<PAGE> 1
As filed with the Securities and Exchange Commission on June 9, 1999
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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BROADCOM CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0480482
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
16215 ALTON PARKWAY, IRVINE, CALIFORNIA 92618
(Address of principal executive offices) (Zip Code)
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EPIGRAM, INC. 1996 STOCK PLAN
MAVERICK NETWORKS 1998 STOCK PLAN
STOCK OPTION GRANTS TO THREE EMPLOYEES OF ARMEDIA, INC.
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(Full title of the Plans)
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HENRY T. NICHOLAS III, PH.D.
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CO-CHAIRMAN
BROADCOM CORPORATION
16215 ALTON PARKWAY, IRVINE, CALIFORNIA 92618
(Name and address of agent for service)
(949) 450-8700
(Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Epigram, Inc. 1996 Stock Plan
Class A Common Stock, $.0001 par value 328,690 shares $92.9375(2) $30,547,626.88(2) $ 8,492.24
Class B Common Stock, $.0001 par value 328,690 shares $ 6.51(3) $ 2,139,771.90(3) $ 594.86
Maverick Networks 1998 Stock Plan
Class A Common Stock, $.0001 par value 290,191 shares $92.9375(2) $26,969,626.06(2) $ 7,497.56
Class B Common Stock, $.0001 par value 290,191 shares $ 4.69(3) $ 1,360,995.79(3) $ 378.36
Stock Option Grants to three employees
of Armedia, Inc.
Class A Common Stock, $.0001 par value 5,036 shares $92.9375(2) $ 468,033.25(2) $ 130.11
Class B Common Stock, $.0001 par value 5,036 shares $ 0.03(3) $ 151.08(3) $ 0.04
- ----------------------------------------------------------------------------------------------------------------------------
Total $61,486,204.96 $17,093.17
============================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Broadcom's Class A or Class B Common Stock which become issuable under the
Epigram, Inc. 1996 Stock Plan, the Maverick Networks 1998 Stock Plan and
the Nonstatutory Stock Option Agreements between Armedia, Inc. and three
employees of Armedia, Inc. by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without Broadcom's
receipt of consideration which results in an increase in the number of
Broadcom's outstanding shares of Class A or Class B Common Stock.
(2) Calculated solely for the purpose of this offering under Rule 457(h) of the
Securities Act of 1933, as amended (the "Securities Act") on the basis of
the high and low selling prices per share of Broadcom's Class A Common
Stock on June 2, 1999, as reported on the Nasdaq National Market.
(3) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act, on the basis of the weighted average exercise price of the
outstanding options. The Class B Common Stock is not listed on the Nasdaq
National Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Broadcom Corporation ("Broadcom") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) Broadcom's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, filed with the Commission on March
31, 1999;
(b) Broadcom's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999, filed with the Commission on May
17, 1999;
(c) Broadcom's Current Reports on Form 8-K filed with the
Commission on January 27, 1999, April 28, 1999 and June 1,
1999; and
(d) Broadcom's Registration Statement No. 000-23993 on Form 8-A
filed with Commission on April 6, 1998, and including any
other amendments or reports filed for the purpose of updating
such description, in which there is described the terms,
rights and provisions applicable to Broadcom's Class A Common
Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Agent"), after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
de-registers all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
The terms, rights and provisions applicable to the Class A
Common Stock are set forth in Broadcom's Registration Statement No. 000-23993 on
Form 8-A which is incorporated by reference into this Registration Statement
pursuant to Item 3(d). The shares of the Class B Common Stock are substantially
identical to the shares of Class A Common Stock, except that the holders of
Class A Common Stock are entitled to one (1) vote per share and the holders of
the Class B Common Stock are entitled to ten (10) votes per share on all matters
submitted to shareholder vote. Holders of shares of Class A Common Stock and
holders of shares of Class B Common Stock vote together as a single class on all
matters submitted to a shareholder vote, except as otherwise required by law or
with respect to a proposed issuance of additional shares of Class B Common
Stock, which issuance requires the affirmative vote of the holders of a majority
of the outstanding shares of Class B Common Stock, voting separately as a class.
Each share of Class B Common Stock is convertible at the option of the holder
into one (1) share of Class A
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<PAGE> 3
Common Stock and will automatically convert into one (1) share of Class A Common
Stock upon the sale of the Class B Common Stock by the original holder.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Broadcom's Articles of Incorporation limit the personal
liability of its directors for monetary damages to the fullest extent permitted
by the California General Corporation Law (the "California Law"). Under the
California Law, a director's liability to a company or its shareholders may not
be limited with respect to the following items: (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the company or its shareholders or that involve the absence of good faith on
the part of the director, (iii) any transaction from which a director derived an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the company or its shareholders in circumstances in
which the director was aware, or should have been aware, in the ordinary course
of performing a director's duties, of a risk of a serious injury to the company
or its shareholders, (v) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
company or its shareholders, (vi) contracts or transactions between the company
and a director within the scope of Section 310 of the California Law or (vii)
improper dividends, loans and guarantees under Section 316 of the California
Law. The limitation of liability does not affect the availability of injunctions
and other equitable remedies available to Broadcom's shareholders for any
violation by a director of the director's fiduciary duty to Broadcom or its
shareholders.
Broadcom's Articles of Incorporation also include an
authorization for Broadcom to indemnify its "agents" (as defined in Section 317
of the California Law) through bylaw provisions, by agreement or otherwise, to
the fullest extent permitted by law. Pursuant to this provision, Broadcom's
Bylaws provide for indemnification of Broadcom's directors, officers and
employees. In addition, Broadcom may, at its discretion, provide indemnification
to persons whom Broadcom is not obligated to indemnify. The Bylaws also allow
Broadcom to enter into indemnity agreements with individual directors, officers,
employees and other agents. These indemnity agreements have been entered into
with all directors and executive officers and provide the maximum
indemnification permitted by law. These agreements, together with Broadcom's
Bylaws and Articles of Incorporation, may require Broadcom, among other things,
to indemnify these directors or executive officers (other than for liability
resulting from willful misconduct of a culpable nature), to advance expenses to
them as they are incurred, provided that they undertake to repay the amount
advanced if it is ultimately determined by a court that they are not entitled to
indemnification, and to obtain directors' and officers' insurance if available
on reasonable terms. Section 317 of the California Law and Broadcom's Bylaws
make provision for the indemnification of officers, directors and other
corporate agents in terms sufficiently broad to indemnify such persons, under
certain circumstances, for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act.
Item 7. Exemption from Registration Claimed
Not Applicable.
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Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
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<C> <S>
4.1 Instruments Defining the Rights of Stockholders.
Reference is made to Broadcom's Registration
Statement No. 000-23993 on Form 8-A, together with
the amendments and exhibits thereto, which is
incorporated herein by reference pursuant to Item
3(d).
5.1 Opinion and consent of Brobeck, Phleger & Harrison
LLP.
23.1 Consent of Ernst & Young LLP, Independent
Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is
contained in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-5 of
this Registration Statement.
99.1 Epigram, Inc. 1996 Stock Plan, as amended.
99.2 Form of Stock Option Agreement - Early Exercise for
Epigram, Inc. 1996 Stock Plan.
99.3 Maverick Networks 1998 Stock Plan.
99.4 Form of Notice of Stock Option Grant for Maverick
Networks 1998 Stock Plan.
99.5 Form of Restricted Stock Purchase Agreement for
Unvested Shares for Maverick Networks 1998 Stock
Plan.
99.6 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Nancy Clark.
99.7 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Ajeya Prabhakar.
99.8 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Sam Sambasivam.
99.9 Form of Option Assumption Agreement - Epigram Plan.
99.10 Form of Option Assumption Agreement - Maverick Plan.
99.11 Form of Option Assumption Agreement - Armedia Grants
Outside Option Plan.
</TABLE>
Item 9. Undertakings
A. 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, (ii) to reflect in the prospectus any
facts or events arising after the effective date of this 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
this Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses 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 into this Registration Statement; (2) that, for the
purpose of determining any liability under the Securities Act 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; and
(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
Epigram, Inc. 1996 Stock Plan, the Maverick Networks 1998 Stock Plan, Stock
Option Grant to Ms. Clark, Stock Option Grant to Mr. Prabhakar or Stock Option
Grant to Mr. Sambasivam.
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<PAGE> 5
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into this 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.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the indemnification provisions summarized
in Item 6 above, or otherwise, the registrant has been advised that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities 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
Securities 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, as
amended, 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 Irvine, California on this 9th day of June, 1999.
BROADCOM CORPORATION
By: /s/ Henry T. Nicholas III
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Henry T. Nicholas III, Ph.D.
President, Chief Executive Officer
and Co-Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
officers and directors of Broadcom Corporation, a California corporation, do
hereby constitute and appoint Henry T. Nicholas III and Henry Samueli and each
of them, their lawful attorneys-in-fact and agents with full power and authority
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, and any one of them, determine may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms that all said attorneys and agents, or
any one of them, shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated. Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Henry T. Nicholas III President, Chief Executive Officer June 9, 1999
- ---------------------------------------- and Co-Chairman
Henry T. Nicholas III, Ph.D. (Principal Executive Officer)
/s/ Henry Samueli Vice President of Research & June 9, 1999
- ---------------------------------------- Development, Chief Technical Officer
Henry Samueli, Ph.D. and Co-Chairman
/s/ William J. Ruehle Vice President and Chief Financial June 9, 1999
- ---------------------------------------- Officer (Principal Financial and
William J. Ruehle Accounting Officer)
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Alan E. Ross Director June 9, 1999
- ----------------------------------------
Alan E. Ross
/s/ Myron S. Eichen Director June 9, 1999
- ----------------------------------------
Myron S. Eichen
/s/ Werner F. Wolfen Director June 9, 1999
- ----------------------------------------
Werner F. Wolfen
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
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<C> <S>
4.1 Instruments Defining the Rights of Stockholders.
Reference is made to Broadcom's Registration
Statement No. 000-23993 on Form 8-A, together with
the amendments and exhibits thereto, which is
incorporated herein by reference pursuant to Item
3(d).
5.1 Opinion and consent of Brobeck, Phleger & Harrison
LLP.
23.1 Consent of Ernst & Young LLP, Independent
Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is
contained in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-5 of
this Registration Statement.
99.1 Epigram, Inc. 1996 Stock Plan, as amended.
99.2 Form of Stock Option Agreement - Early Exercise for
Epigram, Inc. 1996 Stock Plan.
99.3 Maverick Networks 1998 Stock Plan.
99.4 Form of Notice of Stock Option Grant for Maverick
Networks 1998 Stock Plan.
99.5 Form of Restricted Stock Purchase Agreement for
Unvested Shares for Maverick Networks 1998 Stock
Plan.
99.6 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Nancy Clark.
99.7 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Ajeya Prabhakar.
99.8 Nonstatutory Stock Option Agreement between Armedia,
Inc. and Sam Sambasivam.
