Document:

Exhibit

10.44a

 

CORNELL COMPANIES DEFERRED

BONUS PLAN

 

Cornell Companies, Inc., a Delaware corporation,

adopted the Cornell Companies Deferred Bonus Plan (the “Plan”), effective

October 1st, 2001 for the benefit of selected  employees.

 

The Plan is a nonqualified deferred compensation plan

pursuant to which the Company (as hereinafter defined) has awarded and may in

the future award Employees of the Company a Bonus.  The Plan is maintained primarily for the purpose of providing

deferred compensation for a select group of management or highly compensated

employees, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of

the Employee Retirement Income Security Act of 1974, as amended.  The Plan is unfunded for tax purposes and

for purposes of Title I of ERISA.  The

Participants have the status of general unsecured creditors of the Company and

the Plan constitutes a mere promise by the Company to make benefit payments in

the future.

 

ARTICLE

I

DEFINITIONS

 

Whenever the following terms are used in the Plan with

the first letter capitalized, they shall have the meaning specified below,

unless the context clearly indicates to the contrary.

 

“Accounting Date” shall mean the end of

each day that the New York Stock Exchange is open and conducting business.

 

“Administrator” shall mean the Company,

acting through the Chief Administrative Officer of the Company.  The Administrator shall have all the duties

and responsibilities imposed by ERISA, except as specifically assigned,

delegated to or reserved to the Board of Directors or Compensation Committee

under the Plan.

 

“Affiliate” shall mean any employer that,

at the time of reference, was, with the Company, a member of a controlled group

of corporations or trades or businesses under common control, or a member of an

affiliated service group, as determined under regulations issued by the

Secretary of the Treasury or his delegate under Code Sections 414(b), 414(c),

414(m), and 415(h) and any other entity required to be aggregated with the

Company pursuant to regulations issued under Code Section 414(o).

 

“Beneficiary” shall mean the person or

persons, as designated by the Participant, on whose behalf benefits may be

payable under the Plan after the Participant’s death.

 

 

“Board of Directors” shall mean the Board of

Directors of Cornell Companies, Inc. 

The Board of Directors may delegate any powers or duties to the

Compensation Committee, the Administrator or any other person or persons.

 

“Bonus” shall mean the Bonus awarded

pursuant to Section 3.1 of the Plan.

 

“Change in Control” shall be deemed to have

occurred on the earliest of the following dates:

 

(a)                                  the

date Cornell merges or consolidates with any other entity, and the stockholders

of Cornell do not own, directly or indirectly, at least 50% of the voting capital

stock of the surviving entity;

 

(b)                                 the

date Cornell sells all or substantially all of its assets to any other person

or entity; provided that the sale or other transfer of the Company’s facilities

to a real estate investment trust, in a sale-leaseback transaction, or any

similar transaction shall not be considered a sale of all or substantially all

of Cornell’s assets;

 

(c)                                the

date Cornell is dissolved;

 

(d)                                 the

date any third person or entity together with its affiliates become, directly

or indirectly, the beneficial owner of 51% of the Voting Stock of Cornell; or

 

(e)                                  the

date the individuals who constitute the members of the Board of Directors

(“Incumbent Board”) as of the effective date of this Plan  cease for any reason to constitute at least a

majority thereof, provided that for purposes of this clause (e) any person

becoming a director whose election or nomination for election by Cornell’s

stockholders was approved by a vote of at least eighty percent (80%) of the

directors comprising the Incumbent Board (either by the specific vote or

approval of the proxy statement of Cornell in which such person is named as a

nominee for director, without objection by such person to such a nomination)

shall be, for purposes of this clause (e), considered as though such person was

a member of the Incumbent Board;

 

“Code” shall mean the Internal Revenue Code

of 1986, as amended.

 

“Company” shall mean Cornell Companies,

Inc. and any Affiliate that subsequently adopts the Plan as a whole or as to

any one or more divisions, in accordance with Section 11.3(b), and any

successor company which continues the Plan under Section 11.3(a), acting in

each case through its Board of Directors.

 

“Compensation Committee” shall mean the

Compensation Committee of the Board of Directors.

 

2

 

“Cornell” shall mean Cornell Companies,

Inc., a Delaware Corporation.

 

“Date Vesting Commences” shall mean the

date set forth in accordance with Section 4.1 

of the Plan.

 

“Disability” shall mean a Participant’s

disability, as defined by the then current policies of the Company.

 

“Employee” shall mean any person who

renders services to a Company in the status of an employee as that term is

defined in Code Section 3121(d), including officers but not including:

 

(a)                                  directors

who serve solely in that capacity;

 

(b)                                 attorneys,

accountants, and other persons doing independent work for the Company where the

relationship of employer and employee does not exist between said person and

the Company; and

 

(c)                                  leased

employees treated as Employees of the Company pursuant to Code Sections 414(n)

and 414(o).

 

“ERISA” shall mean the Employee Retirement

Income Security Act of 1974, as amended from time to time.

 

“Investment Options” shall be any mutual

fund made available from time to time by the Company and the common stock of

Cornell.  The Company may add additional

Investment Options or delete same by written notice to the Trustee.

