EXHIBIT 99.2
OAK TECHNOLOGY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") by and
between Oak Technology, Inc., a Delaware corporation (the "COMPANY"), and Xxxxx
Xxxx (the "EMPLOYEE"), is made as of February 22, 1999 (such date being
sometimes referred to herein as the "DATE OF GRANT").
R E C I T A L S
A. The Company has adopted and implemented its Executive Stock Option
Plan (the "PLAN") permitting the grant of stock options to employees and
consultants of the Company or any Parent or Subsidiary (each as defined in the
Plan) of the Company, some of which are intended to be non-qualified stock
options in that they do not qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE"), to purchase shares of the authorized but unissued Common Stock or
treasury shares of the Company, $0.001 par value ("COMMON STOCK").
B. The Board of Directors of the Company (the "BOARD") or the Committee
(as defined in the Plan) (subsequent references herein to the Board shall also
mean the Committee, if such Committee has been appointed) has authorized the
granting of a non-qualified stock option to Employee, thereby allowing Employee
to acquire an ownership interest (or increase his or her existing ownership
interest) in the Company. Unless otherwise defined in this Agreement or the
context otherwise requires, all capitalized terms used in this Agreement shall
have the respective meanings assigned to those terms in the Plan.
A G R E E M E N T
NOW, THEREFORE, in reliance on the foregoing Recitals and in
consideration of the mutual covenants hereinafter set forth, the parties hereby
agree as follows:
1. GRANT OF STOCK OPTION. The Company hereby grants to the Employee a
non-transferable and non-assignable option to purchase an aggregate of up to
2,000,000 shares of the Company's Common Stock at the exercise price of Three
Dollars ($3.00) per share, upon the terms and conditions set forth herein (such
purchase right being sometimes referred to herein as "the Option" or "this
Option").
2. TERM AND TYPE OF OPTION. Unless earlier terminated in accordance
with Sections 4 or 5.2 hereof, this Option and all rights of the Employee to
purchase Common Stock hereunder shall expire with respect to all of the shares
then subject to this Agreement at 5:00 p.m. Pacific time on February 21, 2009
(the "OPTION EXPIRATION DATE"). This Option is a non-qualified stock option in
that it is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. Accordingly, the Employee understands that
under current law he or she will recognize ordinary income for federal income
tax purposes upon exercise of this Option in an amount equal to the excess (if
any) of the Fair Market Value (as defined in the Plan) of the shares of Common
Stock so purchased over the exercise price paid for such shares.
3. EXERCISE SCHEDULE. Subject to the remaining provisions of this
Agreement, this Option shall be exercisable in full on and after the Date of
Grant and prior to the expiration of the Option term, provided that the Employee
agrees that the Company has the right to repurchase (the "REPURCHASE OPTION")
any shares acquired upon exercise of the Option which have not vested (the
"UNVESTED SHARES") pursuant to the terms of this Section 3. For each full month
of the Employee's continuous employment with the Company (or any Parent or
Subsidiary) after his employment commencement date, 1/48 of the shares subject
to the Option shall become vested; provided, however, that vesting of shares
subject to the Option shall accelerate to the extent provided in the Employment
Agreement between the Company and the Employee. In addition, the Company may
require the Employee to
deposit the certificate(s) evidencing the Unvested Shares which are acquired
upon exercise of the Option with an agent designated by the Company under the
terms and conditions of an escrow agreement approved by the Company.
3.1 EXERCISE OF REPURCHASE OPTION. If the Employee's
employment with the Company is terminated for any reason or for no reason, with
or without cause, or if the Employee or the Employee's legal representative
attempts to dispose of any Unvested Shares other than as allowed in this
Agreement, the Company may exercise the Repurchase Option by written notice to
the Employee or the Employee's legal representative within sixty (60) days after
such termination or after the Company has received notice of the attempted
disposition.
3.2 PAYMENT FOR SHARES AND RETURN OF SHARES. The purchase
price for each Unvested Share being repurchased shall be an amount equal to the
Employee's original cost per share (as adjusted pursuant to Section 5). Payment
by the Company to the Employee or the Employee's legal representative shall be
made in cash within thirty (30) days after the date of the mailing of the
written notice of exercise of the Repurchase Option. For purposes of the
foregoing, cancellation of any promissory note of the Employee to the Company
shall be treated as payment to the Employee in cash to the extent of the unpaid
principal and any accrued interest canceled. The shares being repurchased shall
be delivered by the Employee to the Company at the same time as the delivery of
the repurchase price to the Employee.