99.9 Form of Option Assumption Agreement - Epigram Plan.
99.10 Form of Option Assumption Agreement - Maverick Plan.
99.11 Form of Option Assumption Agreement - Armedia Grants
Outside Option Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
June 9, 1999
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92618
Re: Broadcom Corporation Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Broadcom Corporation, a California
corporation (the "Company") in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
aggregate of 623,917 shares of Class A Common Stock and 623,917 shares of Class
B Common Stock (collectively, the "Shares") and related stock options under (i)
the Epigram, Inc. 1996 Stock Plan, as amended; (ii) the Maverick Networks 1998
Stock Plan (together, the "Plans"); (iii) the Nonstatutory Stock Option
Agreement between Armedia, Inc. ("Armedia") and Ms. Clark, which has been
assumed by the Company; (iv) the Nonstatutory Stock Option Agreement between
Armedia and Mr. Prabhakar, which has been assumed by the Company; and (v) the
Nonstatutory Stock Option Agreement between Armedia and Mr. Sambasivam, which
has been assumed by the Company (collectively, the "Agreements").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the assumption of the Plans
and the options outstanding thereunder and the Agreements. Based on such review,
we are of the opinion that if, as and when the Shares are issued and sold (and
the consideration therefor received) pursuant to the provisions of option
agreements duly authorized under the Plans or the Agreements and in accordance
with the Registration Statement, such Shares will be duly authorized, legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Act, the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, or Item 509 of Regulation S-K.
<PAGE> 2
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plans, the Agreements or the Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
------------------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8) of Broadcom Corporation pertaining to the
Epigram, Inc. 1996 Stock Plan, the Maverick Networks 1998 Stock Plan and stock
option grants to three employees of Armedia, Inc., of our reports dated
January 26, 1999, with respect to the consolidated financial statements and
financial statement schedule of Broadcom Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Orange County, California
June 9, 1999
<PAGE> 1
EXHIBIT 99.1
EPIGRAM, INC.
1996 STOCK PLAN
(AS AMENDED JUNE 11, 1998)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Epigram, Inc., a California corporation.
(h) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "Director" means a member of the Board of Directors of the
Company.
(j) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave
<PAGE> 2
of absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(o) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Option Agreement" means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(r) "Option Exchange Program" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.
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<PAGE> 3
(s) "Optioned Stock" means the Common Stock subject to an Option
or a Stock Purchase Right.
(t) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(u) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "Plan" means this 1996 Stock Plan.
(w) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(x) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(y) "Service Provider" means an Employee, Director or Consultant.
(z) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(aa) "Stock Purchase Right" means a right to purchase Common Stock
pursuant to Section 11 below.
(bb) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is THREE MILLION FIVE HUNDRED THOUSAND THIRTY
(3,530,000) Shares. The Shares may be authorized but unissued, or reacquired
Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
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<PAGE> 4
(a) The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by
each such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, of any Option or
Stock Purchase Right granted hereunder.
(vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by Optionees
to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable; and
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<PAGE> 5
(xi) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate such
relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
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<PAGE> 6
(A) granted to an Employee who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time
of grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of the grant.
(B) granted to any other Service Provider, the per
Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement, but in no case at a rate of less than 20% per year over
five (5) years from the date the Option is granted. Unless the Administrator
provides otherwise, vesting of Options granted hereunder shall be tolled during
any unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.
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An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of the Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for thirty (30) days following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option on the day three months and one day following such termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
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<PAGE> 8
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The purchase price for the Shares subject to the
Stock Purchase Right shall be no less than 85% of the Fair Market Value of the
Shares at the time the Stock Purchase Right is granted. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but in no case at a rate of less than 20% per year
over five years from the date of purchase.
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<PAGE> 9
(c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. To the extent it has not been previously exercised, an Option or
Stock Purchase Right shall terminate immediately prior to the consummation of
such proposed action.
(c) Change of Control. Change of Control means the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities
other than in a private financing transaction approved by the Board of
Directors; or
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<PAGE> 10
(ii) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company;
(iii) a merger or consolidation in which the Company is a
party and in which the shareholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at a least majority of the
beneficial interest in the voting stock of the Company after such transaction;
(iv) or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
In the event of a Change of Control, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. At
the time of the Change of Control, one-fourth (1/4) of the shares subject to an
Option or Stock Repurchase Right shall accelerate so as to become completely
vested for such shares on the date the event constituting a Change of Control is
consummated. For the purposes of this paragraph, the Option or Stock Purchase
Right shall be considered assumed if, following a change of control, the option
or right confers the right to purchase or receive, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets is
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
13. Time of Granting Options and Stock Purchase Rights. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
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(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of
an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
19. Information to Optionees and Purchasers. The Company shall provide to
each Optionee and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.
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<PAGE> 1
EXHIBIT 99.2
EPIGRAM, INC.
1996 STOCK PLAN
STOCK OPTION AGREEMENT
EARLY EXERCISE
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
DATE OF GRANT
VESTING COMMENCEMENT DATE
EXERCISE PRICE PER SHARE
TOTAL NUMBER OF SHARES GRANTED
TOTAL EXERCISE PRICE
TYPE OF OPTION: [ ] Incentive Stock Option
[ ] Nonstatutory Stock Option
TERM/EXPIRATION DATE:
EXERCISE AND VESTING SCHEDULE:
This Option is exercisable immediately, in whole or in part, and shall
vest according to the following vesting schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to continued status as a Service
Provider on such dates.
In the event of a Change of Control that occurs while Employee is
employed by the Company, one-fourth (1/4th) of the shares subject to the Option
shall accelerate so as to become completely vested on the date the event
constituting a Change of Control is consummated. The balance of the shares
subject to the Option shall continue to vest on the same time schedule as
existed prior to the Change of Control. If the Change of Control occurs in the
first twelve months after the date vesting commences, 1/4th of the shares will
vest upon the Change of Control and another 1/4th of the shares will vest twelve
<PAGE> 2
months after the Vesting Commencement Date, and 1/48th of the shares will
continue to vest each month thereafter until fully vested. If the Change of
Control occurs after the first twelve months after the date vesting commences,
1/4th of the shares will vest upon the Change of Control, and the remaining
shares will continue to vest as to 1/48th of the shares each month thereafter
until fully vested. Notwithstanding the foregoing, if such vesting acceleration
would cause a contemplated Change of Control transaction that was intended to be
accounted for as a "pooling-of-interests" transaction to become ineligible for
such accounting treatment under generally accepted accounting principles, as
determined by the Company's independent public accountants prior to the Change
of Control, Optionee's shares shall not have their vesting so accelerated.
This Option shall be exercisable for thirty (30) days after Optionee
ceases to be a Service Provider. Upon Optionee's death or disability, this
Option may be exercised for such longer period as provided in the Plan. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit A (the "Exercise
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.
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<PAGE> 3
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B, and shall read the applicable rules of the Commissioner of Corporations
attached to such Investment Representation Statement.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
6. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
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<PAGE> 4
7. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal 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 Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of ISO Following Disability. If the Optionee ceases
to be an Employee as a result of a disability that is not a total and permanent
disability as defined in Section 22(e)(3) of the Code, to the extent permitted
on the date of termination, the Optionee must exercise an ISO within three
months of such termination for the ISO to be qualified as an ISO.
(c) Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee 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 Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(d) Disposition of Shares. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable
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<PAGE> 5
at ordinary income rates) to the extent of the difference between the Exercise
Price and the lesser of (1) the Fair Market Value of the Shares on the date of
exercise, or (2) the sale price of the Shares. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(e) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
(f) Section 83(b) Election for Unvested Shares Purchased Pursuant
to Options. With respect to the exercise of an Option for unvested Shares, an
election may be filed by the Optionee with the Internal Revenue Service, within
30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the
Code to be taxed currently on any difference between the purchase price of the
Shares and their Fair Market Value on the date of purchase. In the case of a
Nonstatutory Stock Option, this will result in a recognition of taxable income
to the Optionee on the date of exercise, measured by the excess, if any, of the
fair market value of the Shares, at the time the Option is exercised over the
purchase price for the Shares. Absent such an election, taxable income will be
measured and recognized by Optionee at the time or times on which the Company's
Repurchase Option lapses. In the case of an Incentive Stock Option, such an
election will result in a recognition of income to the Optionee for alternative
minimum tax purposes on the date of exercise, measured by the excess, if any, of
the fair market value of the Shares, at the time the option is exercised, over
the purchase price for the Shares. Absent such an election, alternative minimum
taxable income will be measured and recognized by Optionee at the time or times
on which the Company's Repurchase Option lapses. Optionee is strongly encouraged
to seek the advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election under
Section 83(b) of the Code. A form of Election under Section 83(b) is attached
hereto as Exhibit C-5 for reference.
OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S
BEHALF.
10. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.
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<PAGE> 6
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE: EPIGRAM, INC.
Signature By
Title
Residence Address
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<PAGE> 7
EXHIBIT A
1996 STOCK PLAN
EXERCISE NOTICE
Epigram, Inc.
870 West Maude Avenue
Sunnyvale, California 94086
Attention: Secretary
1. Exercise of Option. Effective as of today, , the undersigned
("Optionee") hereby elects to exercise Optionee's option to purchase _________
shares of the Common Stock (the "Shares") of Epigram, Inc. (the "Company") under
and pursuant to the 1996 Stock Plan (the "Plan") and the Stock Option Agreement
dated _____________ (the "Option Agreement").
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement.
3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona
<PAGE> 8
fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to
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<PAGE> 9
a registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY
COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD
BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE
NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit B, the Investment
Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
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<PAGE> 10
(c) Refusal to Transfer. The Company shall 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 shall have been so transferred.
8. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
9. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
10. Governing Law; Severability. This Agreement is governed by the
internal substantive laws, but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Restricted Stock Purchase
Agreement, the Option Agreement and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee.
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<PAGE> 11
Submitted by: Accepted by:
OPTIONEE: EPIGRAM, INC.
By
Title
Address: Address:
870 West Maude Avenue
Sunnyvale, California 94086
Date Received
-5-
<PAGE> 12
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : Epigram, Inc.
SECURITY : Common Stock
AMOUNT : _______________ Shares
DATE : _______________
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
<PAGE> 13
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(e) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
Date:______________________________
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<PAGE> 14
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (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 trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee 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 inter vivos 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 Sections 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;
(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
to 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 requirement 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 THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES."
<PAGE> 15
EXHIBIT C-1
EPIGRAM, INC.
1996 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made between (the "Purchaser") and Epigram, Inc. (the
"Company") as of __________________.
RECITALS
(1) Pursuant to the exercise of the stock option (grant number ____)
granted to Purchaser under the Company's 1996 Stock Plan (the "Plan") and
pursuant to the Stock Option Agreement (the "Option Agreement") dated
___________ by and between the Company and Purchaser with respect to such grant,
which Plan and Option Agreement are hereby incorporated by reference, Purchaser
has elected to purchase _________ of those shares which have not become vested
under the vesting schedule set forth in the Option Agreement ("Unvested
Shares"). The Unvested Shares and the shares subject to the Option Agreement
which have become vested are sometimes collectively referred to herein as the
"Shares".
(2) As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Restricted Stock
Purchase Agreement, which sets forth the rights and obligations of the parties
with respect to Shares acquired upon exercise of the Option.
1. Repurchase Option.
(a) If Purchaser's employment or consulting relationship with the Company
is terminated for any reason, including for cause, death, and disability, the
Company shall have the right and option to purchase from Purchaser, or
Purchaser's personal representative, as the case may be, all of the Purchaser's
Unvested Shares as of the date of such termination at the price paid by the
Purchaser for such Shares (the "Repurchase Option").
(b) Upon the occurrence of a termination, the Company may exercise its
Repurchase Option by delivering personally or by registered mail, to Purchaser
(or his transferee or legal representative, as the case may be), within ninety
(90) days of the termination, a notice in writing indicating the Company's
intention to exercise the Repurchase Option and setting forth a date for closing
not later than thirty (30) days from the mailing of such notice. The closing
shall take place at the Company's office. At the closing, the holder of the
certificates for the Unvested Shares being transferred shall deliver the stock
certificate or certificates evidencing the Unvested Shares, and the Company
shall deliver the purchase price therefor.