 

“Nonqualified Deferred Bonus Account” of a

Participant shall mean the bookkeeping account established on behalf of the

Participant in accordance with Section 5.2 of the Plan.

 

“Participant” shall mean any Employee

selected to participate in the Plan in accordance with Section 2.1 of the Plan.

 

“Plan” shall mean this Cornell Companies

Deferred Bonus Plan.

 

“Plan Quarter” shall mean the three-month

periods ending on March 31, June 30, September 30, and December 31 of each Plan

Year.

 

“Plan Year” shall mean the twelve-month

period commencing on January 1 and ending on December 31 (except that the first

Plan Year shall begin on the effective date of the Plan and end on December 31,

2001).

 

3

 

“Separation from Service” of an Employee

shall mean his discharge by the Company, or a material reduction or alteration

in his title, responsibilities or his compensation, a relocation greater than

fifty (50) miles from his office location as of the effective date of the Plan,

or the Participant’s voluntary resignation due to a material reduction or alteration

in his title, responsibilities or his compensation, or a relocation greater

than fifty (50) miles from his office location as of the effective date of the

Plan.  A leave of absence or sick leave

authorized by the Company in accordance with established policies (other than

for Disability), a vacation period, or a military leave shall not constitute a

Separation from Service; except that failure to return to work upon expiration

of any leave of absence, sick leave, or vacation or after expiration of a

military leave shall be considered a voluntary resignation effective as of the

date of expiration of such leave of absence, sick leave, vacation, temporary

layoff or military leave.

 

“Trust Agreement” shall mean the Cornell

Companies Nonqualified Trust, a “Rabbi Trust.”

 

“Trust Fund” shall mean the trust fund

established pursuant to the terms of the Trust Agreement.

 

“Trustee” shall mean the corporate trustee

or trustees or the individual trustee or trustees, as the case may be,

appointed from time to time pursuant to the provisions of the Trust Agreement

to administer the Trust Fund.

 

“Voting Stock” shall mean all of the

outstanding shares of capital stock of Cornell entitled to vote generally in

elections for directors, considered as one class; provided, however, that if

Cornell has shares of Voting Stock entitled to more or less than one vote for

any such share, each reference to a proportion of shares of Voting Stock shall

be deemed to refer to such proportion of the votes entitled to be cast by such

shares.

 

ARTICLE II

SELECTION OF PARTICIPANTS

 

Section 2.1 - Selection of Participants.

The Compensation Committee shall select the Employees of the Company that shall

participate in the Plan.  A Participant

so selected shall be named on Attachment 1 to this Agreement.  A separate Attachment 1 shall be created for

each Participant.

 

Section 2.2. 

Requirements of Participants.  Any Employee who qualifies for the

definition of “highly compensated” employee according to Code Section 414(q),

who is selected by the Compensation Committee, and who otherwise enters into

certain contractual agreements with Cornell if so requested, shall become a

Participant in the Plan.  Such employees

shall be (i) officers and executives of the Company; or (ii) in management

 

4

 

positions which report directly to a Company President or Corporate

Officer; or (iii) marketing managers with responsibility for the acquisition of

new business; or (iv) program managers and other P&L managers who have

overall performance responsibilities for significant contracts; or (v) other

key employees of the Company who have a job assignment with significant impact

on profits, operating effectiveness, and overall success of the Company.

 

ARTICLE

III

BONUS

 

Section 3.1 - The Compensation Committee

shall determine the dollar amount of the Bonus to be awarded to each

Participant selected pursuant to Section 2.1 of the Plan.

 

Section 3.2 - The dollar amount of the

Bonus determined pursuant to Section 3.1 shall be entered on the Attachment 1

created for the Participant.

 

ARTICLE

IV

VESTING

 

Section 4.1 - Vesting Period.  The Bonus awarded to a Participant shall

vest 100% on the date determined by the Compensation Committee.  Attachment 1, created for each Participant,

shall define the vesting schedule and any other terms and conditions of vesting

not otherwise described in Article IV.

 

Section 4.2 - Three Year Vesting.  If the Company achieves a $1.56 earnings per

share (as determined under Generally Accepted Accounting Principles in effect

on the Date Vesting Commences and excluding any “start-up expenses”) (“EPS”)

determined as of the end of 2004 (or in the event the Company commences

operation of the Pike County Correctional Facility (the Southeast Federal Bureau

of Prisons project) the Company must achieve $1.76 EPS determined as of the end

of 2004), the Bonus awarded to a Participant shall vest sixty percent (60%) as

of the last day of 2004, whether or not the Participant was otherwise vested in

the Bonus.

 

Section 4.3 - Death, Disability, or Change in Control.  If any Participant shall die or suffer

Disability while employed by the Company; or if a Change in Control should

occur, the Participant shall be deemed to be 100% vested in his Bonus, whether

or not the Participant was otherwise vested in the Bonus.

