incentive stock option as described in Code
§422, the corporation that is the employer of the participant after such
Corporate Transaction or a related corporation (within the meaning of Treasury
Regulation §1.421-1(i)(2)) shall, by reason of the Corporate Transaction,
(i) substitute a new option for such options or (ii) assume such
options. If the requirements of Treasury Regulation §1.424-1 cannot be
satisfied even assuming the option were an incentive stock option as described in
Code §422, then such options shall automatically be terminated.

 

16.           Amendment and Termination of the
Plan.

 

The Board of
Directors or the Committee, without approval of the stockholders, may amend or
terminate the Plan, except that if stockholder approval would be required by
applicable law or regulations or by any listing requirement of the principal
stock exchange on which the Common Stock is then listed no amendment shall
become effective until prior approval of the stockholders of the Company has
been obtained.

 

17.           Amendment or Substitution of
Awards under the Plan.

 

The terms of any
outstanding award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate, including,
but not limited to, acceleration of the date of exercise of any award and/or
payments thereunder or of the date of lapse of restrictions on Shares (but only
to the extent permitted by regulations issued under
Section 409A(a)(3) of the Code); provided that, except as otherwise
provided in Section 15, no such amendment shall adversely affect in a
material manner any right of a participant under the award without his or her
written consent, and provided further that the Committee shall not reduce the
exercise price of any options awarded under the Plan without approval of the
stockholders of the Company.  The Committee may, in its discretion, permit
holders of awards under the Plan to surrender outstanding awards in order to
exercise or realize rights under other awards, or in exchange for the grant of
new awards, or require holders of awards to surrender outstanding awards as a
condition precedent to the grant of new awards under the Plan, but only if such
surrender, exercise, realization, exchange, or grant (a) would not
constitute a distribution of deferred compensation for purposes of
Section 409A(a)(3) of the Code or (b) constitutes a distribution
of deferred compensation that is permitted under regulations issued pursuant to
Section 409A(a)(3) of the Code.

 

18.           Commencement Date; Termination
Date.

 

The date of commencement
of the Plan shall be April 15, 2005, subject to approval by the
shareholders of the Company.

 

Unless previously
terminated upon the adoption of a resolution of the Board terminating the Plan,
the Plan shall terminate at the close of business on April 15, 2012. 
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of

 

14

 

any person, without his or her written consent, under
any grant of options or other incentives theretofore granted under the Plan.

 

19.           Severability.

 

Whenever possible,
each provision of the Plan shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Plan is
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of the Plan.

 

20.           Governing Law.

 

The Plan shall be
governed by the corporate laws of the State of Delaware, without giving effect
to any choice of law provisions that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.

 

21.           Information.

 

With respect to periods
in which the requirements set forth in Section 25100(o) of the California
Blue Sky Law, to the extent applicable and as modified from time to time
(relating to securities listed on a national exchange), are not satisfied, the
Company each year shall furnish to optionees, grantees and stockholders who
have received Common Stock under the Plan its balance sheet and income
statement, unless such optionees, grantees or stockholders are key employees
whose duties with the Company assure them access to equivalent
information.  Such balance sheet and income statement need not be audited.

 

Adopted by the Board of Directors on April 29, 2005
and approved by the shareholders of the Company on April 29, 2005.

 

15Exhibit 10.49

 

 

July 15,
1998

 

Mr. Karl
Schneider

985 Marquette Lane

Foster City, CA 94404

 

Dear
Karl:

 

As
we discussed, it is my pleasure to extend an offer to you to become Vice
President of Finance and Chief Financial Officer of Zoran Corporation (“Company”),
effective July 23, 1998.

 

Your
new compensation package will include the following:

 

	
  •

  	
  $145,000
  annual salary

  
	
  •

  	
  up to
  30% bonus subject to Company and personal performance and Board approval

  
	
  •

  	
  additional 40,000 shares
  of Zoran common stock

  

 

 

Your
new position and compensation package are subject to formal approval by Zoran’s
Compensation Committee and Board of Directors.

 

All
other employment terms and conditions will remain the same as in the agreed
upon offer letter from Zoran to you dated December 15, 1997.

 

Please
confirm in writing your acceptance of this offer by signing in the space below.