<PAGE> 16
(c) At its option, the Company may elect to make payment for the Unvested
Shares to a bank selected by the Company. The Company shall avail itself of this
option by a notice in writing to Purchaser stating the name and address of the
bank, date of closing, and waiving the closing at the Company's office.
(d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety (90) days following
the termination, the Repurchase Option shall terminate.
(e) The Repurchase Option shall terminate in accordance with the Vesting
Schedule in Optionee's Option Agreement.
2. Transferability of the Shares; Escrow.
(a) Purchaser hereby authorizes and directs the secretary of the Company,
or such other person designated by the Company, to transfer the Unvested Shares
as to which the Repurchase Option has been exercised from Purchaser to the
Company.
(b) To insure the availability for delivery of Purchaser's Unvested Shares
upon repurchase by the Company pursuant to the Repurchase Option under Section
1, Purchaser hereby appoints the secretary, or any other person designated by
the Company as escrow agent, as its attorney-in-fact to sell, assign and
transfer unto the Company, such Unvested Shares, if any, repurchased by the
Company pursuant to the Repurchase Option and shall, upon execution of this
Agreement, deliver and deposit with the secretary of the Company, or such other
person designated by the Company, the share certificates representing the
Unvested Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall
be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of
the Company and Purchaser attached as Exhibit C-3 hereto, until the Company
exercises its purchase right as provided in Section 1, until such Unvested
Shares are vested, or until such time as this Agreement no longer is in effect.
As a further condition to the Company's obligations under this Agreement, the
spouse of the Purchaser, if any, shall execute and deliver to the Company the
Consent of Spouse attached hereto as Exhibit C-4. Upon vesting of the Unvested
Shares, the escrow agent shall promptly deliver to the Purchaser the certificate
or certificates representing such Shares in the escrow agent's possession
belonging to the Purchaser, and the escrow agent shall be discharged of all
further obligations hereunder; provided, however, that the escrow agent shall
nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.
(c) The Company, or its designee, shall not be liable for any act it may
do or omit to do with respect to holding the Shares in escrow and while acting
in good faith and in the exercise of its judgment.
<PAGE> 17
(d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of this
Agreement.
3. Ownership, Voting Rights, Duties. This Agreement shall not affect in any
way the ownership, voting rights or other rights or duties of Purchaser, except
as specifically provided herein.
4. Legends. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
5. Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
6. Notices. Notices required hereunder shall be given in person or by
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.
7. Survival of Terms. This Agreement shall apply to and bind Purchaser and
the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.
8. Section 83(b) Election. Purchaser hereby acknowledges that he or she has
been informed that, with respect to the exercise of an Option for unvested
Shares, an election may be filed by the Purchaser with the Internal Revenue
Service, within 30 days of the purchase of the Shares, electing pursuant to
Section 83(b) of the Code to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of
purchase. In the case of a Nonstatutory Stock Option, this will result in a
recognition of taxable income to the Purchaser on the date of exercise, measured
by the excess, if any, of the fair market value of the Shares, at the time the
Option is exercised over the purchase price for the Shares. Absent such an
election, taxable income will be measured and recognized by Purchaser at the
time or times on which the Company's Repurchase Option lapses. In the case of an
Incentive Stock Option, such an election will result in a recognition of income
to the Purchaser for alternative minimum tax purposes on the date of exercise,
measured by the excess, if any, of the fair market value of the Shares, at the
time the option
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<PAGE> 18
is exercised, over the purchase price for the Shares. Absent such an election,
alternative minimum taxable income will be measured and recognized by Purchaser
at the time or times on which the Company's Repurchase Option lapses. Purchaser
is strongly encouraged to seek the advice of his or her own tax consultants in
connection with the purchase of the Shares and the advisability of filing of the
Election under Section 83(b) of the Code. A form of Election under Section 83(b)
is attached hereto as Exhibit C-5 for reference.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.
9. Representations. Purchaser has reviewed with his own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. Purchaser is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. Purchaser understands that he (and not the Company) shall be
responsible for his own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
10. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of California.
Purchaser represents that he has read this Agreement and is familiar with
its terms and provisions. Purchaser hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement.
[The remainder of this page left blank intentionally]
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<PAGE> 19
IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set
forth above.
"COMPANY"
EPIGRAM, INC.
By:_____________________________________
Title:__________________________________
"PURCHASER"
Signature
Address:
Soc. Sec. No.
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<PAGE> 20
EXHIBIT C-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, , hereby sell, assign and transfer unto Epigram,
Inc. _____________________ (__________) shares of the Common Stock of Epigram,
Inc. standing in my name of the books of said corporation represented by
Certificate No. _____ herewith and do hereby irrevocably constitute and appoint
___________________ to transfer the said stock on the books of the within named
corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between Epigram, Inc. and the undersigned dated
____________________.
Dated: _______________
Signature:___________________________________
INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE> 21
EXHIBIT C-3
JOINT ESCROW INSTRUCTIONS
__________________
Corporate Secretary
Epigram, Inc.
870 West Maude Avenue
Sunnyvale, California 94086
Attention: Secretary
Dear ________________:
As Escrow Agent for both Epigram, Inc. (the "Company"), and the
undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Restricted Stock Purchase Agreement ("Agreement") between
the Company and the undersigned, in accordance with the following instructions:
1 In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2 At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.
3 Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete
<PAGE> 22
any transaction herein contemplated, including but not limited to the filing
with any applicable state blue sky authority of any required applications for
consent to, or notice of transfer of, the securities. Subject to the provisions
of this paragraph 3, Purchaser shall exercise all rights and privileges of a
stockholder of the Company while the stock is held by you.
4 Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 120 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.
5 If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6 Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7 You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8 You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9 You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10 You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
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<PAGE> 23
11 You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12 Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13 If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14 It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15 Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: Epigram, Inc.
870 West Maude Avenue
Sunnyvale, CA 94086
Attention: Secretary
PURCHASER:
ESCROW AGENT: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Judith M. O'Brien
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<PAGE> 24
16 By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17 This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
18 These Joint Escrow Instructions shall be governed by, the internal
substantive laws, but not the choice of law rules, of California.
EPIGRAM, INC.
By
Title
PURCHASER:
Signature
ESCROW AGENT:
WILSON SONSINI GOODRICH & ROSATI
___________________________________
Judith M. O'Brien
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<PAGE> 25
EXHIBIT C-4
CONSENT OF SPOUSE
I, ____________________, spouse of , have read and approve the foregoing
Agreement. In consideration of granting of the right to my spouse to purchase
shares of Epigram, Inc., as set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: __________________
___________________________________
(Signature of Spouse)
<PAGE> 26
EXHIBIT C-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
or alternative minimum taxable income, as the case may be, for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
TAXPAYER SPOUSE
NAME: ______________________ ___________________________
ADDRESS: ______________________ ___________________________
______________________ ___________________________
IDENTIFICATION NO.: ______________________ ___________________________
TAXABLE YEAR: ______________________ ___________________________
2. The property with respect to which the election is made is described as
follows: _____________ shares (the "Shares") of the Common Stock of
Epigram, Inc. (the "Company").
3. The date on which the property was transferred is: _____________.
4. The property is subject to the following restrictions:
The Shares may not be transferred and are subject to forfeiture under the terms
of an agreement between the taxpayer and the Company. These restrictions lapse
upon the satisfaction of certain conditions contained in such agreement.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is:
$______________________.
6. The amount (if any) paid for such property is:
$______________________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated:__________________ _______________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated:__________________ _______________________________________________
Spouse of Taxpayer
<PAGE> 1
EXHIBIT 99.3
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means the Committee appointed by the Board of Directors
in accordance with paragraph (a) of Section 4 of the Plan.
(e) "COMMON STOCK" means the Common Stock of the Company.
(f) "COMPANY" means MAVERICK SEMICONDUCTOR, INC., a California
corporation.
(g) "CONSULTANT" means any person, including an advisor, who is engaged
by the Company or any Parent or Subsidiary to render consultative or advisory
services and is compensated for such services, and any director of the Company
whether compensated for such services or not provided that if and in the event
the Company registers any class of any equity security pursuant to the Exchange
Act, the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave, military leave or any other leave of absence
approved by the Board, provided that such leave is for a period of not more than
ninety (90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time to time; or (ii) in the case of transfers
between locations of the Company or between the Company, its Subsidiaries or its
successor.
(i) "EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 2
(k) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or
a national market system including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported, as quoted
on such system or exchange for the last market trading day prior to the time
of determination) as reported in the Wall Street Journal or such other source
as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the Common Stock; or
(iii) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(n) "OPTION" means a stock option granted pursuant to the Plan.
(o) "OPTIONED STOCK" means the Common Stock subject to an Option.
(p) "OPTIONEE" means an Employee or Consultant who receives an Option.
(q) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(r) "PLAN" means this 1998 Stock Plan, as amended from time to time.
(s) "PURCHASER" means an Employee or Consultant who exercises a Stock
Purchase Right.
(t) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(u) "STOCK PURCHASE RIGHT" means the right to purchase Restricted Stock
granted pursuant to Section 11 of the Plan.
(v) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 3,270,000 Shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
<PAGE> 3
If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and Officers. With respect
to grants of Options or Stock Purchase Rights to Employees who are also
officers or directors of the Company, the Plan shall be administered by (A)
the Board if the Board may administer the Plan in compliance with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3")
with respect to a plan intended to qualify thereunder as a discretionary plan,
or (B) a Committee designated by the Board to administer the Plan, which
Committee shall be constituted in such a manner as to permit the Plan to
comply with Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary plan. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to directors,
non-director officers and Employees who are neither directors nor officers.
(iii) Administration With Respect to Consultants and Other Employees.
With respect to grants of Options or Stock Purchase Rights to Employees or
Consultants who are neither directors nor officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate and securities laws and of the Code
(the "Applicable Laws"). Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(j) of the Plan;
(ii) to select the officers, Consultants and Employees to whom Options
and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
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<PAGE> 4
(iv) to determine the number of shares of Common Stock to be covered by
each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to the share price and any restriction or limitation, based in each case on
such factors as the Administrator shall determine, in its sole discretion);
(vii) to determine the terms and restrictions applicable to Stock
Purchase Rights and the Restricted Stock purchased by exercising such Stock
Purchase Rights; and
(viii) to make any other such determinations with respect to awards
under the Plan as it shall deem appropriate.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and Purchasers and any other holders of any Options or Rights.
5. Eligibility for Options.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of any Stock Option,
the term shall be no more than ten (10) years from the
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<PAGE> 5
date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of such Option,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of the grant.
(B) granted to any person, the per Share exercise price shall be no
less than 85% of the Fair Market Value per Share on the date of grant.