 

Section 4.4 – Hypothetical Investment Gains Vesting.  With respect to any portion of the Bonus

allocated pursuant to Section 6.2, other than the portion of such Bonus vested

pursuant to Sections 4.1-4.3 (the “Cash Bonus”), to the extent there is any

increase in value with respect to such Cash Bonus, as determined by Cornell on

a quarterly basis or at such other times as it deems appropriate, the amount of

such increase shall become

 

5

 

100% vested at that time.  Such

vested amount shall be reallocated to a vested subaccount by the Trustee of the

Trust Agreement.

 

Section 4.5 – Vesting.  In order to become 100% vested, a

Participant must accrue sixty (60) “vesting service credits”.  A vesting service credit is each month that

Cornell’s pre-tax earnings before extraordinary or unusual charges or before

the annualized expense of the Plan but not excluding the Plan’s startup expenses,

all as defined by GAAP, exceed $600,000.00 (the “Benchmark”).  If Cornell’s pre-tax earnings as described

in the preceding sentence are less than the Benchmark (such amount shall be

referred to as the “Shortfall”), the Participant will receive a pro rata

vesting service credit for such Shortfall month which shall be equal to the

percentage of the Benchmark that was actually achieved for that month. In

addition, in any subsequent month that Cornell’s pre-tax earnings (as described

above) exceed the Benchmark, then the amount of such excess (determined as

a  percentage of such excess over the

Benchmark) shall be added to the pro rata vesting service credit credited in

the prior Shortfall month.  This process

by which a prior months’ Shortfall is “made up” by future months’ earnings in

excess of the Benchmark shall be repeated each month until the vesting service

credit for the initial Shortfall month equals one hundred percent, in which

case the Participant will accrue a full vesting service credit for such initial

Shortfall month.  If there are

subsequent Shortfalls, then this process shall continue with respect to the

oldest months’ Shortfall, which process shall be repeated as described herein.

 

ARTICLE

V

CREDITING OF BONUS

 

Section 5.1  - Company Contributions.  The Company, in its sole discretion, may

deposit the Bonus for each Participant under the Trust Agreement.

 

Section 5.2 - Participant Account.  The Administrator shall establish and

maintain (or cause to be established and maintained) a bookkeeping account for

each Participant, known as the Nonqualified Deferred Bonus Account, to which

shall be credited the amounts determined under Section 3.1 of the Plan and

credited or debited the amounts determined under Article VII of the Plan.  Such bookkeeping account may consist of

subaccounts pursuant to which amounts vested pursuant to the Plan may be

credited.

 

Section 5.3 - Assignments, etc., Prohibited. No

part of the Nonqualified Deferred Bonus Account of a Participant shall be

liable for the debts, contracts, or engagements of any Participant, his

Beneficiaries or successors in interest, or be taken in execution by levy,

attachment, or garnishment or by any other legal or equitable proceeding, nor

shall any such person have any rights to alienate, anticipate, commute, pledge,

encumber, or assign any benefits or payments hereunder in any manner

whatsoever, except to designate a Beneficiary as provided herein.

 

6

 

ARTICLE VI

INVESTMENT OPTIONS

 

Section 6.1 - Investment in Common Stock of Cornell

Companies, Inc.  The

Compensation Committee shall determine the dollar amount of the Bonus amount

that shall be allocated in the form of common stock of Cornell.

 

Section 6.2 - Investment in Investment Funds.  The balance of the Bonus amount shall be allocated

among the Investment Options as directed by the Company,  or the Participant if so authorized, from

time to time.

 

ARTICLE VII

VALUATION OF ACCOUNTS

 

Each Participant’s Nonqualified Deferred Bonus  Account shall be valued as of each

Accounting Date following the effective date of the Plan, based upon the fair

market value of the assets of each Nonqualified Deferred Bonus Account, as

determined by the Trustee.  In

determining such fair market value, each Nonqualified Deferred Bonus Account

shall include adjustments regarding all dividends, interest income, other

investment income and expenses, investment management fees and expenses,

administrative fees and expenses, applicable taxes, and authorized withdrawals.

 

ARTICLE VIII

BENEFITS

 

Section 8.1 - Manner and Time of Distributions.  The Bonus shall be paid to the Participant

commencing at such time, in such form and over such period of time as set by

the Compensation Committee.  The date

payments are to commence,  the form of

payment, the period over which payments are to be made, and any other

limitations on payments shall be entered on the Attachment 1 created for the

Participant.

 

Section 8.2 - Payment upon Death, Disability or Change in

Control.  All payment

required to be made as a result of death, Disability or Change in Control,

shall be paid in a lump sum to the Participant or his Beneficiaries within

thirty (30) calendar days after the Participant’s death, Disability or a Change

in Control,

 

Section 8.3 – Distribution in  Common Stock of Cornell.  A

Participant or his Beneficiary shall receive the vested portion of his

Nonqualified Deferred Bonus Account which is credited with Cornell common stock

in the form of common stock of Cornell, unless such Participant (or

Beneficiary) has filed a timely election with the Administrator to receive the

cash proceeds of such Investment Option (which the Administrator in its sole

discretion has accepted).

 

7

 

Section 8.4 - Distribution Withholding. Any

tax withholding required with respect to any Plan distributions may be made (i)

from the mutual fund portion of the Participant’s Investment Options, (ii) by

the Participant remitting directly to the Company the appropriate amount of

withholding, (iii) from the portion of the Participant’s Investment Options

credited with Cornell common stock (subject to applicable securities law

requirements), or (iv) through any combination, as determined by the

Administrator.