 

Karl,
I am looking forward to working with you as a partner and a member of Zoran’s
executive staff and to jointly overcome the challenges ahead of us and to
benefit from the exciting growth opportunities of Zoran.

 

Sincerely,

 

	
  ZORAN CORPORATION

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  /s/ Levy Gerzberg

  	
   

  	
   

  	 

	
  Levy Gerzberg

  	
   

  	
   

  	 

	
  President & CEO

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Agreed and Accepted:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  /s/ Karl Schneider

  	
   

  	
  7/15/98

  	
   

  
	
  Karl Schneider

  	
   

  	
  Date

  	 

					

 

ZORAN CORPORATION

3112 SCOTT BOULEVARD •
SANTA CLARA, CA 95054

(408) 919-4111  •  FAX:
(408) 919-4122

 

 

December 15,
1997

 

Mr. Karl
Schneider

985 Marquette Lane

Foster City, CA 94404

 

Dear
Karl:

 

We
are pleased to extend an offer to you to become a regular, full-time, exempt
employee with ZORAN CORPORATION (the “Company”) in the capacity of Corporate
Controller reporting to Ami Kraft, Chief Financial Officer of Zoran.

 

As
of the date you join the Company (the “Effective Date” of your employment) as
Corporate Controller, your initial salary will be $108,000 per year paid on a
biweekly basis at a rate of $4,153.85 per pay period.

 

In
addition, included in this offer is a hire-on bonus of $10,000 payable in three
installments as follows:

 

$3,000    Effective
Date of employment

$3,000    6 months from Effective Date of employment

$4,000    1 year from Effective Date of employment

 

You
will be entitled to the bonus subject to staying with the Company as of the
payment dates. If your employment with the Company will come to an end for any
reason prior to the payment dates, you will not be eligible for any further
payment(s) related to the above schedule.

 

As
a key employee, you will be offered the opportunity to purchase 10,000 shares
of the Company’s common stock (the “Stock”) at the market price on the date the
stock is granted to you by the Zoran Board of Directors. The stock will be
subject to the provisions of the standard form of Incentive Stock Option Grant
or Stock Purchase Agreement adopted for use by the Company and must be approved
by the Company’s Board of Directors. You will also be eligible to participate
in the Company’s employee stock purchase plan.

 

As
an employee you are eligible for the standard group medical, dental and vision
coverage. The Company pays 100% for the employee premium. The employee pays a
nominal fee for any dependent coverage. You will begin accruing vacation as of
your date of hire.

 

As
a condition of employment with Zoran, you shall execute, contemporaneously with
the execution of this agreement, the Proprietary Information and Inventions
Agreement attached as Exhibit A and incorporated herein by this reference.

 

ZORAN CORPORATION

3112 SCOTT BOULEVARD •
SANTA CLARA, CA 95054

(408) 919-4111  •  FAX:
(408) 919-4122

 

 

If
you terminate your employment or if you are terminated by the Company for
reasons other than cause, it is mutually agreed by both parties that the
terminating party will give the other party three (3) months notice.

 

However,
if you should accept an offer from another company while you are in the
employment of Zoran, you explicitly agree that you will notify Zoran within
twelve (12) hours of your acceptance of the offer and the Company may terminate
your employment without the three months’ notice.

 

Your
employment with Zoran is entirely voluntary for both parties and either you or
Zoran may conclude the employment relationship at any time for any reason. This
“at will” employment relationship can only be modified in writing by an
authorized officer of Zoran.

 

If
you wish to accept this offer of employment, please sign in the space provided
below. By so signing, you acknowledge that you have received no inducement or
representations other than those set forth in this letter which caused you to
accept this offer of employment. Please return a signed copy to me.

 

Karl,
we are one of the most technologically innovative companies in the industry and
with your excellent background and skills we feel that you will be a major
contributor to the Company.

 

This
acceptance of employment is valid til December 12, 1997.

 

Sincerely,

 

	
  ZORAN CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ami Kraft

  	
   

  	
   

  
	
  Vice President of Finance

  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Karl Schneider

  	
   

  	
   

  
	
  Karl Schneider

  	
   

  	
  Date:

  	
  JAN 9, 1998

  	
   

  
	
   

  	
   

  	
   

  
	
  JAN 19, 1998

  	
   

  	
   

  
	
  Start Date

  	
   

  	
   

  

 

2

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