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<PAGE> 6
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (i) cash, (ii)
check, (iii) other Shares which (x) in the case of Shares acquired upon exercise
of an Option either have been owned by the Optionee for more than six months on
the date of surrender or were not acquired, directly or indirectly, from the
Company, and (y) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised, (iv) authorization for the Company to retain from the total number of
Shares as to which the Option is exercised that number of Shares having a Fair
Market Value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised, (v) delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds required to
pay the exercise price, (vi) by delivering an irrevocable subscription agreement
for the Shares which irrevocably obligates the option holder to take and pay for
the Shares not more than twelve months after the date of delivery of the
subscription agreement, (vii) any combination of the foregoing methods of
payment, (viii) or such other consideration and method of payment for the
issuance of Shares to the extent permitted under Applicable Laws. In making its
determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company (Section 409 of the California General Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, but only within ninety (90)
days after the date of such termination (or such other period as is set out by
the Administrator in the Option Agreement, but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent that Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date
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<PAGE> 7
of such termination, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event of termination of an Optionee's Consulting relationship
or Continuous Status as an Employee as a result of his disability (as determined
by the Board in accordance with the policies of the Company), Optionee may, but
only within six (6) months from the date of such termination (or such other
longer period as is set out by the Administrator in the Option Agreement, but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise the Option to the extent otherwise entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase Restricted Stock. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer, which shall in no event exceed
one-hundred twenty (120) days from the date of grant of the Stock Purchase
Right. For these purposes, the price to be paid shall be no less than 85% of
fair market value on the date of grant of the Stock Purchase Right or, in the
case of a greater than 10% shareholder, no less than 100% of the fair market
value on the date of grant. The offer shall be accepted by execution of a
Restricted Stock agreement in the form determined by the Administrator. Shares
purchased pursuant to the grant of a Stock Purchase Right shall be referred to
herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the Purchaser's
employment with the Company for any reason (including death or Disability). The
-7-
<PAGE> 8
purchase price for Shares repurchased pursuant to the Restricted Stock agreement
shall be the original price paid by the Purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option with respect to the Restricted Stock shall lapse at such rate as the
Committee may determine, but in no event as to less than 20% of the total shares
granted annually.
(c) Other Provisions. The Restricted Stock agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock agreements need not be the same with respect to
each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees or Purchasers may satisfy withholding
obligations as provided in this paragraph. When an Optionee or Purchaser incurs
tax liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee or Purchaser is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee or Purchaser may satisfy the
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued upon exercise of the Option, or the Shares to be issued in
connection with the Stock Purchase Right, if any, that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee or Purchaser to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option or Right as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of the
Administrator;
(d) if the Optionee is subject to Rule 16b-3, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee or Purchaser and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee or
Purchaser shall receive the full number of Shares with respect to which the
Option or Stock Purchase Right is exercised but such Optionee or Purchaser shall
be unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.
-8-
<PAGE> 9
13. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option or Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options or Stock Purchase Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the Company,
or of a merger in which the successor corporation does not agree to assume the
Option or Stock Purchase Right or substitute an equivalent Option or Stock
Purchase Right, the Board shall notify Optionees and Purchasers at least fifteen
(15) days prior to such proposed action and, in its discretion, permit Optionees
to exercise their Options to the extent already vested or make a determination
to accelerate vesting of any outstanding Options or Stock Purchase Rights. To
the extent it has not been previously exercised, the Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.
14. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee or
Purchaser under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options and Stock Purchase Rights
already granted and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser and the Board, which
agreement must be in writing and signed by the Optionee or Purchaser and the
Company.
16. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the
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<PAGE> 10
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
20. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, annual financial statements of the Company. The Company shall not
be required to provide such information if the issuance of Options under the
Plan is limited to key employees whose duties in connection with the Company
assure their access to equivalent information.
-10-
<PAGE> 1
EXHIBIT 99.4
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
Optionee's Name
Address
You have been granted an option, consisting of the Stock Option Agreement
attached hereto as Exhibit A and the Notice of Stock Option Grant (together,
the "Option") to purchase Common Stock of MAVERICK SEMICONDUCTOR, INC., (the
"Company") as follows:
<TABLE>
<S> <C>
Date of Grant
--------------------------
Vesting Date
--------------------------
Option Price Per Share $
--------------------------
Total Number of Shares Granted
--------------------------
Total Price of Shares Granted $
--------------------------
Type of Option ___ Incentive Stock Option
___ Nonqualified Stock Option
Term/Expiration Date 10 years/
--------------------------
</TABLE>
Exercise Schedule:
This Option may be exercised, in whole or in part, in accordance with the
Vesting Schedule set out below.
-1-
<PAGE> 2
Vesting Schedule
<TABLE>
<CAPTION>
Date of Vesting Number of Shares
--------------- ----------------
<S> <C>
Twelve months from
Vesting Date (_________) 25% (__________)
Thereafter, every 3d month on the ____ day of such month, 1/16 (____) of
the total number of Shares until fully vested. In the event of fractional
Shares, the monthly number of Shares shall be adjusted accordingly to the
nearest whole Share.
</TABLE>
Termination Period:
Option may be exercised for thirty (30) days after termination of
employment or consulting relationship except as set out in Sections 7 and 8 of
the Stock Option Agreement (but in no event later than the Expiration Date).
Exercise of this Option shall be on a form of Exercise Notice provided by the
Company.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION
OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1998 STOCK PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related to it and represents that he or she is familiar with the
terms and provisions of the Plan and this Option. Optionee accepts this Option
subject to all such terms and provisions. Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option.
-2-
<PAGE> 3
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the 1998 STOCK PLAN and the Stock Option Agreement, all
of which are attached and made a part of this document.
OPTIONEE: MAVERICK SEMICONDUCTOR, INC.
a California corporation
By
- ------------------------------ -------------------------------------
Signature
- ------------------------------ Title
Print Name ----------------------------------
I am unmarried ________________.
Spousal consent attached __________.
I am married and have previously filed a spousal consent with the Company. _____
-3-
<PAGE> 4
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in the
Plan and this Option, the undersigned hereby agrees to be irrevocably bound by
the terms and conditions of the Plan and this Option and further agrees that
any community property interest shall be similarly bound. The undersigned
hereby appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Option.
----------------------------
Spouse of Optionee
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<PAGE> 5
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
EXHIBIT A TO NOTICE OF GRANT
STOCK OPTION AGREEMENT
1. Grant of Option. MAVERICK SEMICONDUCTOR, INC., a California
corporation (the "COMPANY"), hereby grants to the Optionee (the "OPTIONEE")
named in the Notice of Grant, an option (the "OPTION") to purchase a number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "EXERCISE PRICE"), subject to the terms,
conditions and definitions of the 1998 Stock Plan (the "PLAN") adopted by the
Company, which is incorporated herein by reference. In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form provided by the Company (the "EXERCISE NOTICE"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "EXERCISED SHARES"), and
such other representations and agreements as to the holder's investment intent
with respect to the Exercised Shares as may be required by the Company pursuant
to the provisions of the Plan. The Exercise Notice shall be signed by the
Optionee and, if the Optionee is married, by the Optionee's spouse, and shall be
delivered in person or by certified mail to the Secretary of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised Shares
shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) such other consideration as is indicated on the Notice of Grant.
<PAGE> 6
4. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached as EXHIBIT B to the Notice of
Grant.
5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event of termination of
Optionee's consulting relationship or Continuous Status as an Employee, Optionee
may, to the extent otherwise so entitled at the date of such termination (the
"TERMINATION DATE"), exercise this Option during the Termination Period set out
in the Notice of Grant. To the extent that Optionee was not entitled to exercise
this Option at the date of such termination, or if Optionee does not exercise
this Option within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's Continuous Status as an
Employee as a result of disability (as determined by the Board in accordance
with the policies of the Company), Optionee may, but only within six (6) months
from the date of termination of employment (but in no event later than the date
of expiration of the term of this Option as set forth in Section 10 below),
exercise the Option to the extent otherwise so entitled at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
8. Death of Optionee. In the event of the death of Optionee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Option terms and Options granted to more than
ten percent (10%) shareholders shall apply to this Option.
11. Tax Consequences. Some of the federal and California tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonqualified Stock Option ("NSO"). If this Option does not qualify
as an ISO, the Optionee may incur regular federal income tax and California
income tax liability upon exercise. The Optionee will be treated
<PAGE> 7
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price. If the Optionee is an
employee, the Company will be required to withhold from his or her compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
(ii) Incentive Stock Option ("ISO"). If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or California income
tax liability upon its exercise, although the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject the Optionee to alternative minimum tax
in the year of exercise.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year after
exercise AND two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, 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 LESSER OF (A) the difference between the FAIR
MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE and the aggregate
Exercise Price, or (B) the difference between the SALE PRICE of such Shares and
the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) the date two years after the grant date, or (ii) the
date one year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she may
be subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
-3-
<PAGE> 8
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
EXHIBIT B TO NOTICE OF GRANT
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : MAVERICK SEMICONDUCTOR, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Optionee is
acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the securities. Optionee understands that the certificate evidencing the
securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of exercise of the Option by the Optionee, such exercise will be
exempt from registration under the Securities Act. In the event the Company
later becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, ninety (90) days thereafter the securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including among other things: (1) the sale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, and the amount of
securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), if applicable.
<PAGE> 9
In the event that the Company does not qualify under Rule 701 at the time of
exercise of the Option, then the securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things: (1) the resale occurring not less than one year after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than two years, (2) the availability of certain
public information about the Company, (3) the sale being made through a broker
in an unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of
1934), and (4) the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.
(d) Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by Optionee (other than those
shares included in the registration) without the prior written consent of the
Company or the underwriters managing such initial underwritten public offering
of the Company's securities for one hundred eighty (180) days from the effective
date of such registration, and (2) further agrees to execute any agreement
reflecting (1) above as may be requested by the underwriters at the time of the
public offering; provided however that the officers and directors of the Company
who own the stock of the Company also agree to such restrictions.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(f) Optionee understands that the certificate evidencing the Securities
may be imprinted, if required by the state of California, with a legend which
prohibits the transfer of the Securities without the consent of the Commissioner
of Corporations of California. At the time of exercise, Optionee will be
furnished with a copy of the applicable Commissioner's Rules with respect to
such restriction, if any.
Signature of Optionee:
________________________________________
Date:________________, 19__
<PAGE> 1
EXHIBIT 99.5
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT FOR UNVESTED SHARES
Secretary
MAVERICK SEMICONDUCTOR, INC.
683 River Oaks Parkway
San Jose, CA 95134
Dear Sir:
1. Exercise of Purchase Agreement. Effective as of today, ___________,
19__, the undersigned ("PURCHASER") hereby elects to exercise Purchaser's Right
to purchase _________ shares of the Common Stock (the "SHARES") of MAVERICK
SEMICONDUCTOR, INC. (the "COMPANY") under and pursuant to the Company's Stock
Plan, as amended (the "PLAN") and the Notice of Grant dated __________,19__
(together, the "PURCHASE Agreement"). Of these Shares, Purchaser has elected to
purchase __________ of those Shares which have become vested under the Vesting
Schedule set out in the Notice of Grant (the "VESTED SHARES") and __________
Shares which have not yet vested under such schedule (the "UNVESTED SHARES").
The Purchase Price for the Shares shall be $______ per Share, as set out in the
Notice of Grant, for an aggregate Purchase Price of $_________. If purchase is
permitted by promissory note, such purchase shall be made by delivery of
Purchaser's full recourse promissory note in the principal amount of $ in
substantially the form of Exhibit A attached hereto (the "NOTE"). In such case,
as security for the payment of the Note and any renewal or modification thereof,
Purchaser hereby pledges and grants to the Company a security interest in all of
the Shares pursuant to a Security Agreement in substantially the form attached
hereto as Exhibit B (the "SECURITY AGREEMENT"). As part of this pledge,
Purchaser will sign and deliver the escrow documents described in Section 6
below.
2. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Purchase Agreement and agrees
to abide by and be bound by their terms and conditions. Purchaser represents
that Purchaser is purchasing the Shares for Purchaser's own account for
investment and not with a view to, or for sale in connection with, a
distribution of any of such Shares.
3. Compliance with Securities Laws; Federal Restrictions on Transfer.
Purchaser has read and executed the Investment Representation Statement attached
as Exhibit B to the Notice of Grant. Purchaser represents that he or she
understands the matters set forth in the Investment Representation Statement and
that he or she is purchasing the Shares subject to the restrictions and
limitations set forth in that document.