 

Section 8.5 – Tax Neutral Provision.  In the event any such Plan

payment shall trigger the imposition of any excise tax, penalty or interest

under Code Section 280G, 4999, or any other similar provisions, the Company

shall pay to such Participant additional amounts hereunder so as to cause the

Participant to be tax neutral to at the imposition of such excise tax, penalty

or interest.

 

Section 8.6 - Effect of Failure to Locate Distributee.

If the person to whom benefits are payable hereunder has not been ascertained

or located within one (1) year after the payments are to be made, the amount of

his Nonqualified Deferred Bonus Account shall be forfeited and such amounts

shall be removed from such account and returned to the Company.

 

ARTICLE IX

DISTRIBUTIONS IN THE EVENT OF TAXATION

 

Should any amounts contained in a Participant’s

Nonqualified Deferred Bonus Account become subject to taxation by the Internal

Revenue Service of the U.S. Government prior to the actual receipt thereof by

the Participant, or his Beneficiary, then such amounts shall become immediately

payable thereto in a lump sum distribution. 

Such distribution shall be subject to all withholding required by law.

 

ARTICLE X

ADMINISTRATIVE PROVISIONS

 

Section 10.1 - Administrator’s Duties and Powers.

 

(a)                                  The

Administrator shall conduct the general administration of the Plan in

accordance with the Plan and shall have all the necessary power and authority

to carry out that function. Among its necessary powers and duties, are the

following:

 

(i)                                     to

delegate all or part of its function as Administrator to others and revoke any

such delegation;

 

(ii)                                  to

determine questions of eligibility of Participants and their entitlement to

benefits;

 

8

 

(iii)                             to

select and engage attorneys, accountants, actuaries, trustees, appraisers,

brokers, consultants, administrators, physicians, or other persons to render

service or advice with regard to any responsibility the Administrator or the

Company has under the Plan, or otherwise, to designate such persons to carry

out responsibilities, and (with the Company and its officers, trustees, and

Employees) to rely upon the advice, opinions or valuations of any such persons,

to the extent permitted by law, being fully protected in acting or relying

thereon in good faith;

 

(iv)                            to

interpret the Plan for purpose of the administration and application of the

Plan, in a manner not inconsistent with the Plan or applicable law and to amend

or revoke any such interpretation; and

 

(v)                                 to

adopt rules of the Plan that are not inconsistent with the Plan or applicable

law and to amend or revoke any such rules.

 

(b)                                 Every

finding, decision, and determination made by the Administrator shall, to the

full extent permitted by law, be final and binding upon all parties.

 

Section 10.2 - Limitation Upon Powers. The

Plan shall be uniformly and consistently administered, interpreted, and applied

with regard to all Participants in similar circumstances.

 

Section 10.3 - Indemnification by the Company: Liability

Insurance.

 

(a)                                  The

Company shall pay or reimburse the Administrator for all expenses incurred

thereby and shall indemnify and hold it harmless from, all claims, liabilities,

and costs (including reasonable attorneys’ fees) arising out of the performance

of its Plan functions.  This

indemnification shall survive the termination of the Plan and the distribution

of all Trust Funds.

 

(b)                                 The

Company shall obtain and provide for any such person, at the Company’s expense,

liability insurance against liabilities imposed on him by law.

 

Section 10.4 - Recordkeeping.

 

(a)                                  The

Administrator shall maintain, or cause to be maintained, suitable records as

follows:

 

(i)                                     records

of each Participant’s Nonqualified Deferred Bonus Account which shall show,

among other things, the gains and losses within such account; and

 

(ii)                                  records

of its deliberations and decisions.

 

9

 

(b)                                 The

Administrator may appoint a secretary to keep records of proceedings, to

transmit its decisions, instructions, consents, or directions to any interested

party, and to execute and file, on behalf of the Administrator, such documents,

reports, or other matters as may be necessary or appropriate under ERISA and to

perform other ministerial acts.

 

(c)                                  The

Administrator shall not be required to maintain any records or accounts, which

duplicate any records or accounts maintained by the Company.

 

Section 10.5 - Statement to Participants.

Within sixty day 60) days after the last day of each Plan Quarter, the

Administrator shall furnish (or cause to be furnished) to each Participant a

statement setting forth the value of his Nonqualified Deferred Bonus Account

and such other information as the Administrator shall deem appropriate.

 

Section 10.6 - Inspection of Records.

Copies of the Plan and records of a Participant’s Nonqualified Deferred Bonus

Account and Attachment 1 shall be open to inspection by him or his duly

authorized representatives at the office of the Company at any reasonable

business hour.

 

Section 10.7 - Service in More than One Capacity.  Any person or group of

persons may serve in more than one capacity with respect to the Plan.

 

Section 10.8 - Accounting for Distributions.

Records for each Nonqualified Deferred Bonus Account shall be maintained by the

Trustee.

