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As filed with the Securities and Exchange Commission on October 24, 1996
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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C-CUBE MICROSYSTEMS INC.
(Exact name of issuer as specified in its charter)
DELAWARE 77-0192108
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1778 MCCARTHY BLVD.
MILPITAS, CA 95035
(Address of principal executive offices)
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DIVICOM INC. 1993 STOCK OPTION PLAN
(Full title of the plan)
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JAMES G. BURKE
VICE PRESIDENT OF FINANCE AND ADMINISTRATION,
CHIEF FINANCIAL OFFICER AND SECRETARY
C-CUBE MICROSYSTEMS INC.
1778 MCCARTHY BLVD.
MILPITAS, CA 95035
(408) 944-6300
(Name, address and telephone number of agent for service)
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Copy to:
Aaron J. Alter, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
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CALCULATION OF REGISTRATION FEE
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Title of Proposed Maximum Proposed Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
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Common Stock 263,820 $ 41.75 $ 11,014,485.00 $ 3,337.72
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(1) Estimated in accordance with Rule 457(h) solely for the purpose of
computing the amount of the registration fee based on the prices of the
Company's Common Stock as reported on the Nasdaq National Market on
October __, 1996.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
C-Cube Microsystems Inc. (the "Company") hereby incorporates by
reference in this registration statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") since the
end of the fiscal year covered by the registrant document referred to in (a)
above.
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A (No. 0-23596), filed pursuant to
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
The Company hereby incorporates by reference in this Registration
Statement the contents of the Company's Registration Statements on Form S-8
(Registration Nos. 33-81718, 33-89474, 333-02812, 333-03677, 333-03877 and
333-03881).
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to this registration statement which indicates that
all securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Incorporated by reference to the corresponding item of the
registrant's Registration Statement on Form S-8 (No. 333-03881).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
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ITEM 8. EXHIBITS
4.1 DiviCom Inc. 1993 Stock Option Plan
4.2 Form of Incentive Stock Option Agreement for DiviCom Inc. 1993
Stock Option Plan
4.3 Form of Stock Option Exercise Agreement for DiviCom Inc. 1993
Stock Option Plan
5.1 Opinion of counsel as to legality of securities being
registered
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney
ITEM 9. UNDERTAKINGS
(a) RULE 415 OFFERING The undersigned registrant hereby
undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 (Section 239.13 of this
chapter) or Form S-8 (Section 239.16(b) of this chapter), and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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(b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF
REGISTRATION STATEMENT ON FORM S-8
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Milpitas, State of California, on October 23, 1996.
C-CUBE MICROSYSTEMS INC.
By: /s/ Alexandre Balkanski
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Alexandre Balkanski
President, Chief Executive Officer
and Director
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EXHIBIT INDEX
Exhibit
Number
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4.1 DiviCom Inc. 1993 Stock Option Plan
4.2 Form of Incentive Stock Option Agreement for DiviCom Inc.
1993 Stock Option Plan
4.3 Form of Stock Option Exercise Agreement for DiviCom Inc.
1993 Stock Option Plan
5.1 Opinion of counsel as to legality of securities being registered
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney
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EXHIBIT 4.1
DIVICOM INC.
1993 STOCK OPTION PLAN
1. PURPOSE. The DiViCom Inc. 1993 Stock Option Plan (the "Plan") is
established to attract, retain and reward persons providing services to DiViCom
Inc. and any successor corporation thereto (collectively referred to as the
"Company"), and any present or future parent and/or subsidiary corporations of
such corporation (all of whom along with the Company being individually referred
to as a "Participating Company" and collectively referred to as the
"Participating Company Group"), and to motivate such persons to contribute to
the growth and profits of the Participating Company Group in the future. For
purposes of the Plan, a parent corporation and a subsidiary corporation shall be
as defined in sections 424(e) and 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code").
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed committee of
the Board having such powers as shall be specified by the Board. Any subsequent
references herein to the Board shall also mean the committee if such committee
has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to terminate or amend
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law. All questions of interpretation of the Plan or of
any options granted under the Plan (an "Option") shall be determined by the
Board, and such determinations shall be final and binding upon all persons
having an interest in the Plan and/or any Option. Options may be either
incentive stock options as defined in section 422 of the Code ("Incentive Stock
Options") or nonqualified stock options. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or which
is allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.
3. ELIGIBILITY. Options may be granted only to employees (including
officers and directors who are also employees) and directors of the
Participating Company Group or to individuals who are rendering services as
consultants or advisors to the Participating Company Group. For purposes of the
foregoing sentence, "employees" shall include prospective employees to whom
Options are granted in connection with written offers of employment with the
Participating Company Group and "consultants" or "advisors" shall include
prospective consultants or advisors to whom Options are granted in connection
with written consulting or advising offers with the Participating Company Group.
The Board shall, in its sole discretion, determine which persons shall be
granted Options (an "Optionee"). A director of the Company may only be granted
a nonqualified stock option unless the director is also an employee of the
Company. An individual who is rendering services as a consultant or advisor and
an individual granted an option before becoming an employee may only be granted
a nonqualified stock option. Eligible persons may be granted more than one (1)
Option.
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4. SHARES SUBJECT TO OPTION. Options shall be for the purchase of shares
of the authorized but unissued common stock of the Company (the "Stock"),
subject to adjustment as provided in paragraph 9 below. The maximum number of
shares of Stock which may be issued under the Plan shall be 13,089,999 shares.
In the event that any outstanding Option for any reason expires or is terminated
or canceled, the shares allocable to the unexercised portion of such Option may
again be subject to an Option grant.
5. TIME FOR GRANTING OPTIONS. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the shareholders of the Company.
6. TERMS, CONDITIONS AND FORM OF OPTIONS. Subject to the provisions of
the Plan, the Board shall determine for each Option (which need not be
identical) the number of shares of Stock for which the Option shall be granted,
the option exercise price of the Option, the timing and terms of exercisability
and vesting of the Option, whether the Option is to be treated as an Incentive
Stock Option or as a nonqualified stock option and all other terms and
conditions of the Option not inconsistent with the Plan. Options granted
pursuant to the Plan shall be evidenced by written agreement specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish, which agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions.