4. Company's Repurchase Option. The Company or its assignee(s) shall
have the Purchase Agreement to repurchase all, but not less than all of the
Unvested Shares on the terms and conditions set forth in this section (the
"REPURCHASE OPTION") if the Purchaser should cease to be employed by the Company
for any reason or no reason, including without limitation death, disability,
voluntary resignation or termination by the Company with or without cause.
(a) Right of Termination Unaffected. Nothing in this Agreement shall be
construed to limit or otherwise affect in any manner whatsoever the right or
power of the Company to terminate Purchaser's employment at any time for any
reason or no reason, with or without cause. Purchaser shall be considered to be
employed by the Company if Purchaser is an officer, director or full-time
employee of the Company or any Parent or Subsidiary of the Company (as defined
in the Plan) or if the Board of Directors determines that Purchaser is rendering
substantial services as a part-time employee, consultant or independent
contractor to
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the Company or any Parent or Subsidiary of the Company (as defined in the Plan).
In case of any dispute, the Board of Directors of the Company shall have
discretion to determine (i) whether Purchaser has ceased to be employed by the
Company and (ii) the date on which the employment relationship ceases (the
"TERMINATION DATE").
(b) Exercise of Repurchase Option. At any time within ninety (90) days
after Purchaser's Termination Date, the Company or its assignee(s) may elect to
repurchase the Unvested Shares purchased pursuant to the Purchase Agreement by
giving Purchaser (or Purchaser's personal representative as the case may be)
written notice of exercise of the Repurchase Option.
(i) Repurchase Price. The Company or its assignee(s) shall have the
option to repurchase from Purchaser all, but not less than all, of the
Unvested Shares (or from Purchaser's personal representative as the case may
be) at the Exercise Price (as defined in the Purchase Agreement), as such
price may be adjusted from time to time to reflect any subsequent stock
dividend, stock split, reverse stock split or recapitalization of the Company
(the "REPURCHASE PRICE").
(ii) Payment of Repurchase Price. The Repurchase Price shall be
payable, at the Purchase Agreement of the Company or its assignee(s), by check
or by cancellation of all or a portion of any outstanding indebtedness of
Purchaser to the Company (or, in the case of repurchase by an assignee, to the
assignee) or any combination thereof. The Repurchase Price shall be paid
without interest within 90 days after the Termination Date.
(iii) Lapse of Repurchase Option. All Unvested Shares held by the
Purchaser shall be released from the Company's Repurchase Option and cease to
be Unvested Shares according to the Vesting Schedule set out in the Notice of
Grant.
5. Right of First Refusal. Before any Shares held by Purchaser or any
transferee (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including transfer by gift or operation of law),
the Company or its assignee(s) shall have a right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section (the "RIGHT OF
FIRST REFUSAL").
(a) Notice of Proposed Transfer. The Holder of the Shares shall deliver
to the Company a written notice (the "SALE NOTICE") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("PROPOSED TRANSFEREE"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "OFFERED Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
(b) Bona Fide Transfer. Within ten (10) days after receipt of the Sale
Notice, the Company shall determine the bona fide nature of the proposed
voluntary transfer and give the Purchaser written notice of the Company's
determination. If the proposed transfer is deemed not to be bona fide, the
Purchaser shall be responsible for providing additional information to the
Company to show the bona fide nature of the proposed transfer. The Company shall
have the right to demand further assurances from the Purchaser and the Proposed
Transferee (in a form satisfactory to the Company) that the Sale Notice fully
and accurately sets forth all of the terms and conditions of the proposed
transfer, including, without limitation, assurance that the Sale Notice fully
and accurately sets forth the consideration actually to be paid for the Shares
and all transactions, directly or indirectly, between the parties which may have
affected the price the Proposed Transferee was willing to pay for the Shares.
(c) Exercise of Right of First Refusal by Company. In the event that
the proposed transfer is deemed to be bona fide, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect
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to purchase all, but not less than all, of the Shares proposed to be transferred
to any one or more of the Proposed Transferees, at the purchase price determined
in accordance with subsection (c) below. Such written notice may be given within
thirty (30) days after receipt of the Sale Notice.
(d) Purchase Price. The purchase price ("PURCHASE PRICE") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(e) Payment. Payment of the Purchase Price shall be made, at the
Purchase Agreement of the Company or its assignee(s), by cancellation of all or
a portion of any outstanding indebtedness of the Holder to the Company (or, in
the case of repurchase by an assignee, to the assignee), or by any combination
thereof within sixty (60) days after receipt of the Sale Notice, in the manner
and at the times set forth in such notice.
(f) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s), then the Holder may sell or otherwise transfer
such Shares to that Proposed Transferee at the Offered Price or at a higher
price, provided that such sale or other transfer is consummated within one
hundred twenty (120) days after the date of the Notice and provided further that
any such sale or other transfer is effected in accordance with any applicable
securities laws and the Proposed Transferee agrees in writing that the
provisions of this Section shall continue to apply to the Shares in the hands of
such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal before any Shares held by the Holder may be
sold or otherwise transferred.
(g) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Purchaser's lifetime or on the Purchaser's death by will or
intestacy to the Purchaser's immediate family or a trust for the benefit of the
Purchaser's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(h) 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 Purchase Agreement if such transfer is in
connection with a Change in Capitalization, as described in Section 13 of the
Plan. If the consideration received pursuant to such transfer or exchange
consists of stock of a Parent or Subsidiary, such consideration shall remain
subject to the Right of First Refusal unless the provisions of paragraph 5(j)
result in a termination of the Right of First Refusal.
(i) 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
Purchaser has attempted a transfer, to one or more persons as may be selected by
the Company.
(j) Early Termination of the Right of Refusal. The other provisions of
this paragraph 5 notwithstanding, the Right of First Refusal shall terminate,
and be or no further force and effect upon (i) a merger of the Company or
transaction in which over 80% of the voting power of the Company is transferred
and following which the shareholders of the Company have less than 20% of the
voting power or the resulting or combined entity and shall not apply with
respect to shares sold in such offering or acquisition , 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
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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.
6. Escrow. As security for the faithful performance of this Agreement,
Purchaser agrees, immediately upon receipt of the certificate(s) evidencing the
Shares, to deliver such certificate(s), together with a stock power in the form
of ATTACHMENT 1 attached hereto, executed by Purchaser and by Purchaser's
spouse, if any (with the date and number of Shares left blank), to the Secretary
of the Company or its designee ("Escrow Holder"), who is hereby appointed to
hold such certificate(s) and stock power in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Agreement. Such appointment shall be evidenced
by an executed form of Joint Escrow Instructions, attached hereto as ATTACHMENT
2. Purchaser and the Company agree that Escrow Holder shall not be liable to any
party to this Agreement (or to any other party) for any actions or omissions
unless Escrow Holder is grossly negligent relative thereto. The Escrow Holder
may rely upon any letter, notice or other document executed by any signature
purported to be genuine and may rely on advice of counsel and obey any order of
any court with respect to the transactions contemplated herein. The Shares shall
be released from escrow upon termination of both the Repurchase Purchase
Agreement and the Right of First Refusal; provided, however, that such release
shall not affect the rights of the Company with respect to any pledge of Shares
to the Company.
7. Rights as Shareholder. Subject to the terms and conditions of this
Agreement, Purchaser shall have all of the rights of a shareholder of the
Company with respect to the Shares from and after the date that Purchaser
delivers full payment of the Exercise Price until such time as Purchaser
disposes of the Shares or the Company and/or its assignee(s) exercises the
Repurchase Purchase Agreement or Right of First Refusal hereunder. Upon such
exercise, Purchaser shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in
accordance with the provisions of this Agreement, and Purchaser shall forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.
8. Tax Consequences.
(a) Tax Consultation. 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
consultants 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.
(B) Section 83(b) Election For Unvested Shares. If the Right being
exercised is for unvested shares, Purchaser hereby acknowledges that Purchaser
has been informed that, with respect to the purchase of unvested shares, unless
an election is filed by the Purchaser with the Internal Revenue Service within
thirty (30) days of the purchase of the Shares, electing pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended (and similar state tax
provisions if applicable) to be taxed currently for income tax purposes on any
difference between the purchase price of the Shares and their fair market value
on the date of purchase, the Purchaser will be required to include in income an
amount equal to the excess, if any, of the fair market value of the Shares, at
the time the Company's Repurchase Option lapses over the purchase price for such
Shares. Purchaser represents that Purchaser has consulted any tax consultant(s)
Purchaser deems advisable in connection with the purchase of the Shares or the
filing of the Election under Section 83(b) and similar tax provisions. A form of
Election Under Section 83(b) is attached hereto as ATTACHMENT 3 for reference.
PURCHASER HEREBY ASSUMES ALL RESPONSIBILITY FOR FILING SUCH ELECTION AND PAYING
ANY TAXES RESULTING FROM SUCH ELECTION OR THE LAPSE OF THE REPURCHASE
RESTRICTIONS ON THE SHARES.
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9. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Purchaser understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL
PURCHASE AGREEMENTS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
EXERCISE NOTICE AND RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF
REPURCHASE AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.
Purchaser understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner. In
the event such a restriction is required by the state of California, a copy of
the Commissioner's Rules will be furnished to Purchaser and an additional legend
may be required on the Shares.
(i) Stop-Transfer Notices. Purchaser agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(ii) Refusal to Transfer. The Company shall not be required (A) 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 (B) 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 shall have been so transferred.
10. Market Standoff Agreement. Purchaser hereby agrees that if so
requested by the Company or any representative of the underwriters in connection
with any registration of the offering of any securities of the Company under the
1933 Act, Purchaser shall not sell or otherwise transfer any Shares or other
securities of the Company during the one hundred eighty (180) day period
following the effective date of a registration statement of the Company filed
under the 1933 Act; provided, however, that such restriction shall only apply to
the first registration statement of the Company to become effective under the
1933 Act which include securities to be sold on behalf of the Company to the
public in an underwritten public offering under the 1933 Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such one hundred eighty (180) day
period.
11. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Purchaser and his or her heirs, executors, administrators, successors and
assigns.
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12. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Purchaser or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Purchaser.
13. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
14. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
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. Delivery of Payment. Purchaser herewith delivers to the Company the
full Exercise Price for the Shares.
17. Entire Agreement. The Plan and Notice of Grant/Purchase Agreement
are incorporated herein by reference. This Agreement, the Plan and the Notice of
Grant/Purchase Agreement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and is governed by
California law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
PURCHASER: MAVERICK SEMICONDUCTOR, INC.
___________________________________ By_________________________________
(Signature)
Its________________________________
Address: Address:
683 River Oaks Parkway
San Jose, CA 95134
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MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
ATTACHMENT 1 TO RESTRICTED STOCK PURCHASE AGREEMENT
STOCK POWER AND ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Purchase
Agreement dated as of __________, 19__, the undersigned hereby sells, assigns
and transfers unto___________________________________________, _______________
shares of the Common Stock of MAVERICK SEMICONDUCTOR, INC., a California
corporation, standing in the undersigned's name on the books of said corporation
represented by Certificate No. __________ delivered herewith, and does hereby
irrevocably constitute the Secretary of said corporation as attorney-in-fact,
with full power of substitution, to transfer said stock on the books of said
corporation.
Dated: __________, 19__
___________________________________
(Signature)
___________________________________
(Please Print Name)
___________________________________
(Spouse's Signature, if any)
___________________________________
(Please Print Name)
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MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
ATTACHMENT 2 TO RESTRICTED STOCK PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
___________, 199__
Secretary
MAVERICK SEMICONDUCTOR, INC.