 

Section 10.9 - ERISA Claims Procedures.  Any claims for benefits or any other claims

or disputes hereunder shall be brought in accordance with the claims procedures

set out in the Company’s 401(k) Plan.

 

ARTICLE

XI

MISCELLANEOUS PROVISIONS

 

Section 11.1 - Termination or Amendment of the Plan.

 

(a)                                  Cornell

shall have the right at any time to declare the Plan terminated completely as

to the Company or as to any division, facility, or other operational unit

thereof, and may amend same from time to time, provided that no termination or

amendment shall reduce or terminate any benefit to or in respect of any

Participant.

 

(b)                                 In

the event of any such termination, the Administrator shall distribute in lump

sum payment all vested Bonus amounts (including investment earnings related to

vested Bonus amounts) and the Administrator shall continue to maintain the

unvested

 

10

 

Participants’ Nonqualified Deferred Bonus Accounts and payment from,

and vesting under, such Nonqualified Deferred Bonus Accounts shall be made in

accordance with the Plan.

 

Section 11.2 - Limitation of Rights.  Nothing contained in the Plan shall give any

Employee the right to be retained in the service of the Company or to interfere

with or restrict the right of the Company, which is hereby expressly reserved,

to discharge or retire any Employee, except as provided by law, at any time

without notice and with or without cause. Inclusion under the Plan will not

give any Employee any right or claim to any benefit hereunder except to the

extent such right has specifically become fixed under the terms of this Plan.

 

Section 11.3 - Consolidation or Merger: Adoption of Plan by

Other Companies.

 

(a)                                  There

shall be no merger, consolidation with, transfer, or sale of the assets or

liabilities of the Plan to any other plan unless each Participant in this Plan

would have, following such event, accounts which are equal to or greater than

his corresponding Nonqualified Deferred Bonus Account had the Plan been

terminated immediately before such merger, consolidation, transfer, or sale.

 

(b)                                 An

Affiliate may, with the approval of the Company, adopt the Plan as a whole

company or as to any one or more divisions by resolution of its own board of

directors. Such Affiliate shall give written notice of such adoption to the

Administrator.

 

Section 11.4 - Payment on Behalf of Minor. etc. In

the event any amount becomes payable under the Plan to a minor or a person who,

in the sole judgment of the Administrator is considered by reason of physical

or mental condition to be unable to give a valid receipt therefore, the

Administrator may direct that such payment be made to any person found by the

Administrator in its sole judgment, to have assumed the care of such minor or

other person. Any payment made pursuant to such determination shall constitute

a full release and discharge of the Company, the Administrator, and their

officers, directors, and employees.

 

Section 11.5 - Governing Law.   This Plan shall be construed, administered,

and governed in all respects under the laws of the State of Texas, and venue

for any disputes shall be Harris County, Texas.

 

Section 11.6 - The masculine pronoun shall

include the feminine pronoun, and the singular the plural where the context so

indicates.

 

Section 11.7 - Titles. Titles are provided

herein for convenience only and are not to serve as a basis for interpretation

or construction of the Plan.

 

11

 

Section 11.8 - References. Unless the

context clearly indicates to the contrary, a reference to a statute, regulation

or document shall be construed as referring to any subsequently enacted,

adopted or executed statute, regulation or document.

 

Section 11.9 - No Tax Guarantee. Neither

this Plan, nor any representations made in connection with it, shall be

construed to be assurance or guarantee of a deferral of income for income tax

purposes of any amount to be paid pursuant to this Plan.

 

Section 11.10 - Plan Payment/Release.  All payments made pursuant to this Plan shall

constitute a full release and discharge of the Company, the Administrator, and

their officers, directors, and employees under this Plan.

 

Section 11.11 - Source of Payments.  All payments made pursuant to this Plan shall

be made, at the sole discretion of Cornell, from assets accumulated under the

Trust Fund, from other assets of the Company, or from any combination of the

two.

 

12

 

IN WITNESS WHEREOF, Cornell has caused this

Plan to be executed on this 1st day of October 1, 2001.

 

	

   

  	

  By:

  	

  /s/ Patrick Perrin

  
	

   

  	

   

  	

   

  
	

   

  	

  Name:

  	

  Patrick Perrin

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  Chief Administrative

  Officer

  

 

13Exhibit
10.39

 

ZORAN CORPORATION

 

2000 NONSTATUTORY
STOCK OPTION PLAN

 

Amended Through
January 30, 2002

 

1.             Purposes of the Plan.  The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentives to Employees and Consultants
of the Company and its Subsidiaries, and to promote the success of the
Company’s business.  Options granted
hereunder shall be Nonstatutory Stock Options.

 

2.             Definitions.  As used herein, and in any Option granted
hereunder, the following definitions shall apply:

 

(a)           “Board” shall mean the Board
of Directors of the Company.

 

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

 

(c)           “Common Stock” shall mean the
Common Stock of the Company.

 

(d)           “Company” shall mean Zoran
Corporation, a Delaware corporation.

 

(e)           “Committee” shall mean the
Committee appointed by the Board in accordance with paragraph (a) of Section 4
of the Plan.  If the Board does not
appoint or ceases to maintain a Committee, the term “Committee” shall refer to
the Board.