(a) OPTION EXERCISE PRICE. The option exercise price for each Option
shall be established in the sole discretion of the Board; provided, however,
that (i) the option exercise price per share for an Incentive Stock Option shall
be not less than the fair market value, as determined by the Board, of a share
of Stock on the date of the granting of the Option, (ii) the option exercise
price per share for a nonqualified stock option shall not be less than eighty-
five percent (85%) of the fair market value, as determined by the Board, of a
share of Stock on the date of the granting of the Option and (iii) no Option
granted to an Optionee who at the time the Option is granted owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company within the meaning of the section
442(b)(6) of the Code (a "Ten Percent Owner Optionee") shall have an option
exercise price per share less than one hundred ten percent (110%) of the fair
market value, as determined by the Board, of a share of Stock, on the date of
the granting of the Option. Notwithstanding the foregoing, an Option (whether
an Incentive Stock Option or a nonqualified stock option) may be granted with an
option exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying with the provisions of section 4242(a) of the
Code.
(b) EXERCISE PERIOD OF OPTIONS. The Board shall have the power to
set the time or time within each Option shall be exercisable or the event or
events upon the occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however that (i) no Option
shall be exercisable after the expiration of ten (10) years after the date such
Option is granted, and (ii) no Incentive Stock Option granted to a Ten Percent
Owner Optionee shall be exercisable after the expiration of five (5) years after
the date such Option is granted.
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(c) PAYMENT OF OPTION EXERCISE PRICE. Payment of the option exercise
price for the number of shares of Stock being purchased pursuant to any Option
shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the
Company of shares of the Company's stock owned by the Optionee having a value,
as determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the option exercise price, (iii) by the Optionee's recourse promissory
note, (iv) by the assignment of the proceeds of a sale of 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 (v) by any combination thereof. The Board may at any time or from
time to time, by adoptions of or by amendment to either of the standard forms of
stock option agreement described in paragraph 7 below, or by other means, grant
Options which do not permit all of the foregoing forms of consideration to be
used in payment of the option exercise price and/or which otherwise restrict one
(1) or more forms of consideration. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of the Company's stock
to the extent such tender of stock would constitute a violation of the
provisions of any law, regulation and/or agreement restricting the redemption of
the Company's stock. Furthermore, no promissory note shall be permitted if an
exercise using a promissory note would be a violation of any law. Any permitted
promissory note shall be due and payable not more than four (4) years after the
Option is exercised, and interest shall be payable at least annually and be at
least equal to the minimum interest rate necessary to avoid imputed interest
pursuant to all applicable sections of the Code. The Board shall have the
authority to permit or require the Optionee to secure any promissory note used
to exercise an Option with the shares of Stock acquired on exercise of the
Option and/or with other collateral acceptable to the Company.
(i) Unless otherwise provided by the Board, in the event the
Company at any time is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
(ii) The Company reserves, at any and all times, the right, in
the Company's sole and absolute discretion, to establish, decline to approve
and/or terminate any program and/or procedure for the exercise of Options by
means of an assignment of the proceeds of a sale of some or all of the shares of
Stock to be acquired upon such exercise.
7. STANDARD FORMS OF STOCK OPTION AGREEMENT.
(a) INCENTIVE STOCK OPTIONS. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of incentive stock option agreement attached hereto as
EXHIBIT A and incorporated herein by reference.
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(b) NONQUALIFIED STOCK OPTIONS. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonqualified
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of nonqualified stock option agreement attached hereto as
EXHIBIT B and incorporated herein by reference.
(c) STANDARD TERM FOR OPTIONS. Unless otherwise provided for by the
Board in the grant of an Option, any Option granted hereunder shall be
exercisable for a term of ten (10) years.
8. AUTHORITY TO VARY TERMS. The Board shall have the authority from time
to time to vary the terms of either of the standard forms of Stock Option
Agreement described in paragraph 7 above either in connection with the grant of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of such revised
or amended standard form or forms of stock option agreement shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority to grant Options which are not immediately
exercisable.
9. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan and
to any outstanding Options and in the option exercise price of any outstanding
Options in the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the Company.
10. TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:
(a) the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company after such sale or exchange;
(b) a merger or consolidation in which the Company is not the
surviving corporation;
(c) a merger or consolidation in which the Company is the surviving
corporation where the shareholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such merger or
consolidation;
(d) the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one (1)
or more parent or subsidiary corporations (as defined in paragraph 1 above) of
the Company); or
(e) A liquidation or dissolution of the Company.
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In the event of a Transfer of Control, the Board, in its sole discretion,
may arrange with the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "Acquiring Corporation"),
for the Acquiring Corporation to either assume the Company's rights and
obligations under outstanding Options or substitute options for the Acquiring
Corporation's stock for such outstanding Options. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control.
11. PROVISION OF INFORMATION. At least annually, copies of the Company's
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchasers of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.
12. OPTIONS NON-TRANSFERABLE. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution.
13. TRANSFER OF COMPANY'S RIGHT. In the event any Participation Company
assigns, other than by operations of law, to a third person, other than another
Participating Company, any of the Participating Company's rights to repurchase
any shares of Stock acquired on the exercise of an Option, the assignee shall
pay to the assigning Participating Company the value of such right as determined
by the Company in the Company's sole discretion. Such consideration shall be in
such form, including without limitation, the performance of future services, as
the Company shall determine in the Company's sole discretion. In the event such
repurchase right is exercisable at the time of such assignment, the value of
such right shall be not less than the fair market value of the shares of Stock
which may be repurchased under such right (as determined by the Company) minus
the repurchase price of such shares. The requirements of this paragraph 13
regarding the minimum consideration to be received by the assigning
Participating Company shall not inure to the benefit of the Optionee whose
shares of Stock are being repurchased. Failure of a Participating Company to
comply with the provisions of this paragraph 13 shall not constitute a defense
or otherwise prevent the exercise of the repurchase right by the assignee of
such right.
14. TERMINATION OR AMENDMENT OF PLAN. The Board, including any duly
appointed committee of the Board, may terminate or amend the Plan at any time;
provided, however, that without the approval of the Company's shareholders,
there shall be (a) no increase in the total number of shares of Stock covered by
the Plan (except by operation of the provisions of paragraph 9 above), (b) no
change in the class of persons eligible to receive Incentive Stock Options and
(c) no expansion in the class of persons eligible to receive nonqualified stock
options. In any event, no amendment may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee.
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EXHIBIT 4.2
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
DiviCom Inc.
INCENTIVE STOCK OPTION AGREEMENT
DiviCom Inc. (the "Company"), granted to the individual named below an
option to purchase certain shares of common stock of the Company, in the manner
and subject to the provisions of this Option Agreement.
1. DEFINITIONS:
(a) "OPTIONEE" shall mean _______________________________.
(b) "DATE OF OPTION GRANT" shall mean ______________________________.
(c) "NUMBER OF OPTION SHARES" shall mean ________ shares of common
stock of the Company as adjusted from time to time pursuant to paragraph 9
below.
(d) "EXERCISE PRICE" shall mean $__________ per share as adjusted
from time to time pursuant to paragraph 9 below.