683 River Oaks Parkway
San Jose, CA 95134
Dear Sir:
As Escrow Agent for both MAVERICK SEMICONDUCTOR, INC., a
California corporation ("Corporation"), and the undersigned purchaser of stock
of the Corporation ("Purchaser"), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement"), dated as of __________, 19__, to which a
copy of these Joint Escrow Instructions is attached, in accordance with the
following instructions:
1. In the event the Corporation and/or any assignee of the
Corporation (referred to collectively for convenience herein as the
"Corporation") exercises the Repurchase Option set forth in the Agreement, the
Corporation shall give to Purchaser and you a written notice specifying the
number of shares of stock to be purchased, the purchase price, and the time for
a closing hereunder at the principal office of the Corporation. Purchaser and
the Corporation hereby irrevocably authorize and direct you to close the
transaction contemplated by such notice in accordance with the terms of said
notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against the
simultaneous delivery to you of the purchase price (by check or by cancellation
of any debt owed by Purchaser to the Corporation) for the number of shares of
stock being purchased pursuant to the exercise of the Repurchase Option.
3. Purchaser irrevocably authorizes the Corporation to deposit
with you any certificates evidencing shares of stock to be held by you hereunder
and any additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with the Department of Corporations of
the State of California of an Application for Consent to Transfer Securities
Subject to Legend or Escrow Condition Pursuant to Section 25151 of the
California Corporate Securities Law of 1968. Subject to the provisions of this
paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder
of the Corporation while the stock is held by you.
4. Upon written request of the Purchaser after each successive
one-year period from the date of the Agreement, unless the Repurchase Option has
been exercised, you will deliver to Purchaser a certificate or certificates
representing so many shares of stock as are not then subject to the Repurchase
Option. Ninety days after cessation of Purchaser's service to the Company, you
will deliver to Purchaser a certificate or certificates representing the
aggregate number of shares sold and issued pursuant to the Agreement and not
purchased by the Corporation or its assignees pursuant to exercise of the
Repurchase Option.
Notwithstanding the foregoing, none of the certificates
representing the shares of stock deposited under these escrow instructions shall
be released to the Purchaser if the Purchaser's Note given in payment for such
shares has not been paid in full. So long as any Note is outstanding, the shares
shall be held by you as collateral for the obligation
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under the Note. Subject to the provisions of this paragraph 4, upon payment of
the Note in full the certificates representing the shares may be released and
delivered to the Purchaser. In the event Purchaser defaults in payment of the
Note when due, you shall, upon written request of the Corporation, deliver the
certificate evidencing the shares of stock and the stock assignments to the
Corporation to enable the Corporation to exercise its rights as a secured party
under the Commercial Code of the State of California.
5. If at the time of termination of this escrow you should have
in your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged of
all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith and in the exercise of your own good judgment, and any act done or
omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow Instructions
or any documents deposited with you.
11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be Secretary of the Corporation or if you shall
resign by written notice to each party. In the event of any such termination,
the Corporation shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
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15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten (10) days' advance written notice to each of the other parties
hereto.
CORPORATION: MAVERICK SEMICONDUCTOR, INC.
683 River Oaks Parkway
San Jose, CA 95134
PURCHASER: ______________________________
______________________________
______________________________
ESCROW AGENT: Secretary
MAVERICK SEMICONDUCTOR, INC.
683 River Oaks Parkway
San Jose, CA 95134
16. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
17. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
Very truly yours,
MAVERICK SEMICONDUCTOR, INC.
a California corporation
By_________________________________
Title______________________________
PURCHASER
___________________________________
ESCROW AGENT
___________________________________
Secretary
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MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
1998 STOCK PLAN
ATTACHMENT 3 TO RESTRICTED STOCK PURCHASE AGREEMENT
ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986
The undersigned Taxpayer hereby elects, pursuant to the provisions of Section
83(b) of the Internal Revenue Code of 1986,. as amended, to include in taxable
income for the Taxpayer's current taxable year, as compensation for services,
the excess, if any, of the fair market value of the property described below at
the time of transfer over the amount paid for such property.
1. Taxpayer's Name: ______________________________________________________
Taxpayer's Address: ___________________________________________________
___________________________________________________
Social Security Number:________________________________________________
2. The property with respect to which the election is made is described as
follows: ___________ shares of Common Stock of MAVERICK SEMICONDUCTOR,
INC., a California corporation (the "Company"), which is Taxpayer's
employer or the corporation for whom the Taxpayer has performed
services.
3. The date on which the shares were transferred was ___________, 19__,
and this election is made for calendar year 19__.
4. The shares are subject to the following restrictions:
[x] The Company may repurchase all or a portion of the shares at the
Taxpayer's original purchase price under certain conditions at
the time of Taxpayer's termination of employment or services.
[x] A right of first refusal in the Company for vested shares at
fair market value upon termination of employment with the
Company.
5. The fair market value of the shares (without regard to restrictions
other than restrictions which by their terms will never lapse) was
$_________ per share at the time of transfer.
6. The amount paid for such shares was $________ per share.
7. The Taxpayer has submitted a copy of this statement to the Company as
the Taxpayer's employer or the corporation for whom the Taxpayer has
performed services.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS") (AT THE
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS) WITHIN 30 DAYS AFTER
THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR ABOVE STATED. THE ELECTION CANNOT BE
REVOKED WITHOUT THE CONSENT OF THE IRS.
Dated: __________, 19__
___________________________________
Taxpayer's Signature
___________________________________
Spouse's Signature (if any)
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<PAGE> 12
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
EXHIBIT A
FULL RECOURSE PROMISSORY NOTE
$_________ __________, California
____________, 199_
FOR VALUE RECEIVED, ______________, an individual ("Borrower"),
hereby promises to pay to the order of Maverick Semiconductor, Inc., a
California corporation ("Company") the principal sum
of__________________________, plus interest which is compounded in accordance
herewith, on the date (the "Maturity Date") which is the _______anniversary of
the date of this Note; and to pay interest in arrears on said sum, or such
lesser amount as shall from time to time be outstanding hereunder upon
prepayment (to the extent thereof) and on the Maturity Date, at an annual rate
of interest (based on a year of 365 days and actual days elapsed) equal to the
applicable federal rate (the "Rate") for the date of this Note, as announced by
the Internal Revenue Service with respect to deemed demand loans made by a
company to its service-provider.
1. PAYMENT TERMS.
1.1. Location of Payment. Borrower shall make all payments hereunder to
Company at__________________________ or to such other location as the holder
hereof shall specify in writing to Borrower, in lawful money of the United
States and in same day or immediately available funds.
1.2. Principal and Interest Payments; Compounding of Interest. The
principal amount of this Note shall be due and payable in a single installment
due on the Maturity Date. Accrued interest on the principal amount of this Note
shall be due and payable on prepayment, to the extent thereof and on the
Maturity Date. On each anniversary of the date of this Note, all interest then
accrued on this Note shall be added to the principal amount hereof and shall
thereafter bear interest at the rates set forth herein.
1.3. Prepayment.
(a) At his option, Borrower may, upon three (3) business day's
notice to Company, prepay this Note in whole or in part without penalty.
(b) If Borrower proposes to sell, transfer or assign any shares
of the shares of stock which are pledged to secure this Note pursuant to the
Security Agreement (as hereinafter defined), then the principal amount of this
Note shall be prepaid in an amount proportionally equal to the proportion which
the shares which are to be sold, transferred or assigned bears to the original
number of shares pledged under the Security Agreement (as adjusted for any stock
splits, recapitalizations, etc.). Such prepayment shall be made simultaneous
with such sale, transfer or assignment.
1.4. Date of Payment. Whenever any payment due hereunder shall fall due
on a day other than a business day, such payment shall be made on the next
succeeding business day, and such extension of time shall be included in the
computation of interest.
1.5. Late Payments. If any amounts required to be paid by Borrower under
this Note remain unpaid after such amounts are due, Borrower shall pay interest
on the aggregate, outstanding balance of such amounts from the date due until
those amounts are paid in full at a per annum rate equal to the Rate plus two
percent (2%).
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1.6. Notations on Note. Borrower hereby authorizes Company to record on
the schedule(s) annexed to this Note the date and amount of each payment or
prepayment of principal or interest made by Borrower.
1.7. Usury Savings Clause. Notwithstanding any other term of this Note,
Company shall never be entitled to receive, collect or apply as interest on this
Note, any amount in excess of the maximum rate of interest (the "Maximum Rate")
which Company is allowed to charge or receive under applicable law and, if
Company ever receives, collects or applies as interest any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment of
principal and treated under this Note as such; and, if the principal of this
Note is paid in full, any remaining excess shall forthwith be paid to Borrower.
In furtherance of the foregoing, Borrower and Company (by its acceptance of this
Note) stipulate and agree that none of the terms and provisions contained in
this Note shall ever be construed to create a contract to pay interest at a rate
in excess of the Maximum Rate. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Rate, Borrower
and Company shall, to the maximum extent permitted under applicable law, (i)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread, in equal parts, the total amount
of interest throughout the entire contemplated term of this Note so that the
interest rate is uniform throughout the entire term thereof; provided, that if
this Note is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received would exceed the Maximum
Rate, then Company shall refund to Borrower the amount of such excess or credit
against the principal of this Note, and, in such event, Company shall not be
subject to any penalties provided by law for contracting for, charging or
receiving interest in excess of the Maximum Rate.
2. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Company that this Note has been duly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower,
enforceable against him in accordance with its terms, except as the
enforceability thereof may be affected by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and except as the
availability of certain equitable remedies may be limited by certain equitable
principles of general applicability.
3. SECURITY. This Note is secured by that certain Security Agreement dated as of
the date of this Note (the "Security Agreement") from Borrower in favor of
Company.
4. EVENTS OF DEFAULT. The occurrence or existence of any one or more of the
following shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay when due any principal, interest or other
amount payable under the terms of this Note and such failure shall continue for
ten (10) days; or
(b) Borrower shall fail to observe or perform any other covenant,
obligation, condition or agreement contained in this Note or the Security
Agreement and such failure shall continue for ten (10) days after Company
notifies Borrower of such failure; or
(c) Any representation or warranty made by Borrower to Company in this
Note or the Security Agreement, shall be false, incorrect, incomplete or
misleading in any material respect when made; or
(d) Any of the following shall occur (i) a receiver, trustee or
custodian shall be appointed for Borrower or all or a substantial part of his
property, (ii) Borrower shall make a general assignment for the benefit of
creditors, (iii) Borrower shall become insolvent (as such term may be defined or
interpreted under any applicable statute), (iv) a voluntary or involuntary case
or other proceeding seeking relief with respect to
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<PAGE> 14
Borrower or his debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect shall be commenced; or
(e) Borrower's consulting or employment relationship with Company shall
terminate for any reason.
5. REMEDIES. Upon the occurrence or existence of any Event of Default (other
than an Event of Default referred to in Section 4(d)) and at any time thereafter
during the continuance of such Event of Default, Company may by written notice
to Borrower, declare all outstanding obligations payable by Borrower hereunder
to be immediately due and payable without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein to the contrary notwithstanding. Upon the occurrence or
existence of any Event of Default described in Section 4(d) immediately and
without notice, all outstanding obligations payable by Borrower hereunder shall
automatically become immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding. In addition
to the foregoing remedies, upon the occurrence or existence of any Event of
Default, Company may exercise any right, power or remedy permitted to it by the
Security Agreement or law, either by suit in equity or by action at law, or
both.