3.3 TRANSFERS NOT SUBJECT TO THE REPURCHASE OPTION. The
Repurchase Option shall not apply to (1) a transfer to the Employee's ancestors,
descendants or spouse or to a trustee for their benefit or the benefit of the
Employee, provided that such transferee shall agree in writing (in a form
satisfactory to the Company) to take the stock subject to all the terms and
conditions of this Agreement, including this Section 3 providing for a
Repurchase Option, or (2) a Change in Control (provided that any securities or
property to which the Employee is entitled by reason of his ownership of the
Unvested Shares shall continue to be subject to the Repurchase Option).
3.4 LEGENDS. The Company may at any time place a legend or
legends referencing the Repurchase Option on any certificates evidencing
Unvested Shares.
3.5 ASSIGNMENT OF REPURCHASE OPTION. The Company shall have
the right to assign the Repurchase Option, at any time, whether or not such
option is then exercisable, to one or more persons as may be selected by the
Company.
4. RIGHTS ON TERMINATION OF EMPLOYMENT. Upon the termination
of the Employee's employment with the Company (or with any Parent or
Subsidiary of the Company), the Employee's right to exercise this Option
shall be limited in the manner set forth in this Section 4 (and this Option
shall terminate in the event not so exercised), provided that in any event,
the Option may not be exercised after the Option Expiration Date.
4.1 DEATH. If the Employee's employment is terminated by
death, the Employee's estate may, for a period of twelve (12) months following
the date of such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination. The Employee's
estate shall mean the Employee's legal representative upon death or any person
who acquires the right to exercise the Option by reason of such death in
accordance with Section 6.2.
4.2 RETIREMENT. If the Employee's employment is terminated by
voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following the date of such termination,
exercise the Option to the extent it was exercisable by the Employee on the date
of such termination unless the Employee dies prior thereto, in which event the
Employee shall be treated as though the Employee had died on the date of
retirement and the provisions of Section 4.1 above shall apply.
4.3 DISABILITY. If the Employee's employment is terminated
because of a Disability, the Employee may, within twelve (12) months following
the date of such termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination unless the Employee
dies prior to the expiration of such period, in which event the Employee shall
be treated as though the Employee's death occurred on the date of termination
because of Disability and the provisions of Section 4.1 above shall apply.
4.4 OTHER TERMINATION. If the Employee's employment is
terminated for any reason other than provided in Sections 4.1, 4.2 and 4.3
above, the Employee or the Employee's estate may, within three (3) months after
the date of the Employee's termination, exercise the Option to the extent it was
exercisable by the Employee on the date of such termination.
4.5 TRANSFER OF EMPLOYMENT TO RELATED CORPORATION. In the
event the Employee leaves the employ of the Company to become an employee of any
Parent or Subsidiary of the Company or if the Employee leaves the employ of any
such Parent or Subsidiary to become an employee of the Company or of another
Parent or Subsidiary, the Employee shall be deemed to continue as an employee of
the Company for all purposes of this Agreement for so long as employment with a
Parent or Subsidiary continues.
5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CHANGE OF
CONTROL.
5.1 STOCK SPLITS AND SIMILAR EVENTS. Appropriate adjustments
shall be made in the number and class of shares of capital stock subject to the
Option and in the exercise price of 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
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 subject to and the
exercise price of the Option shall be adjusted in a fair and equitable manner.
5.2 CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
shall 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 Change of Control nor exercised
as of the date of the Change of Control shall terminate and cease to be
outstanding effective as of the date of the Change of Control. A "CHANGE OF
CONTROL" shall be deemed to have occurred in the event any of the following
occurs with respect to the Company:
5.2.1 the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange.
5.2.2 a merger or consolidation in which the Company is a
party where the stockholders of the Company before such merger or consolidation
do not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such merger or consolidation.
5.2.3 the sale, exchange, or transfer of all or
substantially all of the assets of the Company other than a sale, exchange, or
transfer to one (1) or more subsidiaries of the Company.
5.2.4 a liquidation or dissolution of the Company.
5.3 BOARD'S DETERMINATION FINAL AND BINDING UPON EMPLOYEE. To
the extent that the foregoing adjustments in this Section 5 relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. The
Company agrees to give notice of any such adjustment to the Employee; provided,
however, that any such adjustment shall be effective and binding for all
purposes hereof whether or not such notice is given or received.