(e) "INITIAL EXERCISE DATE" shall be the Initial Vesting Date.
(f) "INITIAL VESTING DATE" shall be the date occurring one (1) year
after the Date of Hire.
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(g) Determination of "VESTED RATIO":
Vested Ratio
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Prior to Initial Vesting Date 0
On Initial Vesting Date, provided the Optionee is 1/4
continuously employed by a Participating Company
from the Date of Option Grant until the Initial
Vesting Date
PLUS
For each full month of the Optionee's continuous 1/48
employment by a Participating Company from the
Initial Vesting Date
In no event shall the Vested Ratio exceed
1/1.
(h) "OPTION TERM DATE" shall mean the date ten (10) years after the
Date of Option Grant.
(i) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(j) "COMPANY" shall mean DiviCom Inc., a Delaware corporation, and
any successor corporation thereto.
(k) "PARTICIPATING COMPANY" shall mean (i) the Company and (ii) any
future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in Sections 424(e) and 424(f) of the Code.
(l) "PARTICIPATING COMPANY GROUP" shall mean at any point in time all
corporations collectively which are then a Participating Company.
(m) "PLAN" shall mean the DiviCom Inc. 1993 Stock Option Plan.
2. STATUS OF THE OPTION. This Option is intended to be an incentive
stock option as described in section 422 of the Code, but the Company does not
represent or warrant that this Option qualifies as such. The Optionee should
consult with the Optionee's own tax advisors regarding the tax effects of this
Option and the requirements necessary to obtain favorable income tax treatment
under Section 422 of the Code, including, but not limited to, holding period
requirements. (Note: If the aggregate Exercise Price of the Option (that is,
the Exercise Price multiplied by the Number of Option Shares) plus the aggregate
exercise price of any other incentive stock options held by the
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Optionee (whether granted pursuant to the Plan or any other stock option plan of
the Participating Company Group) is greater than One Hundred Thousand Dollars
($100,000), the Optionee should contact the Chief Financial Officer of the
Company to ascertain whether the entire Option qualifies as an incentive stock
option.)
3. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company
(the "Board") and/or by a duly appointed committee of the Board having such
powers as shall be specified by the Board. Any subsequent references herein to
the Board shall also mean the committee if such committee has been appointed
and, unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All determinations by the Board shall be final and binding upon all
persons having an interest in the Option. Any officer of a Participating
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. The Option shall first become exercisable on
the Initial Exercise Date but shares purchased pursuant to this Option shall be
subject to the Company's repurchase rights set forth in paragraph 11. The
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option in the amount equal to the Number of Option Shares
multiplied by the Vested Ratio as set forth in paragraph 1 above less the number
of shares previously acquired upon exercise of the Option. In no event shall
the Option be exercised for more shares than the Number of Option Shares.
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares and other administrative matters as may be required
pursuant to the provisions of this Option Agreement and the exercise form used
by the Company. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 6 below, accompanied by (i) full payment of
the exercise price for the number of shares being purchased and (ii) an executed
copy, if required herein, of the then current forms of escrow and security
agreements referenced below.
(c) FORM OF PAYMENT OF OPTION EXERCISE PRICE. Such payment shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's common stock owned by the Optionee having a value not
less than the option price, which either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from
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the Company, or (iii) by any combination of the foregoing. Notwithstanding the
foregoing, the Option may not be exercised by tender to the Company of shares of
the Company's common stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's common stock.
(d) WITHHOLDING. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee hereby
authorizes payroll withholding and otherwise agrees to make adequate provision
for foreign, federal and state tax withholding obligations of the Company, if
any, which arise in connection with the Option, including, without limitation,
obligations arising upon (i) the exercise, in whole or in part, of the Option,
(ii) the transfer, in whole or in part, of any shares acquired on exercise of
the Option, (iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with respect to
any shares acquired on exercise of the Option. The Optionee is cautioned that
the Option is not exercisable unless the Company's withholding obligations are
satisfied. Accordingly, the Optionee may not be able to exercise the Option
when desired even though the Option is vested and the Company shall have no
obligation to issue a Certificate for such shares.
(e) CERTIFICATE REGISTRATION. The certificate or certificates for
the shares as to which the Option shall be exercised shall be registered in the
name of the Optionee, or, if applicable, the heirs of the Optionee.
(f) REPRESENTATION OF OPTIONEE; RESTRICTIONS ON GRANT OF THE OPTION
AND ISSUANCE OF SHARES. The Optionee represents that this Option is being
acquired for the Optionee's own account and that the shares acquired upon
exercise hereof will be acquired for the Optionee's own account, and not with a
view to resale of the Option or securities issued upon the exercise hereof. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. No Option may be exercised unless (i) a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. Questions concerning this restriction should
be directed to the Chief Financial Officer of the Company. As a condition to
the exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
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(g) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and exercisable by the Optionee on the date of death, may be
exercised by the Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following, termination of
employment as described in paragraph 7 below, or (c) upon a Transfer of Control
as described in paragraph 8 below.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF THE OPTION. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability within the meaning of Section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be employee, may be exercised by the Optionee within thirty
(30) days after the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. If the Optionee's employment with
the Company is terminated because of the death or disability of the Optionee
within the meaning of Section 422(c) of the Code, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee
ceased to be an employee, may be exercised by the Optionee (or the Optionee's
legal representative) at any time prior to the expiration of six (6) months from
the date on which the Optionee's employment terminated, but in any event no
later than the Option Term Date. The Optionee's employment shall be deemed to
have terminated on account of death if the Optionee dies within thirty (30) days
after the Optionee's termination of employment. Except as provided in this
paragraph 7(a), the Option shall terminate and may not be exercised after the
Optionee ceases to be an employee of the Participating Company Group.
(b) TERMINATION OF EMPLOYMENT DEFINED. For purposes of this
paragraph 7, the Optionee's employment shall be deemed to have terminated either
upon an actual termination of employment or upon the Optionee's employer ceasing
to be a Participating Company.
(c) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date.
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(d) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which the Optionee would no longer be subject to such
suit, (ii) the one hundred and ninetieth (190th) day after the Optionee's
termination of employment, or (iii) the Option Term Date.
(e) LEAVE OF ABSENCE. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.
8. OWNERSHIP CHANGE AND TRANSFER OF CONTROL. An "Ownership Change" shall
be deemed to have occurred in the event any of the following occurs with respect
to the Company:
(a) the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company;
(b) a merger or consolidation in which the Company is a party;
(c) the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one (1)
or more parent or subsidiary corporations as defined in paragraph 1(k) above of
the Company); or
(d) a liquidation or dissolution of the Company.