6. NOTICES. All notices, demands or consents required or permitted under this
Note shall be in writing and shall be delivered personally or sent by national
overnight courier service or by registered or certified, return receipt
requested mail to the address set forth, with respect to Borrower, below his
signature on this Note and, with respect to Company, at the address indicated in
Section 1.1 of this Note, or to such other address as the recipient of any
notice shall have notified the other. All notices, demands or consents shall be
deemed effective upon personal delivery or three (3) days following dispatch in
the United States mail in accordance with this section, or one (1) business day
following deposit with any national overnight courier service in accordance with
this section. The requirements of this section shall be strictly followed and
the terms of this provision shall be strictly construed and applied.
7. MISCELLANEOUS. Borrower shall pay all reasonable fees and expenses, including
reasonable attorneys' fees, incurred by Company in the enforcement or attempt to
enforce any of Borrower's obligations hereunder not performed when due. Borrower
hereby waives notice of presentment, demand, protest or notice of any other
kind. This Note shall be governed by and construed in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, Borrower has executed this Note as of the day
and year first above written.
___________________________________
Borrower
Address:
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PAYMENTS
Principal
or Interest
Date Payments Notation By
- ---- ----------- -----------
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<PAGE> 16
MAVERICK NETWORKS
(FORMERLY KNOWN AS MAVERICK SEMICONDUCTOR, INC.)
EXHIBIT B TO RESTRICTED STOCK PURCHASE AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made as of the _____ day of
______________, 199__ between MAVERICK SEMICONDUCTOR, INC., a California
corporation ("PLEDGEE" or the "Company"), and __________ ("Pledgor").
Recitals
Pledgor purchased an aggregate of________ shares of Common Stock
of MAVERICK SEMICONDUCTOR, INC. . (the "Stock") under a Restricted Stock
Purchase Agreement dated _____________, 199__ (the "Purchase Agreement"),
between Pledgor and Pledgee. As payment for the Stock, Pledgor delivered a
Promissory Note (the "Note") in an amount of $__________.
NOW THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In order to
secure Pledgor's obligation to pay the Note in full, Pledgor, pursuant to the
Commercial Code of the State of California, hereby pledges all of the Stock
(herein sometimes referred to as the "Collateral") represented by certificates
number , as well as all other stock owned in the Company by Pledgor. In
addition, if the Company so requests, Pledgor agrees to collateralize this Note
with additional property deemed satisfactory by the Company.
The pledged Stock (together with an executed blank stock assignment for use in
transferring all or a portion of the Stock to Pledgee if, as and when required
pursuant to this Security Agreement) shall be delivered to the Secretary of
Pledgee, or such other person designated by the Company ("Escrow Agent") to be
held pursuant to an Escrow Agreement attached hereto (the "Escrow Agreement") as
security for the repayment of the Note, and any extensions or renewals thereof.
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to Pledgee,
its successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the
principal sum of the Note secured hereby, together with interest thereon, at the
time and in the manner provided in the Note.
(b) Encumbrances. The Stock is not subject to any
encumbrances, defenses and liens other than the security interest granted
hereunder, and Pledgor will not further encumber the Stock in any manner without
the prior written consent of Pledgee.
(c) Margin Regulations. In the event that Pledgee's Common
Stock becomes margin-listed by the Federal Reserve Board subsequent to the
execution of this Security Agreement, and Pledgee is classified as a "lender"
within the meaning of the regulations under Part 207 of Title 12 of the Code of
Federal Regulations ("Regulation G"), Pledgor agrees to cooperate with Pledgee
in making any amendment to the Note or providing any additional collateral as
may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as
all payments of principal and interest are made as they become due under the
terms of the Note, Pledgor shall have the right to vote all of the Stock pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes
declared or made in the capital structure of Pledgee, all new, substituted and
additional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee and Escrow Agent under the terms of this
Security Agreement and the Escrow Agreement in the same manner as the Stock
originally pledged hereunder. In the event of substitution of such securities,
Pledgor and Pledgee shall cooperate and execute such documents as are reasonable
so as to provide for the substitution of such Collateral and, upon such
substitution, references to "Stock" in this Security Agreement shall include the
substituted shares of capital stock of Pledgor as a result thereof.
5. Warrants and Rights. In the event that, during the term of
this pledge, subscription warrants or other rights or options shall be issued in
connection with the pledged Stock, such rights, warrants and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Stock
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<PAGE> 17
then held by Escrow Agent shall be immediately delivered to Escrow Agent, to be
held under the terms of this Security Agreement in the same manner as the Stock
pledged.
6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of ten (10) days or more; or
(b) Pledgor fails to perform any of the covenants set
forth in the Purchase Agreement or the Note or contained in this Security
Agreement for a period of ten (10) days after written notice thereof from
Pledgee.
In the case of an event of default, as set forth above, Pledgee
shall have the right to accelerate payment of the Note upon notice to Pledgor,
and Pledgee shall thereafter be entitled to pursue its remedies under the
California Commercial Code.
7. Withdrawal or Substitution of Collateral. Until the Note has
been paid in full, Pledgor shall not sell, withdraw, pledge, substitute or
otherwise dispose of all or any part of the Collateral without the prior written
consent of Pledgee.
8. Term. The within pledge of Stock shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
Stock shall be promptly delivered to Pledgor, subject to the terms of any other
agreement between Pledgor and Pledgee.
9. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against him, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
10. Escrow Agent Liability. The liability of the Escrow Agent
shall be limited as provided in the Escrow Agreement.
11. Miscellaneous.
(a) Invalidity of Particular Provisions. Pledgor and
Pledgee agree that the enforceability or invalidity of any provision or
provisions of this Security Agreement shall not render any other provision or
provisions herein contained unenforceable or invalid.
(b) Successors or Assigns. Pledgor and Pledgee agree that
all of the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts between California residents to be wholly performed within the State
of California.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"PLEDGEE"
________________________________________
a ___________ corporation
By:_____________________________________
Title:__________________________________
"PLEDGOR"
________________________________________
Address:
________________________________________
________________________________________
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<PAGE> 1
EXHIBIT 99.6
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.
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia inc., a Delaware corporation (the "Company"), hereby grants an
option to purchase Shares of its common stock to the optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Option Plan (the "Plan").
Date of Option Grant: September 30, 1995
Name of Optionee: Nancy Clark
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option: 10,000
Exercise Price per Share: $0.001
Vesting Start Date: September 30, 1995
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN,
A COPY OF WHICH IS ALSO ENCLOSED.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
Attachment
<PAGE> 2
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
NONSTATUTORY STOCK OPTION This option is not intended to be an incentive
stock option under section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING Your right to exercise this option vests monthly
beginning on the Vesting Start Date, as shown on
the cover sheet; provided, however, no portion of
this option may be exercised prior to the
expiration of one year from the Date of Grant, as
shown on the cover sheet. The number of Shares
which may be purchased under this option by you at
the Purchase Price on or after the first
anniversary of the Date of Grant shall be equal to
the difference between (i) the product (rounded to
the nearest integer) of the number of full months
of your continuous employment with the Company
(including all days of any approved leaves of
absence) from the Vesting Starting Date times the
number of Shares covered by this option times
.02083333, minus (ii) the number of Shares
purchased pursuant to this Option prior to such
exercise. The resulting number of Shares will be
rounded to the nearest whole number. No additional
Shares will vest after your Company service has
terminated for any reason.
TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Date of Grant,
as shown on the cover sheet. (It will expire
earlier if your Company service terminates, as
described below.)
REGULAR TERMINATION If your service as an employee of the Company (or
any subsidiary) terminates for any reason except
death or Disability, then your option will expire
at the close of business at Company headquarters
on the 30th day after your termination date.
Notwithstanding anything else in this Agreement to
the contrary, in the event that you cease to be
employed by the Company within one year from the
Date of Grant for any reason all rights to
purchase shares under this Option shall
immediately terminate.
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<PAGE> 3
DEATH If you die as an employee of the Company (or any
subsidiary), then your option will expire at the
close of business at Company headquarters on the
date 6 months after the date of death. During that
6-month period, your estate or heirs may exercise
the vested portion of your option.
DISABILITY If your service as an employee of the Company (or
any subsidiary) terminates because of your
Disability, then your option will expire at the
close of business at Company headquarters on the
date 6 months after your termination date.
"Disability" means that you are unable to engage
in any substantial gainful activity by reason of
any medically determinable physical or mental
impairment.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go on a military leave, a sick
leave or another bona fide leave of absence, if
the leave was approved by the Company in writing.
And your service terminates in any event when the
approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your service terminates for all
purposes under the Plan.
RESTRICTIONS ON EXERCISE The Company will not permit you to exercise this
option if the issuance of Shares at that time
would violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many Shares you wish
to purchase. Your notice must also specify how
your Shares should be registered (in your name
only or in your and your spouse's names as
community property or as joint tenants with right
of survivorship). The notice will be effective
when it is received by the Company.
If someone else wants to exercise this option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled
to do so.
PERIODS OF Any other provision of this Agreement
NONEXERCISABILITY notwithstanding, the Company shall have the right
to designate one or more periods of time, each of
which shall not exceed 180 days in length, during
which this option shall not be exercisable if the
Company determines (in its sole discretion) that
such limitation on exercise could in any way
facilitate a lessening of any restriction on
transfer pursuant to the Securities Act or any
state securities laws with respect to any issuance
of securities by the Company, facilitate the
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<PAGE> 4
registration or qualification of any securities by
the Company under the Securities Act or any state
securities laws, or facilitate the perfection of
any exemption from the registration or
qualification requirements of the Securities Act
or any applicable state securities laws for the
issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting
schedule set forth in this Agreement other than to
limit the periods during which this option shall
be exercisable.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the Shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Your personal check, a cashier's check or a
money order.
- Common Shares which have already been owned
by you any time period specified by the
Committee and which are surrendered to the
Company. The value of the Shares, determined
as of the effective date of the option
exercise, will be applied to the option
price.
- To the extent that a public market for the
Shares exists as determined by the Company,
by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a
securities broker to sell Shares and to
deliver all or part of the sale proceeds to
the Company in payment of the aggregate
Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or the sale of
shares acquired upon exercise of this option.
RESTRICTIONS ON RESALE By signing this Agreement, you agree not to sell
any option Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit a sale.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view to
the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act of
1933 but an exemption is available which requires
an investment representation or other
representation, you shall represent and agree at
the time of exercise that the Shares being
acquired upon exercising this option are being
acquired for investment, and not with a view to
the sale or distribution thereof,
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<PAGE> 5
and shall make such other representations as are
deemed necessary or appropriate by the Company and
its counsel.
THE COMPANY'S RIGHT OF In the event that you propose to sell, pledge or
FIRST REFUSAL otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you
must give a written "Transfer Notice" to the
Company describing fully the proposed transfer,
including the number of Shares proposed to be
transferred, the proposed transfer price and the
name and address of the proposed transferee. The
Transfer Notice shall be signed both by you and by
the proposed new transferee and must constitute a
binding commitment of both parties to the transfer
of the Shares. The Company shall have the right to
purchase all, and not less than all, of the Shares
on the terms of the proposal described in the
Transfer Notice (subject, however, to any change
in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of
First Refusal within 30 days after the date when
the Transfer Notice was received by the Company.