5.4 NO RIGHTS EXCEPT AS EXPRESSLY STATED. Except as
hereinabove expressly provided in this Section 5, no additional rights shall
accrue to the Employee by reason of any subdivision or combination of shares of
the capital stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or of
stock of another corporation, and any issue by the Company of shares of stock of
any class or of securities convertible into shares of stock of any class shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or exercise price of shares subject to the Option. Neither the
Employee nor any person claiming under or through the Employee shall be, or have
any of the rights or privileges of, a stockholder of the Company in respect of
any of the shares issuable upon the exercise of this Option, unless and until
this Option is properly and lawfully exercised and a certificate representing
the shares so purchased is duly issued and delivered to the Employee or to his
or her estate.
5.5 NO LIMITATIONS ON COMPANY'S DISCRETION. The grant of the
Option hereby shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
6. MANNER OF EXERCISE.
6.1 GENERAL INSTRUCTIONS FOR EXERCISE. The Option shall be
exercised by the Employee by completing, executing and delivering to the Company
a Notice of Exercise (the "NOTICE OF EXERCISE"), in substantially the form
attached hereto as Exhibit A, which Notice of Exercise shall specify the number
of shares of Common Stock which the Employee elects to purchase. The Company's
obligation to deliver shares upon the exercise of this Option shall be subject
to the Employee's satisfaction of all applicable federal, state, local and
foreign income and employment tax withholding requirements, if any. Upon receipt
of such Notice of Exercise and of payment of the purchase price (and payment of
applicable taxes as provided above), the Company shall, as soon as reasonably
possible and subject to all other provisions hereof, deliver certificates for
the shares of Common Stock so purchased, registered in the Employee's name or in
the name of his or her legal representative (if applicable). Payment of the
purchase price upon any exercise of the Option shall be made by check acceptable
to the Company or in cash; provided, however, that the Committee may, in its
sole and absolute discretion, accept any other legal consideration to the extent
permitted under applicable laws and the Plan including, without limitation,
consummation of an immediate sale proceeds transaction ("IMMEDIATE SALE
PROCEEDS"), which transaction may be executed (a) through a "same day sale"
commitment from the Employee and a broker-dealer that is a member of the
National Association of Securities Dealers (a "NASD DEALER") whereby the
Employee irrevocably elects to exercise the Option and to sell a portion of the
shares of Common Stock so purchased under the Option to pay for the aggregate
exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of
such shares to forward the aggregate exercise price directly to the Company or
(b) through a "margin" commitment from the Employee and a NASD Dealer whereby
the Employee irrevocably elects to exercise the Option and to pledge the shares
of Common Stock so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the aggregate exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the aggregate exercise price directly to the Company.
6.2 EXERCISE PROCEDURE AFTER DEATH. To the extent exercisable
after the Employee's death, this Option shall be exercised only by the
Employee's executor(s) or administrator(s) or the person or persons to whom this
Option is transferred under the Employee's will or, if the Employee shall fail
to make testamentary disposition of this Option, under the applicable laws of
descent and distribution. Any such transferee exercising this Option must
furnish the Company with (1) written Notice of Exercise and relevant information
as to his, her or its status, (2) evidence satisfactory to the Company to
establish the validity of the transfer of this Option and compliance with any
laws or regulations pertaining to said transfer, and (3) written acceptance of
the terms and conditions of this Option as contained in this Agreement.
7. NON-TRANSFERABLE. The Option shall, during the lifetime of
the Employee, be exercisable only by the Employee (or the Employee's guardian
or legal representative) and shall not be transferable or assignable by the
Employee in whole or in part other than by will or the laws of descent and
distribution. If the Employee shall make
any such purported transfer or assignment of the Option, such assignment
shall be null and void and of no force or effect whatsoever.
8. COMPLIANCE WITH SECURITIES AND OTHER LAWS. The Option may not
be exercised and the Company shall not be obligated to deliver any
certificates evidencing shares of Common Stock hereunder if the issuance of
shares upon such exercise would constitute a violation of any applicable
requirements of: (i) the Securities Act of 1933, as amended, (ii) the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (iii)
applicable state or foreign securities laws, (iv) any applicable listing
requirement of any stock exchange on which the Company's Common Stock is then
listed, and (v) any other law or regulation applicable to the issuance of
such shares. Nothing herein shall be construed to require the Company to
register or qualify any securities under applicable federal, state or foreign
securities laws, or take any action to secure an exemption from such
registration and qualification for the issuance of any securities upon the
exercise of the Option. To the extent deemed necessary by the Company's
counsel, shares of Common Stock issued upon exercise of this Option shall
include such legends as in the opinion of the Company's counsel may be
required by applicable federal, state and foreign securities laws.
9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in this
Agreement shall: (i) confer upon the Employee any right with respect to the
continuance of employment by the Company, or by any Parent or Subsidiary of
the Company, or (ii) limit in any way the right of the Company, or of any
Parent or Subsidiary, to terminate the Employee's employment at any time.