A "Transfer of Control" shall mean an Ownership Change in which the
shareholders of the Company before such Ownership Change do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company after such transaction or in which the Company is not the
surviving corporation.
In the event of a Transfer of Control, the Board, in its sole discretion,
may arrange with the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "Acquiring Corporation"),
for the Acquiring Corporation to assume the Company's rights and obligations
under this Option Agreement or substitute an option for the Acquiring
Corporation's stock for the Option. The Option shall terminate and cease to be
outstanding effective as of the date of the Transfer of Control to the extent
that the Option is neither assumed or substituted for by the
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Acquiring Corporation in connection with the Transfer of Control nor exercised
of the date of the Transfer of Control.
9. EFFECT OF CHANGE IN STOCK SUBJECT TO THE OPTION. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.
10. RIGHTS AS A SHAREHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 9
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.
11. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event the Optionee proposes to
sell, pledge, or otherwise transfer any shares acquired upon the exercise of the
Option (the "Transfer Shares") to any person or entity, including, without
limitation, any shareholder of the Participating Company Group, the Company
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this paragraph 11 (the "Right of First
Refusal"). For purposes of this paragraph 11, a change in record ownership of
shares, including without limitation, any such change pursuant to a decree of
divorce or marital separation, shall be deemed a transfer subject to the Right
of First Refusal whether or not such change in record ownership results in a
change in the beneficial ownership of such shares.
(b) NOTICE OF PROPOSED TRANSFER. Prior to any Proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary
transfer, the proposed transfer price shall be deemed to be the fair market
value of the Transfer Shares as determined by the Company in good faith. In the
event the Optionee proposes to transfer any shares acquired upon the exercise of
the Option to more than one (1) Proposed Transferee, the Optionee shall provide
a separate Transfer Notice for the proposed transfer to each Proposed
Transferee. The Transfer Notice shall be signed by
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both the optionee and the Proposed Transferee and must constitute a binding
commitment of the Optionee and the Proposed Transferee for the transfer of the
Transfer Shares to the Proposed Transferee subject only to the Right of First
Refusal.
(c) BONA FIDE TRANSFER. In the event that the Company shall
determine that the information provided by the Optionee in the Transfer Notice
is insufficient to establish the bona fide nature of a proposed voluntary
transfer, the Company shall give the Optionee written notice of the Optionee's
failure to comply with the procedure described in this paragraph 11 and the
Optionee shall have no right to transfer the Transfer Shares without first
complying with the procedure described in this paragraph 11. The Optionee shall
not be permitted to transfer the Transfer Shares if the proposed transfer is not
bona fide.
(d) EXERCISE OF THE RIGHT OF FIRST REFUSAL. In the event the
proposed transfer is deemed to be bona fide, the Company shall have the right to
purchase all, but not less than all, of the Transfer Shares (except as the
Company and the Optionee otherwise agree) at the purchase price and on the terms
set forth in the Transfer Notice by delivery to the Optionee of a notice of
exercise of the Right of First Refusal within thirty (30) days after the date
the Transfer Notice is delivered to the Company. The Company's exercise or
failure to exercise the Right of First Refusal with respect to any proposed
transfer described in a Transfer Notice shall not affect the Company's ability
to exercise the Right of First Refusal with respect to any proposed transfer
described in any other Transfer Notice, whether or not such other Transfer
Notice is issued by the Optionee or issued by a person other than the Optionee
with respect to a proposed transfer to the same Proposed Transferee. If the
Company exercises the Right of First Refusal, the Company and the Optionee shall
thereupon consummate the sale of the Transfer Shares to the Company on the terms
set forth in the Transfer Notice within sixty (60) days after the date of the
Transfer Notice is delivered to the Company (unless a longer period is offered
by the Proposed Transferee); provided, however, that in the event the Transfer
Notice provides for the payment for the Transfer Shares other than in cash, the
Company shall have the option of paying for the Transfer Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice
as reasonably determined by the Company. For purposes of the foregoing,
cancellation of any indebtedness of the Optionee to any Participating Company
shall be treated as payment to the Optionee in cash to the extent of the unpaid
principal and any accrued interest canceled.
(e) FAILURE TO EXERCISE THE RIGHT OF FIRST REFUSAL. If the Company
fails to exercise the Right of First Refusal in full within the period specified
in paragraph 11(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than one hundred twenty
(120) days following delivery to the Company of the Transfer Notice. The
Company shall have the right to demand further assurances from the Optionee and
the Proposed Transferee (in a form satisfactory to the Company that the transfer
of the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on
the books of the Company until the Company has received such assurances, if so
demanded, and has approved the proposed transfer as bona fide. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the
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<PAGE>
Optionee, shall again be subject to the Right of First Refusal and shall require
compliance by the Optionee with the procedure described in this paragraph 11.
(f) TRANSFEREES OF THE TRANSFER SHARES. All transferees of the
Transfer Shares or any interest therein, other than the Company, shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold such
Transfer Shares or interests subject to the provisions of this paragraph 11
providing for the Right of First Refusal with respect to any subsequent
transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 11 are met.
(g) TRANSFERS NOT SUBJECT TO THE RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall not apply to any transfer or exchange of the shares
acquired pursuant to the exercise of the Option if such transfer is in
connection with an Ownership Change. If the consideration received pursuant to
such transfer or exchange consists of stock of a Participating Company, such
consideration shall remain subject to the Right of First Refusal unless the
provisions of paragraph 11 (i) below result in a termination of the Right of
First Refusal.
(h) ASSIGNMENT OF THE RIGHT OF FIRST REFUSAL. The Company shall have
the right to assign the Right of First Refusal at any time, whether or not the
Optionee has attempted a transfer, to one (1) or more persons as may be selected
by the Company.
(i) EARLY TERMINATION OF THE RIGHT OF FIRST REFUSAL. The other
provisions of this paragraph 11 notwithstanding, the Right of First Refusal
shall terminate, and be of no further force and effect, upon (i) the occurrence
of a Transfer of Control, unless the surviving, continuing, successor, or
purchasing corporation as the case may be, assumes the Company's rights and
obligations under the Plan, or (ii) the existence of a public market for the
class of shares subject to the Right of First Refusal. A "public market" shall
be deemed to exist if (x) such stock is listed on a national securities exchange
(as that term is used in the Exchange Act) or (y) such stock is traded on the
over-the-counter market and prices therefor are published daily on business days
in a recognized financial journal.