 

(f)            “Consultant” shall mean any
independent contractor retained to perform services for the Company or any
Parent or Subsidiary.

 

(g)           “Continuous Service” shall
mean the absence of any interruption or termination of service with the
Company, a successor of the Company or any Parent or Subsidiary, whether in the
capacity of an Employee or a Consultant. 
Continuous Service shall not be considered interrupted (i) during any
period of sick leave, military leave or any other leave of absence approved by
the Board, (ii) in the case of transfers between locations of the Company or
between the Company and any Parent, Subsidiary or successor of the Company, or
(iii) merely as a result of a change in the capacity in which the Optionee
renders such service provided that no interruption or termination of the
Optionee’s service occurs.

 

(h)           “Conversion Date” shall mean
the effective date of a certificate of amendment of the Certificate of
Incorporation of the Company filed with the Secretary of State of the State of
Delaware to effect an increase in the number of authorized shares of Common
Stock by an amount at least equal to the maximum aggregate number of Shares
authorized for issuance under the Plan as provided in Section 3.

 

(i)            “Employee” shall mean any
person employed by the Company or any Parent or Subsidiary.

 

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

 

(k)            “Nonstatutory Stock Option”
shall mean an Option that is not intended to be an incentive stock option
within the meaning of Section 422 of the Code.

 

 

(l)            “Option” shall mean a stock
option granted pursuant to the Plan.

 

(m)          “Option Agreement” shall mean a
written agreement between the Company and the Optionee regarding the grant and
exercise of Options to purchase Shares and the terms and conditions thereof as
determined by the Committee pursuant to the Plan.

 

(n)           “Optioned Shares” shall mean the
Shares subject to an Option.

 

(o)           “Optionee” shall mean an
Employee or Consultant who receives an Option.

 

(p)           “Parent” shall mean a “parent
corporation,” whether now or hereafter existing, as defined by
Section 424(e) of the Code.

 

(q)           “Plan” shall mean this 2000
Nonstatutory Stock Option Plan.

 

(r)            “Preferred Stock” shall mean
the Series A Preferred Stock of the Company.

 

(s)           “Securities Act” shall mean
the Securities Act of 1933, as amended.

 

(t)            “Share” shall mean (i) prior
to the Conversion Date, a share of Preferred Stock, as adjusted in accordance
with Section 11, and (ii) on and after the Conversion Date, a share of
Common Stock, as adjusted in accordance with Section 11.

 

(u)           “Subsidiary” shall mean a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.

 

3.             Stock Subject to the Plan.

 

(a)           Maximum Number of Shares Issuable.  Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be issued under the
Plan shall be five million three hundred twenty-five thousand (5,325,000).  If an Option expires or becomes
unexercisable for any reason without having been exercised in full, the Shares
which were subject to the Option but as to which the Option was not exercised
shall, unless the Plan shall have been terminated, become available for other
Option grants under the Plan.

 

(b)           Conversion of Shares on Conversion
Date.  Prior to the Conversion Date,
the Shares issuable under the Plan as set forth in Section 3(a) and under each
outstanding Option shall consist of authorized but unissued or reacquired
shares of Preferred Stock.  On the
Conversion Date, the Shares issuable under the Plan and under each then
outstanding Option shall automatically convert into and thereafter shall
consist solely of that number of the authorized but unissued or reacquired
shares of Common Stock into which the number of shares of Preferred Stock
issuable under the Plan in accordance with Section 3(a) or under such
outstanding Option, as the case may be, are convertible in accordance with
their terms.

 

4.             Administration of the Plan.

 

(a)           Procedure.  The Plan shall be administered by the
Board.  The Board may appoint a
Committee consisting of one or more members of the Board to administer the Plan,
subject to such terms and conditions as the Board may prescribe.  Once appointed, the Committee shall continue
to serve until otherwise directed by the Board.  From time to time, the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and,
thereafter, directly administer the Plan. 
Any action which may be taken by the Committee under the Plan may
instead be taken by the Board, and each reference herein to the Committee shall
be deemed to refer also to the Board.

 

2

 

The Committee shall meet
at such times and places and upon such notice as the chairperson
determines.  A majority of the Committee
shall constitute a quorum.  Any acts by
the Committee may be taken at any meeting at which a quorum is present and
shall be by majority vote of those members entitled to vote.  Additionally, any acts reduced to writing or
approved in writing by all of the members of the Committee shall be valid acts
of the Committee.

 

(b)           Powers of the Committee.  Subject to the provisions of the Plan, the
Committee shall have the authority: 
(i) to determine, upon review of relevant information, the fair
market value of the Shares; (ii) to determine the exercise price of
Options to be granted, the Employees or Consultants to whom and the time or
times at which Options shall be granted, and the number of Shares to be
represented by each Option; (iii) to interpret the Plan; (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan;
(v) to determine the terms and provisions of each Option (which need not be
identical) and, with the consent of the holder thereof, to modify or amend any
Option; (vi) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option; (vii) to
accelerate or (with the consent of the Optionee) defer an exercise date of any
Option; and (viii)  to make all other determinations deemed necessary or
advisable for the administration of the Plan.