Except to the extent the Company and Employee shall have otherwise agreed in
writing, Employee's employment shall be terminable by the Company (or by a
Parent or Subsidiary, if applicable) at will. The Board in its sole
discretion shall determine whether any leave of absence or interruption in
service (including an interruption during military service) shall be deemed a
termination of employment for the purposes of this Agreement.
10. OPTION SUBJECT TO TERMS OF PLAN. In addition to the provisions
hereof, this Agreement and the Option are governed by, and subject to the
terms and conditions of, the Plan. The Employee acknowledges receipt of a
copy of the Plan (a copy of which is attached hereto as Exhibit B). The
Employee represents that he or she is familiar with the terms and conditions
of the Plan, and hereby accepts the Option subject to all of the terms and
conditions thereof, which terms and conditions shall control to the extent
inconsistent in any respect with the provisions of this Agreement. The
Employee hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Board as to any questions arising under
the Plan or under this Agreement.
11. INTENT TO COMPLY WITH SEC RULE 16b-3. With respect to Insiders,
transactions under this Agreement are intended to comply with all applicable
conditions of SEC Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of this Agreement or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board. Moreover, in the event this Agreement does not
include a provision required by Rule 16b-3 to be stated herein, such
provision shall be deemed automatically to be incorporated by reference into
this Agreement insofar as Insiders are concerned.
12. NOTICES. All notices and other communications of any kind which
either party to this Agreement may be required or may desire to serve on the
other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail,
return receipt requested, deposited in the United States mail with postage
thereon fully prepaid, addressed to the other party at the addresses
indicated on the signature page hereof or as otherwise provided below.
Service of any such notice or other communication so made by mail shall be
deemed complete on the date of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of the third (3rd)
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to
which such notices or other communications are thereafter to be addressed or
delivered.
13. FURTHER ASSURANCES. The Employee shall, upon request of the
Company, take all actions and execute all documents requested by the Company
which the Company deems to be reasonably necessary to effectuate the terms
and intent of this Agreement and, when required or permitted by any provision
of this Agreement to transfer all or any portion of the Common Stock
purchased hereunder to the Company (and its assignees), the Employee shall
deliver such Common Stock endorsed in blank or accompanied by Stock
Assignments Separate from Certificate endorsed in blank, so that title
thereto will pass by delivery alone. Any sale or transfer by the Employee of
the Common Stock to the Company (and its assignees) shall be made free of any
and all claims, encumbrances, liens and restrictions of every kind, other
than those imposed by this Agreement.
14. SUCCESSORS. Except to the extent the same is specifically
limited by the terms and provisions of this Agreement, this Agreement is
binding upon the Employee and the Employee's successors, heirs and personal
representatives, and upon the Company, its successors and assigns.
15. TERMINATION OR AMENDMENT. Subject to the terms and conditions
of the Plan, the Board may terminate or amend the Plan and/or the Option at
any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Employee.
16. INTEGRATED AGREEMENT. This Agreement, the Plan and the
Employment Agreement between the Company and the Employee constitute the
entire understanding and agreement of the Employee and the Company with
respect to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties between the
Employee and the Company other than those set forth or provided for herein.
To the extent contemplated herein, the provisions of this Agreement shall
survive any exercise of the Option and shall remain in full force and effect.
17. OTHER MISCELLANEOUS TERMS. Titles and captions contained in
this Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California, irrespective of its choice of law principles.
18. INDEPENDENT TAX ADVICE. The Employee agrees that he or she has
obtained or will obtain the advice of independent tax counsel (or has
determined not to obtain such advice, having had adequate opportunity to do
so) regarding the federal, state and/or foreign income tax consequences of
the receipt and exercise of the Option and of the disposition of Common Stock
acquired upon exercise hereof. The Employee acknowledges that he or she has
not relied and will not rely upon any advice or representation by the Company
or by its employees or representatives with respect to the tax treatment of
the Option.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
COMPANY: EMPLOYEE:
OAK TECHNOLOGY, INC.
a Delaware Corporation
/s/ Xxxxx X. Xxxxxxxxx /s/ Young X. Xxxx
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Signature Signature
By: Xxxxx X. Xxxxxxxxx Name Printed: Young X. Xxxx
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Its: Vice President, General Counsel
and Corporate Secretary Address:
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Address: 000 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000 ------------------------------
U.S.A.
SCHEDULE OF EXHIBITS
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EXHIBIT A: Form of Notice of Exercise for Oak Technology, Inc.
Employee Non-Qualified Stock Option Agreement
EXHIBIT B: Executive Stock Option Plan