12. ESCROW.
(a) ESTABLISHMENT OF ESCROW. To insure shares subject to the Right
of First Refusal, and/or security for any promissory note will be available for
repurchase, the Company may require the Optionee to deposit the certificate or
certificates evidencing the shares which the Optionee purchases upon exercise of
the Option with an agent designated by the Company under the terms and
conditions of escrow and security agreements approved by the Company. If the
Company does not require such deposit as a condition of exercise of the Option,
the Company reserves the right at any time to require the Optionee to so deposit
the certificate or certificates in escrow. The Company shall bear the expenses
of the escrow.
(b) DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after the
expiration of the Right of First Refusal, and after full repayment on any
promissory note secured by the shares in
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escrow, but not more frequently than twice each year, the agent shall deliver to
the Optionee the shares no longer subject to such restrictions and no longer
security for any promissory note.
(c) NOTICES AND PAYMENTS. In the event the shares held in escrow are
subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.
13. STOCK DIVIDENDS SUBJECT TO OPTION AGREEMENT. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal and/or any
security interest held by the Company with the same force and effect as the
shares subject to the Right of First Refusal and such security interest
immediately before such event.
14. NOTICE OF SALES UPON DISQUALIFYING DISPOSITION. The Optionee shall
dispose of the shares acquired pursuant to the Option only in accordance with
the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year from the date the Optionee exercises all or part of the Option or within
two (2) years of the date of grant of the Option. Until such time as the
Optionee disposes of such shares in a manner consistent with the provisions of
this Option Agreement, the Optionee shall hold all shares acquired pursuant to
the Option in the Optionee's name (and not in the name of any nominee) for the
one-year period immediately after exercise of the Option and the two-year period
immediately after grant of the Option. At any time during the one-year or two-
year periods set forth above, the Company may place a legend or legends on any
certificate or certificates representing shares acquired pursuant to the Option
requesting the transfer agent for the Company's stock to notify the Company of
any such transfers. The obligation of the Optionee to notify the Company of any
such transfer shall continue notwithstanding that a legend has been placed on
the certificate or certificates pursuant to the preceding sentence.
15. LEGENDS. The Company may at any time place legends referencing the
Right of First Refusal set forth in paragraph 11 above, and any applicable
federal or state securities law restrictions on all certificates representing
shares of stock subject to the provisions of this Option Agreement. The
Optionee shall, at the request of the Company, promptly present to the Company
any and all certificates representing shares acquired pursuant to the Option in
the possession of the Optionee in order to effectuate the provisions of this
paragraph. Unless otherwise specified by the Company, legends placed on such
certificates may include, but shall not be limited to, the following:
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(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
(d) "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION
AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISO'S,
THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO __________________. SHOULD THE
REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND
FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE
CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED
UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE
NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED
ABOVE."
16. INITIAL PUBLIC OFFERING. The Optionee hereby agrees that in the event
of any underwritten public offering of stock, including an initial public
offering of stock made by the Company pursuant to an effective registration
statement filed under the Securities Act, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by the
underwriter for such public offering; provided, however, that such period of
time shall not exceed one hundred eighty (180) days from the effective date of
the registration statement to be filed in connection with such initial public
offering. The foregoing limitation shall not apply to shares registered in the
initial public offering under the Securities Act.
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<PAGE>
17. BINDING EFFECT. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
18. TERMINATION OR AMENDMENT. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee unless such amendment is required to enable the Option to qualify as an
Incentive Stock Option.
19. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
20. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
21. REGISTRATION RIGHTS. The Company and the Optionee hereby agree that
upon exercise of an option hereunder, the Optionee shall be deemed to be a
Holder (as defined in the Registration Rights and Buy-Out Agreement between the
Company and certain stockholders of the Company dated April 20, 1993) with
respect to the shares issued or issuable pursuant to the exercise of said
option, and that the shares so issued or issuable shall thereupon be deemed to
be Registrable Securities (as defined in said Registration Rights and Buy-Out
Agreement) held by such Holder. By executing this Option Agreement the Company
and the Optionee agree to be bound by the terms and conditions of said
Registration Rights and Buy-Out Agreement as if they had executed the same.
DiviCom Inc.
By:
----------------------------------------
Title: President
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal set
forth in paragraph 11, and hereby accepts the Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement.
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The undersigned acknowledges receipt of a copy of the Plan.
Date:
------------------------- ----------------------------------------
The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the above Option Agreement, including, without limitation, the provisions of
paragraph 11 providing a right of first refusal in favor of the Company upon
certain changes in record ownership, and the undersigned hereby agrees thereto
and joins therein to the extent, if any, that the agreement and joinder of the
undersigned may be necessary.
----------------------------------------
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EXHIBIT 4.3
1993 STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of December 22, 1995
(the "Effective Date") by and between DiviCom Inc., a Delaware corporation (the
"COMPANY"), and the purchaser named below (the "PURCHASER"). Capitalized terms
not defined herein shall have the meaning ascribed to them in the Company's 1993
Stock Option Plan (the "PLAN").
Purchaser: ___________________________________
Social Security Number: ___________________________________
Address: ___________________________________
___________________________________
___________________________________
Total Number of Shares: ___________________________________
Purchase Price Per Share: ___________________________________
Total Purchase Price: ___________________________________
Option No. _____________ Date of Grant: ___________________
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
1. EXERCISE OF OPTION.
1.1 AMENDMENT OF OPTION AGREEMENT.
(a) Paragraph 4(a) of the Incentive Stock Option Agreement
pursuant to which the option that is being exercised by this Stock Option
Exercise Agreement was granted (the "OPTION AGREEMENT") is amended to read in
its entirety as set forth below:
RIGHT TO EXERCISE. The Option shall be exercisable in part or in full
as of the Date of Option Grant and prior to the termination of the
Option. All shares purchased pursuant to this Option shall be subject
to the Company's repurchase rights set forth in paragraph 11. In
addition, Unvested Shares (as defined herein) purchased
<PAGE>
pursuant to this Option shall be subject to the Company's repurchase option
set forth in paragraph 22. Unvested Shares means that number of shares of
the Company's common stock equal to (i) the Number of Option Shares less
(ii) the Number of Option Shares multiplied by the Vested Ratio determined
pursuant to paragraph 1(g) above. In no event shall the Option be
exercised for more shares than the Number of Option Shares.
(b) The first sentence of paragraph 12(a) of the Option
Agreement is amended as follows (changed language is in italics):
ESTABLISHMENT OF ESCROW. To insure THAT shares subject to the Right of
First Refusal OR REPURCHASE OPTION, or PLEDGED AS security for any
promissory note, will be available for repurchase, the Company may require
the Optionee to deposit the certificate or certificates evidencing the
shares which the Optionee purchases upon exercise of the Option with an
agent designated by the Company under the terms and conditions of escrow
and security agreements approved by the Company.