 

(c)           Effect of Committee’s Decision.  All decisions, determinations and
interpretations of the Committee shall be final and binding on all potential or
actual Optionees, any other holder of an Option or other equity security of the
Company and all other persons.

 

5.             Eligibility and Option
Limitations.

 

(a)           Persons Eligible for Options.  Options under the Plan may be granted only
to Employees or Consultants whom the Committee, in its sole discretion, may
designate from time to time.  For
purposes of the foregoing sentence, “Employees” and “Consultants” shall include
prospective Employees and prospective Consultants to whom Options are granted
in connection with written offers of employment or other service
relationship.  However, notwithstanding
any other provision herein to the contrary, no person shall be eligible to be
granted an Option under the Plan whose eligibility would require approval of
the Plan by the stockholders of the Company under any law or regulation or the
rules of any stock exchange or market system upon which shares of Common Stock
may then be listed.  If not inconsistent
with any such law, regulation or rule, an Option may be granted to a person,
not previously employed by the Company, as an inducement essential to entering
into an employment contract with the Company. 
An Employee who has been granted an Option, if he or she is otherwise
eligible, may be granted an additional Option or Options

 

(b)           No Right to Continuing Employment.  Neither the establishment nor the operation
of the Plan shall confer upon any Optionee or any other person any right with
respect to continuation of employment or other service with the Company (or any
Parent or Subsidiary), nor shall the Plan interfere in any way with the right
of the Optionee or the right of the Company (or any Parent or Subsidiary) to
terminate such employment or service at any time.

 

(c)           Option Repricing.  No Option shall be repriced without the
approval of a majority of the shares of Common Stock present or represented by
proxy and voting at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Common Stock is
present or represented by proxy.

 

6.             Term of Plan.  The Plan shall become effective upon its
adoption by the Board.  It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

 

7.             Term of Option.  The term of each Option shall not exceed ten
(10) years from the date of grant of the Option, and, unless the Committee
determines otherwise, the term of each Option shall be ten (10) years from the
date of grant of the Option.  The term
of the Option shall be set forth in the Option Agreement.

 

3

 

8.             Option Price and Consideration.

 

(a)           Option Price.  The option price for the Shares to be issued
pursuant to any Option shall be such price as is determined by the Committee,
which shall in no event be less than 85% of the fair market value of such
Shares on the date the Option is granted. 
The fair market value of the Common Stock shall be determined by the
Committee, using such criteria as it deems relevant; provided, however, that if
there is a public market for the Common Stock, the fair market value per Share
shall be the average of the last reported bid and asked prices of the Common
Stock on the date of grant, as reported in The Wall Street Journal (or,
if not so reported, as otherwise reported by the NASDAQ System) or, in the
event the Common Stock is listed on a national securities exchange (within the
meaning of Section 6 of the Exchange Act) or on the NASDAQ National Market
System (or any successor national market system), the fair market value per
Share shall be the closing price on such exchange on the date of grant of the
Option, as reported in The Wall Street Journal.  The fair market value of each share of
Preferred Stock shall equal the fair market value determined in accordance with
the preceding sentence of that number of shares of Common Stock into which such
share of Preferred Stock is then convertible in accordance with its terms.

 

(b)           Consideration.  The consideration to be paid for the
Optioned Shares shall be payment in cash or by check unless payment in some
other manner is authorized by the Committee at the time of the grant of the
Option, including (i) the surrender of other Shares owned by the Optionee for
more than six months and having a fair market value equal to the option price,
(ii) following the Conversion Date, by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of
the Federal Reserve System), or (iii) such other consideration and method of
payment for the issuance of Optioned Shares as may be permitted under
Section 152 of the Delaware General Corporation Law.  Any cash or other property received by the
Company from the sale of Shares pursuant to the Plan shall constitute part of
the general assets of the Company.

 

9.             Exercise of Option.

 

(a)           Vesting Period.  Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Committee and as shall be permissible under the terms of the Plan, which shall
be specified in the Option Agreement evidencing the Option.  Unless the Committee specifically determines
otherwise at the time of the grant of the option, each Option shall vest and
become exercisable, cumulatively, in four substantially equal installments on
each of the first four anniversaries of the date of the grant of the option,
subject to the Optionee’s Continuous Service. 
However, no Option granted to a prospective Employee or prospective
Consultant may become exercisable prior to the date on which such person
commences service.

 

(b)           Exercise Procedures.  An Option shall be deemed to be exercised
when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option, and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. 
An Option may not be exercised for fractional shares or for less than
ten (10) Shares.  As soon as practicable
following the exercise of an Option in the manner set forth above, the Company
shall issue or cause its transfer agent to issue stock certificates representing
the Shares purchased.  Until the
issuance of such stock certificates (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Shares notwithstanding the
exercise of the Option.  No adjustment
will be made for a dividend or other rights for which the record date is prior
to the date of the transfer by the Optionee of the consideration for the
purchase of the Shares, except as provided in Section 11 of the Plan.