(c) The first sentence of paragraph 12(b) of the Option
Agreement is amended as follows (changed language is in italics):
DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after (i) the
expiration of the Right of First Refusal, (II) THE LAPSE OF THE COMPANY'S
REPURCHASE OPTION, and (III) after full repayment on any promissory note
secured by the shares in escrow, but not more frequently than twice each
year, the agent shall deliver to the Optionee the shares no longer subject
to such restrictions and no longer security for any promissory note.
(d) The first sentence of paragraph 12(c) of the Option
Agreement is amended as follows (changed language is in italics):
NOTICES AND PAYMENTS. In the event the shares held in escrow are subject
to the Company' s exercise of the Right of First Refusal OR REPURCHASE
OPTION, the notices required to be given to the Optionee shall be given to
the escrow agent and any payment required to be given to the Optionee shall
be given to the escrow agent.
(e) PARAGRAPH 13 of the Option Agreement is amended as follows
(changed language is in italics):
STOCK DIVIDENDS SUBJECT TO OPTION AGREEMENT. If, from time to time, there
is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of
which is subject to the provisions of this Option Agreement, then in such
event any and all new substituted or additional securities to which the
Optionee is entitled by reason of the Optionee's
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ownership of the shares acquired upon exercise of the Option shall be
immediately subject to the Right of First Refusal, REPURCHASE OPTION,
and/or any security interest held by the Company with the same force and
effect as the shares subject to the Right of First Refusal, Repurchase
Option, and such security interest immediately before such event.
(f) The first sentence of paragraph 15 of the Option Agreement
shall be amended as follows (changed language is in italics):
LEGENDS. The Company may at any time place legends referencing the Right
of First Refusal, set forth in paragraph 11 above AND REPURCHASE OPTION SET
FORTH IN PARAGRAPH 22 BELOW, and any applicable federal or state securities
law restrictions on all certificates representing shares of stock subject
to the provisions of this Option Agreement.
(g) The first sentence of paragraph 15(c) of the Option
Agreement shall be amended as follows (changed language is in italics):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL OPTION AND A REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS
ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF EACH
IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION."
(h) Paragraph 22 is added to the Option Agreement and is as
follows:
22. COMPANY'S REPURCHASE OPTION. The Company has the option to repurchase
all or a portion of the Unvested Shares on the terms and conditions set
forth in this paragraph (the "REPURCHASE OPTION") if Optionee ceases to be
employed by the Company for any reason, or no reason, including without
limitation Optionee's death, disability, voluntary resignation or
termination by the Company with or without cause.
(a) DEFINITION OF "EMPLOYED BY THE COMPANY;" "TERMINATION DATE." For
purposes of this Agreement, Optionee will be considered to be "EMPLOYED BY
THE COMPANY" if the Board of Directors of the Company determines that
Optionee is rendering substantial services as an officer, director,
employee, consultant or independent contractor to the Company or to any
parent, subsidiary or affiliate of the Company. In case of any dispute as
to whether Optionee is employed by the Company, the Board of Directors of
the Company will have discretion to determine whether Optionee has ceased
to be employed by the Company or any parent,
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subsidiary or affiliate of the Company and the effective date on which
Optionee's employment terminated (the "TERMINATION DATE").
(b) EXERCISE OF REPURCHASE OPTION AT ORIGINAL PRICE. At any time
within thirty (30) days after the Termination Date, the Company may elect
to repurchase any or all of the Unvested Shares by giving Optionee written
notice of exercise of the Repurchase Option. The Company and/or its
assignee(s) will then have the option to repurchase from Optionee (or from
Optionee's personal representative as the case may be) any or all of the
Unvested Shares at the Optionee's Exercise Price (as adjusted to reflect
any stock dividend, stock split, reverse stock split or recapitalization of
the common stock of the Company occurring after the Date of Option Grant).
(c) PAYMENT OF REPURCHASE PRICE. The repurchase price payable to
purchase Unvested Shares upon exercise of the Repurchase Option will be
payable, at the option of the Company or its assignee(s), by check or by
cancellation of all or a portion of any outstanding indebtedness of
Optionee to the Company (or to such assignee) or by any combination
thereof. The repurchase price will be paid without interest within sixty
(60) days after the Termination Date.
(d) RIGHT OF TERMINATION UNAFFECTED. Nothing in this Agreement will
be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any parent, subsidiary or affiliate of
the Company) to terminate Optionee's employment at any time for any reason
or no reason, with or without cause.
(i) The first paragraph of the Option Agreement following the
signature line for DiviCom Inc. shall be amended as follows (changed language is
in italics):
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal
set forth in paragraph 11 AND REPURCHASE OPTION SET FORTH IN PARAGRAPH 22,
and hereby accepts the Option subject to all of the terms and provisions
thereof. The Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions
arising under this Option Agreement.
(j) The first paragraph of the Option Agreement following the
signature line for the Optionee shall be amended as follows (changed language is
in italics):
The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the
provisions of the above Option Agreement, including, without limitation,
the provisions of paragraph 11 providing a right of first refusal in favor
of the Company upon certain
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changes in record ownership, THE COMPANY'S REPURCHASE OPTION AS SET FORTH
IN PARAGRAPH 22 and the undersigned hereby agrees thereto and joins therein
to the extent, if any, that the agreement and joinder of the undersigned
may be necessary.
1.2 EXERCISE. Pursuant to exercise of that certain option ("OPTION")
granted to Purchaser under the Plan and subject to the terms and conditions of
this Agreement, Purchaser hereby purchases from the Company, and the Company
hereby sells to Purchaser, the total number of shares set forth above ("SHARES")
of the Company's Common Stock at a purchase price per share set forth above for
a total purchase price set forth above (the "PURCHASE PRICE"). As used in this
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (a) in replacement of the Shares,
(b) as a result of stock dividends or stock splits with respect to the Shares,
and (c) all securities received in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.
1.3 TITLE TO SHARES. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the following trust
(including date):
________________________________________________________________
________________________________________________________________
[ ] Other; please specify: ________________________________________
________________________________________________________________
1.4 PAYMENT. Purchaser hereby delivers payment of the Purchase Price
in the manner permitted in the Option Agreement where defined as follows (check
and complete as appropriate):
[ ] in cash in the amount of $_______________, receipt of which is
acknowledged by the Company;
[ ] by delivery of ___________ fully-paid, nonassessable and vested
shares of the Common Stock of the Company owned by Purchaser for at least six
(6) months prior to the date hereof which have been paid for within the meaning
of SEC Rule 144 (if purchased by use of a promissory note, such note has been
fully paid with respect to such vested shares), or obtained by
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Purchaser in the open public market, and owned free and clear of all liens,
claims, encumbrances or security interests, valued at the current Fair Market
Value of $_____ per share,
[ ] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $_____________.