 

(c)           Death of Optionee.  In the event of the death during the Option
period of an Optionee who is at the time of his death, or was within the ninety
(90) day period immediately prior thereto, an Employee or Consultant, and who
was in Continuous Service from the date of the grant of the Option until the
date of death or termination, the Option may be exercised, at any time within
one (1) year following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the accrued right to exercise at the time of the
termination or death, whichever comes first.

 

4

 

(d)           Disability of Optionee.  In the event of the permanent and total
disability during the Option period of an optionee who is at the time of such
disability, or was within the ninety (90) day period prior thereto, an Employee
or Consultant, and who was in Continuous Service from the date of the grant of
the Option until the date of disability or termination, the Option may be
exercised at any time within one (1) year following the date of disability, but
only to the extent of the accrued right to exercise at the time of the
termination or disability, whichever comes first, subject to the condition that
no option shall be exercised after the expiration of the Option period.

 

(e)           Other Termination of Continuous
Service.  If the Continuous Service
of an Optionee shall cease for any reason other than permanent and total
disability or death, he or she may, but only within ninety (90) days (or such
other period of time as is determined by the Committee) after the date his or
her Continuous Service ceases, exercise his or her Option to the extent that he
or she was entitled to exercise it at the date of such termination of
Continuous Service, subject to the condition that no Option shall be
exercisable after the expiration of the Option period.

 

(f)            Tax Withholding.  The Company shall have the right, but not
the obligation, to deduct from the Shares issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole Shares
having a fair market value, as determined by the Company, equal to all or any
part of the federal, state, local and foreign taxes, if any, required by law to
be withheld by the Company (or any Parent or Subsidiary) with respect to such
Option or the Shares acquired upon the exercise thereof.  Alternatively or in addition, in its
discretion, the Company shall have the right to require the Optionee, through
payroll withholding, cash payment or otherwise to make adequate provision for
any such tax withholding obligations arising in connection with the Option or
the Shares acquired upon the exercise thereof. 
The fair market value of any Shares withheld or tendered to satisfy any
such tax withholding obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rates.  The Company shall have no obligation to deliver Shares until such
tax withholding obligations have been satisfied by the Optionee.

 

Any adverse consequences
incurred by an Optionee with respect to the use of Shares to pay any part of
any tax withholding obligations in connection with the exercise of an Option
shall be the sole responsibility of the Optionee.  Shares withheld in accordance with this provision shall not again
become available for purposes of issuance under the Plan.

 

10.           Non-Transferability of Options.  An Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent and distribution and may be exercised, during
the lifetime of the Optionee, only by the Optionee.

 

11.           Adjustments Upon Changes in
Capitalization.  Subject to any
required action by the stockholders of the Company, the number of Shares
subject to the Plan, the number of Optioned Shares covered by each outstanding
Option, and the per share exercise price of each such Option, shall be
appropriately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
recapitalization, combination, reclassification, the payment of a stock
dividend on the Common Stock or any other increase or decrease in the number of
such shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall
be made by the Committee, whose determination in that respect shall be final,
binding and conclusive.  Except as
expressly provided herein, no issue 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 subject to an Option.

 

The Committee may, if it
so determines in the exercise of its sole discretion, also make provision for
adjusting the number or class of securities covered by any Option, as well as
the price to be paid therefor, in the event that the Company effects one or
more reorganizations, recapitalizations, rights offerings, or other increases
or reductions of shares of its outstanding Common Stock or Preferred Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.

 

5

 

Unless otherwise
determined by the Committee, upon the dissolution or liquidation of the Company
the Options granted under the Plan shall terminate and thereupon become null
and void.

 

Upon any merger or
consolidation, if the Company is not the surviving corporation, the Options
granted under the Plan shall either be assumed by the surviving entity or shall
terminate in accordance with the provisions of the preceding paragraph, unless
otherwise determined by the Committee.

 

12.           Time of Granting Options.  Unless otherwise specified by the Committee,
the date of grant of an Option under the Plan shall be the date on which the
Committee makes the determination granting such Option.  Notice of the determination shall be given
to each Optionee to whom an Option is so granted within a reasonable time after
the date of such grant.

 

13.           Amendment and Termination of the
Plan.  The Committee may amend or
terminate the Plan from time to time in such respects as the Committee may deem
advisable.  Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if the Plan had not been
amended or terminated.

 

14.           Conditions Upon Issuance of Shares.  Shares shall not be issued with respect to
an Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such
compliance.  As a condition to the
exercise of an Option, the Company may require the person exercising such
Option to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

 

15.           Reservation of Shares.  During the term of this Plan the Company
will at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  Inability of the Company to obtain from any regulatory body
having jurisdiction and authority deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder shall relieve
the Company of any liability in respect of the nonissuance or sale of such
Shares as to which such requisite authority shall not have been obtained.

 

16.           Information to Optionee.  The Company shall provide or otherwise make
available to each Optionee all such information made available to the Company’s
stockholders generally.

 

17.           Option Agreement.  Options granted under the Plan shall be
evidenced by Option Agreements.

 

IN WITNESS
WHEREOF, the undersigned Secretary of the Company certifies that the foregoing
sets forth the Zoran Corporation 2000 Nonstatutory Stock Option Plan as duly
adopted by the Board and amended through January 30, 2002.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  

 

6

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