[ ] by the assignment of the proceeds of a sale of 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).
2. DELIVERY.
2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of EXHIBIT 1 attached
hereto (the "STOCK POWERS"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a consent of Spouse in the form of
EXHIBIT 2 attached hereto (the "SPOUSE CONSENT") executed by Purchaser's spouse,
and (iv) the Purchase Price, either by check or cash.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the Purchase
Price and all the documents to be executed and delivered by Purchaser to the
Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:
3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy of
the Plan and the Stock Option Agreement, has read and understands the terms of
the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to
be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser is purchasing
the Shares for Purchaser's own account for investment purposes only and not with
a view to, or for sale in connection with, a distribution of the Shares within
the meaning of the Securities Act of 1933, as amended (the "SECURITIES ACT").
Purchaser has no present intention of selling or otherwise disposing of all or
any portion of the Shares and no one other than Purchaser has any beneficial
ownership of any of the Shares.
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3.3 ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully aware of, (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Purchaser may not be able to sell
or dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was Purchaser presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS. Purchaser understands
and acknowledges that the Shares have not been registered with the Securities
and Exchange Commission ("SEC") under the Securities Act and that,
notwithstanding any other provision of the Stock Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act and all applicable state
securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws. The Shares are being issued under the Securities Act
pursuant to (the Company will check the applicable box):
[ X ] the exemption provided by SEC Rule 701;
[ ] the exemption provided by SEC Rule 504;
[ ] Section 4(2) of the Securities Act;
[ ] other: ____________________________.
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS. THE SALE OF THE
SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED
WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE
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<PAGE>
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN
EXEMPTION BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands
that Purchaser may not transfer any Shares unless such Shares are registered
under the Securities Act or qualified under applicable state securities laws or
unless, in the opinion of counsel to the Company, exemptions from such
registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has been advised that SEC
Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of two
years, and in certain cases three years, after they have been purchased AND PAID
FOR (within the meaning of Rule 144), before they may be resold under Rule 144.
Purchaser understands that Shares paid for with a Note may not be deemed to be
fully "paid for" within the meaning of Rule 144 unless certain conditions are
met and that accordingly, the Rule 144 holding period of such Shares may not
begin to run until such Shares are fully paid for within the meaning of Rule
144. Purchaser understands that Rule 144 may indefinitely restrict transfer of
the Shares so long as Purchaser remains an "affiliate" of the Company or if
"current public information" about the Company (as defined in Rule 144) is not
publicly available.
5.3 SEC RULE 701. The Shares may become freely tradable by non-
affiliates if issued pursuant to SEC Rule 701 promulgated under the Securities
Act (under limited conditions regarding the method of sale) 90 days after the
first sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the SEC, subject to
the lengthier market standoff agreement contained in Section 7 of this Exercise
Agreement or any other agreement entered into by Purchaser. Affiliates must
comply with the provisions (other than the holding period requirements) of Rule
144.
5.4 STATE LAW RESTRICTIONS ON TRANSFER. Purchaser understands that
transfer of the Shares may be restricted by Section 260.141.11 of the Rules of
the California Commissioner of Corporations, a copy of which is attached hereto
as EXHIBIT 3, and that the certificate(s) representing the Shares may bear a
legend to that effect.
6. RESTRICTIONS ON TRANSFERS.
6.1 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser
shall make no disposition of the Vested Shares (other than as permitted by this
Agreement) unless and until:
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(a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;
(b) Purchaser shall have complied with all requirements of this
Exercise Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Shares under
the Securities Act or (ii) all appropriate action necessary for compliance with
the registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act (including Rule 144) has been
taken; and
(d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares pursuant to the provisions of the Commissioner Rules
identified in Sections 4.2. and 9.1.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not transfer, assign,
grant a lien or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Shares which are subject to the Company's Right of First
Refusal or Repurchase Option, except as permitted by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to
whom the Shares are transferred by means of one of the permitted transfers
specified in this Agreement must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Company that such person is bound
by the provisions of this Exercise Agreement and that the transferred shares are
subject to (i) the Company's Right of First Refusal granted hereunder and
(ii) the market stand-off provisions of Section 7, to the same extent such
shares would be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) after the effective date of such
registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify for employee
shareholders generally.
8. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Purchaser
delivers payment of the Purchase Price until such
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<PAGE>
time as Purchaser disposes of the Shares or the Company and/or its assignee(s)
exerciser(s) the Right of First Refusal or Repurchase Option. Upon an exercise
of the Right of First Refusal or Repurchase Option, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Agreement, and Purchaser will promptly surrender the
stock certificate(s) evidencing the Shares so purchased to the Company for
transfer or cancellation.
9. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
9.1 LEGENDS. Purchaser understands and agrees that the Company will
place the legends set forth below or similar legends on any stock certificate(s)
evidencing the Shares, together with any other legends that may be required by
state or federal securities laws, the Company's Articles of Incorporation or
Bylaws, any other agreement between Purchaser and the Company or any agreement
between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON PUBLIC RESALE AND TRANSFER AND TO A RIGHT OF FIRST REFUSAL AND A REPURCHASE
OPTION HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AS SET FORTH IN A STOCK OPTION
EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES
AND THE BYLAWS OF THE ISSUER, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS, RIGHT OF
FIRST REFUSAL AND REPURCHASE OPTION ARE BINDING ON TRANSFEREES OF THESE SHARES.
The California Commissioner of Corporations may require that the following
legend also be placed upon the share certificate(s) evidencing ownership of the
Shares:
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
9.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to ensure
compliance with the restrictions imposed by this Agreement, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
9.3 REFUSAL TO TRANSFER. The Company will not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares, or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares have been so transferred.
10. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE, IN PARTICULAR, IF THE SHARES ARE SUBJECT TO REPURCHASE BY THE COMPANY OR
IF PURCHASER IS AN INSIDER SUBJECT TO SECTION 16(b) OF THE EXCHANGE ACT,
PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH PURCHASER'S TAX ADVISER
CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE INTERNAL
REVENUE SERVICE, THE FORM OF WHICH IS ATTACHED AS EXHIBIT 5. Set forth below is
a brief summary as of the date of this Exercise Agreement of some of the federal
and California tax consequences of exercise of the Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER
BEFORE EXECUTING THIS OPTION OR DISPOSING OF THE SHARES.
10.1 EXERCISE OF INCENTIVE STOCK OPTION. If the Option qualifies as
an incentive stock option, there will be no regular federal income tax liability
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Purchase Price Per Share will be treated as a tax preference item for
federal income tax purposes and may subject Purchaser to the alternative minimum
tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an incentive stock option, there may be a regular federal income tax
liability and a California income
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tax liability upon the exercise of the Option. Purchaser will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Purchase Price Per Share. The Company will be required to
withhold from Purchaser's compensation or collect from Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve months after the date of the transfer of the Shares pursuant to the
exercise of the Option (and, in the case of an ISO, are disposed of more than
two years after the Option Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
one year of exercise or within two years after the Option Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
fair market value of the Shares on the date of exercise over the Purchase Price
Per Share. The Company will be required to withhold from Purchaser's
compensation or collect from Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
11. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.
12. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase shares under the Right
of First Refusal or Repurchase Option. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement will be binding
upon Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
13. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California as
such laws are applied to agreements between California residents entered into
and to be performed entirely within California, excluding that body of laws
pertaining to conflict of laws. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
14. NOTICES. Any notice required to be given or delivered to the Company
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered
to Purchaser shall be in writing and addressed to
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Purchaser at the address indicated above or to such other address as Purchaser
may designate in writing from time to time to the Company. All notices shall be
deemed effectively given upon personal delivery, three (3) days after deposit in
the United States mail by certified or registered mail (return receipt
requested), one (1) business day after its deposit with any return receipt
express courier (prepaid), or one (1) business day after transmission by rapifax
or telecopier.
15. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
16. HEADINGS. The captions and headings of this Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. All references herein to Sections will refer to Sections of
this Agreement.
17. ENTIRE AGREEMENT. The Plan and this Agreement, together with all its
Exhibits, constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede all prior
understandings and agreements, whether oral or written, between the parties
hereto with respect to the specific subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Purchaser has executed this
Agreement in duplicate as of the Effective Date.
DIVICOM INC. PURCHASER:
By:
------------------------------- ------------------------------------
Signature
Name: Nolan Daines
Title: President and Chief Executive Officer
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: California Commissioner Rule 260.141.11 (not included)
Exhibit 4: Copy of Purchaser's Check (not included)
Exhibit 5: Form of 83(b) Election (not included)
[SIGNATURE PAGE TO DIVICOM STOCK OPTION EXERCISE AGREEMENT]
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EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. _____ dated as of _______________, 1995, (the "AGREEMENT"), the
undersigned hereby sells,
assigns and transfers unto _____________________________, shares of the Common
Stock of DiviCom Inc., a Delaware corporation (the "COMPANY"), standing in the
undersigned's name on the books of the Company represented by Certificate No(s).
__________ delivered herewith, and does hereby irrevocably constitute and
appoint the Secretary of the Company as the undersigned's attorney-in-fact, with
full power of substitution, to transfer said stock on the books of the Company.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated: _____________,199___
PURCHASER
_______________________________________
(Signature)
_______________________________________
(Please Print Name)
_______________________________________
(Spouse's Signature, if any)
_______________________________________
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Note and upon exercise of
its "Right of First Refusal" or "Repurchase Option" set forth in the Agreement
without requiring additional signatures on the part of the Purchaser or
Purchaser's Spouse.
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
SPOUSE CONSENT
The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "AGREEMENT"). In consideration of the Company's granting my spouse the
right to purchase the Shares as set forth in the Agreement, the undersigned
hereby agrees to be irrevocably bound by the Agreement and further agrees that
any community property interest shall similarly be bound by the Agreement. The
undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Date: ________________________ ___________________________________
Purchaser's Spouse
Address: __________________________
___________________________________
<PAGE>
EXHIBIT 3
CALIFORNIA COMMISSIONER RULE 260.141.11
(a) The issuer of any security upon which a restriction on transfer has been
imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security at the time the certificate evidencing the security is delivered
to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed
pursuant to Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of these rules:
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or transferee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee by
a transferee or custodian for the account of the transferee or the
transferee's ancestors, descendants or spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation intervivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting
as such or as a finder) to a resident of a foreign state, territory
or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of
such securities is not in violation of any securities law of the
foreign state, territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting
syndicate or selling group;
(9) if the interest sold or transferred is a pledge or other lien given
by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not
required;
(10) by way of a sale qualified under Section 25111, 25112, 25113, or
25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is
in effect with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly-owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113
of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
<PAGE>
(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or the
administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or by
the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential
purchasers at the sale that transfer of the securities is restricted
under this rule, (ii) delivers to each purchaser a copy of this rule,
and (iii) advises the Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirements of
Section 25110 of the Code but exempt from that qualification
requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as
follows:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
-2-
<PAGE>
EXHIBIT 5.1
October 23, 1996
C-Cube Microsystems Inc.
1778 McCarthy Blvd.
Milpitas, CA 95035
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about October 24, 1996 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 263,820 shares of your Common Stock
reserved for issuance under the DiviCom Inc. 1993 Stock Option Plan (the
"Plan"). As your legal counsel, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
sale and issuance of such Common Stock under the Plan.
It is our opinion that, when issued and sold in the manner referred to in
the Plan and pursuant to the agreements which accompany the Plan, the Common
Stock issued and sold thereby will be legally and validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto. This opinion may be incorporated by reference in
any abbreviated registration statement filed pursuant to Rule 462 under the
Securities Act with respect to the Registration Statement.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of C-Cube Microsystems Inc. on Form S-8 of our reports dated January 17, 1996
appearing in the Annual Report on Form 10-K of C-Cube Microsystems Inc. for the
year ended December 31, 1995.
Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
San Jose, California
October 21, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Alexandre Balkanski and James G. Burke,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, or his substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- -------------------------- -------------------------------- ----------------
/s/ Donald T. Valentine Chairman of the Board October 23, 1996
- --------------------------
Donald T. Valentine
/s/ Alexandre A. Balkanski President, Chief Executive October 23, 1996
- -------------------------- Officer, and Director
Alexandre A. Balkanski (PRINCIPAL EXECUTIVE OFFICER)
/s/ James G. Burke Vice President of Finance and October 23, 1996
- -------------------------- Administration, Chief Financial
James G. Burke Officer and Secretary (PRINCIPAL
FINANCIAL AND ACCOUNTING
OFFICER)
/s/ William O'Meara Director October 23, 1996
- --------------------------
William O'Meara
/s/ Baryn Futa Director October 23, 1996
- --------------------------
Baryn Futa
/s/ T. J. Rodgers Director October 23, 1996
- --------------------------
T. J. Rodgers
/s/ Gregorio Reyes Director October 23, 1996
- --------------------------
Gregorio Reyes
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