The Company's rights under this Subsection shall
be freely assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date when
it received the Transfer Notice, you may, not
later than 90 days following receipt of the
Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in the Transfer Notice within 60 days after
the date when the Company received the Transfer
Notice (or within such longer period as may have
been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee
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of the Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
RIGHT OF REPURCHASE Following termination of your employment for any
reason, the Company shall have the right to
purchase all of those Shares that you have or will
acquire under this option. If the Company fails to
provide you with written notice of its intention
to purchase such Shares before or within 30 days
of the date the Company receives written notice
from you of your termination of employment, the
Company's right to purchase such Shares shall
terminate. If the Company exercises its right to
purchase such Shares, the Company will consummate
the purchase of such Shares within 60 days of the
date of its written notice to you. The purchase
price for any Shares repurchased shall be the
higher of the Fair Market Value of those Shares on
the date of purchase or the aggregate Exercise
Price for those Shares and shall be paid in cash.
The Company's right of repurchase shall terminate
in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do
any of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will. Regardless of any marital
property settlement agreement, the Company is not
obligated to honor a notice of exercise from your
spouse or former spouse, nor is the Company
obligated to recognize such individual's interest
in your option in any other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any
subsidiaries) in any capacity. The Company (and
any subsidiaries) reserve the right to terminate
your service at any time and for any reason.
STOCKHOLDER RIGHTS You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for
your option Shares has been issued. No adjustments
are made for dividends or other rights if the
applicable record date occurs before your stock
certificate is issued, except as described in the
Plan.
6
<PAGE> 7
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the
Plan. Your option shall be subject to the terms of
the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of California.
THE PLAN AND OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan.
7
<PAGE> 8
This Agreement and the Plan constitute the entire
understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option
are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
8
<PAGE> 9
NOTICE OF EXERCISE
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia Inc.
830 Hillview Court #280
Milpitas, CA 95035
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Nonstatutory Stock Option Agreement for
Employees, Directors and Consultants of Armedia Inc. dated ____________, 199__
(the "Stock Option Agreement") and the 1996 Stock Incentive Plan (the "Plan") of
Armedia Inc. (the "Company"), I hereby elect to purchase ______________ shares
of the Class A Common Stock of the Company (the "Common Stock") at aggregate
exercise price of $___________. I enclose my check in the amount of
$___________.
The Common Stock is to be issued and registered in the name(s)
of:
_______________________________
_______________________________
I understand that there may be tax consequences as a result of
the purchase or disposition of the Common Stock, and I have consulted with any
tax consultants I wished to consult and I am not relying on the Company for any
tax advice. I understand that my exercise is governed by my Stock Option
Agreement and the Plan and agree to abide by and be bound by their terms and
conditions. I represent that the Common Stock is being acquired solely for my
own account and not as a nominee for any other party, or for investment, and
that I will not offer, sell or otherwise dispose of any such Common Stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
Dated: ____________, 199_.
___________________________________
(Signature)
___________________________________
(Please Print Name)
___________________________________
___________________________________
(Address)
<PAGE> 10
ADDENDUM
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
<PAGE> 11
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. PURPOSE 1
Section 2. DEFINITIONS. 1
(a) "Board of Directors"..........................................1
(b) "Code"........................................................1
(c) "Committee"...................................................1
(d) "Company".....................................................1
(e) "Disability"..................................................1
(f) "Employee"....................................................1
(g) "Exercise Price"..............................................2
(h) "Fair Market Value"...........................................2
(i) "ISO".........................................................2
(j) "Nonstatutory Option".........................................2
(k) "Option"......................................................2
(l) "Optionee"....................................................2
(m) "Plan"........................................................2
(n) "Service".....................................................2
(o) "Share".......................................................2
(p) "Stock".......................................................2
(q) "Stock Option Agreement"......................................2
(r) "Subsidiary"..................................................2
Section 3. ADMINISTRATION. 3
(a) Committee Membership..........................................3
(b) Committee Procedures..........................................3
(c) Committee Responsibilities....................................3
(d) Financial Reports.............................................4
Section 4. ELIGIBILITY. 5
(a) General Rule..................................................5
(b) Ten-Percent Shareholders......................................5
(c) Attribution Rules.............................................5
(d) Outstanding Stock.............................................5
Section 5. STOCK SUBJECT TO PLAN 6
(a) Basic Limitation..............................................6
(b) Additional Shares.............................................6
Section 6. TERMS AND CONDITIONS OF OPTIONS 6
(a) Stock Option Agreement........................................6
(b) Number of Shares..............................................6
</TABLE>
i
<PAGE> 12
<TABLE>
<S> <C> <C>
(c) Exercise Price................................................7
(d) Withholding Taxes.............................................7
(e) Exercisability................................................7
(f) Term..........................................................7
(g) Nontransferability............................................8
(h) Exercise of Options on Termination of Service.................8
(i) No Rights as a Shareholder....................................8
(j) Modification, Extension and Assumption of Options.............8
(k) Restrictions on Transfer of Shares............................9
Section 7. PAYMENT FOR SHARES 9
(a) General Rule..................................................9
(b) Surrender of Stock............................................9
(c) Promissory Notes..............................................9
(d) Cashless Exercise.............................................10
Section 8. ADJUSTMENT OF SHARES 10
(a) General.......................................................10
(b) Reorganizations...............................................10
(c) Reservation of Rights.........................................10
Section 9. LEGAL REQUIREMENTS 11
Section 10. NO EMPLOYMENT RIGHTS 11
Section 11. DURATION AND AMENDMENTS 11
(a) Term of the Plan..............................................11
(b) Right to Amend or Terminate the Plan..........................12
(c) Effect of Amendment or Termination............................12
Section 12. EXECUTION 12
</TABLE>
ii
<PAGE> 13
ARCUS TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to ac-quire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(d) "Company" shall mean Arcus Technology, Inc., a Delaware corporation.
(e) "Disability" shall mean a disability as determined by the Committee.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes of the Plan except the second
sentence of Section 4(a).
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<PAGE> 14
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
neither an ISO nor an option described in Code section 423.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Arcus Technology, Inc. 1996 Stock Option
Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power
2
<PAGE> 15
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
3
<PAGE> 16
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether
such Option is to be classified as an ISO or as a Nonstatutory Option,
and to specify the provisions of the Stock Option Agreement relating to
such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
and
(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Optionees, and all persons deriving their rights
from an Optionee. No member of the Committee shall be liable for any action that
he or she has taken or has failed to take in good faith with respect to the Plan
or any Option.
(d) Financial Reports. To the extent required by applicable law, not
less often than annually, the Company shall furnish to Optionees Company
financial statements, including a balance sheet, regarding the Company's
financial condition and results of operations, unless
4
<PAGE> 17
such Optionees have duties with the Company that assure them access to
equivalent information. Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Commit-tee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a Nonstatutory Option to
the extent required by applicable law) is at least 110 percent of the Fair
Market Value of a Share on the date of grant, and (ii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its share-holders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
5
<PAGE> 18
SECTION 5. STOCK SUBJECT TO PLAN
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares which may be issued under
the Plan (upon exercise of Options) shall not exceed ____________________
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options out-standing at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
6
<PAGE> 19
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant. To the
extent required by applicable law, the Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee in its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten (10) percent shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
7
<PAGE> 20
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a share-holder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another
8
<PAGE> 21
issuer) in return for the grant of new Options for the same or a different
number of Shares and at the same or a different Exercise Price or for other
consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such rights of repurchase, rights of first
refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
9
<PAGE> 22
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or 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 an
10
<PAGE> 23
Option. The grant of an Option pursuant to the Plan 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, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. The Plan shall terminate
11
<PAGE> 24
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Sub-section (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION
To record the adoption of the Plan by the Company, the Board of
Directors has caused its authorized officer to execute the same.
ARCUS TECHNOLOGY, INC.
By_________________________________
As Its_____________________________
12
<PAGE> 1
EXHIBIT 99.7
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.
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia inc., a Delaware corporation (the "Company"), hereby grants an
option to purchase Shares of its common stock to the optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Option Plan (the "Plan").
Date of Option Grant: February 1, 1998
Name of Optionee: Ajeya Prabhakar
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option: 20,000
Exercise Price per Share: $0.001
Vesting Start Date: February 1, 1998
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN,
A COPY OF WHICH IS ALSO ENCLOSED.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
Attachment
<PAGE> 2
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
NONSTATUTORY STOCK OPTION This option is not intended to be an incentive
stock option under section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING Your right to exercise this option vests monthly
beginning on the Vesting Start Date, as shown on
the cover sheet; provided, however, no portion of
this option may be exercised prior to the
expiration of one year from the Date of Grant, as
shown on the cover sheet. The number of Shares
which may be purchased under this option by you at
the Purchase Price on or after the first
anniversary of the Date of Grant shall be equal to
the difference between (i) the product (rounded to
the nearest integer) of the number of full months
of your continuous employment with the Company
(including all days of any approved leaves of
absence) from the Vesting Starting Date times the
number of Shares covered by this option times
.02083333, minus (ii) the number of Shares
purchased pursuant to this Option prior to such
exercise. The resulting number of Shares will be
rounded to the nearest whole number. No additional
Shares will vest after your Company service has
terminated for any reason.
TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Date of Grant,
as shown on the cover sheet. (It will expire
earlier if your Company service terminates, as
described below.)
REGULAR TERMINATION If your service as an employee of the Company (or
any subsidiary) terminates for any reason except
death or Disability, then your option will expire
at the close of business at Company headquarters
on the 30th day after your termination date.
Notwithstanding anything else in this Agreement to
the contrary, in the event that you cease to be
employed by the Company within one year from the
Date of Grant for any reason all rights to
purchase shares under this Option shall
immediately terminate.
2
<PAGE> 3
DEATH If you die as an employee of the Company (or any
subsidiary), then your option will expire at the
close of business at Company headquarters on the
date 6 months after the date of death. During that
6-month period, your estate or heirs may exercise
the vested portion of your option.
DISABILITY If your service as an employee of the Company (or
any subsidiary) terminates because of your
Disability, then your option will expire at the
close of business at Company headquarters on the
date 6 months after your termination date.
"Disability" means that you are unable to engage
in any substantial gainful activity by reason of
any medically determinable physical or mental
impairment.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go on a military leave, a sick
leave or another bona fide leave of absence, if
the leave was approved by the Company in writing.
And your service terminates in any event when the
approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your service terminates for all
purposes under the Plan.
RESTRICTIONS ON EXERCISE The Company will not permit you to exercise this
option if the issuance of Shares at that time
would violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many Shares you wish
to purchase. Your notice must also specify how
your Shares should be registered (in your name
only or in your and your spouse's names as
community property or as joint tenants with right
of survivorship). The notice will be effective
when it is received by the Company.
If someone else wants to exercise this option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled
to do so.
PERIODS OF Any other provision of this Agreement
NONEXERCISABILITY notwithstanding, the Company shall have the right
to designate one or more periods of time, each of
which shall not exceed 180 days in length, during
which this option shall not be exercisable if the
Company determines (in its sole discretion) that
such limitation on exercise could in any way
facilitate a lessening of any restriction on
transfer pursuant to the Securities Act or any
state securities laws with respect to any issuance
of securities by the Company, facilitate the
3
<PAGE> 4
registration or qualification of any securities by
the Company under the Securities Act or any state
securities laws, or facilitate the perfection of
any exemption from the registration or
qualification requirements of the Securities Act
or any applicable state securities laws for the
issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting
schedule set forth in this Agreement other than to
limit the periods during which this option shall
be exercisable.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the Shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Your personal check, a cashier's check or a
money order.
- Common Shares which have already been owned
by you any time period specified by the
Committee and which are surrendered to the
Company. The value of the Shares, determined
as of the effective date of the option
exercise, will be applied to the option
price.
- To the extent that a public market for the
Shares exists as determined by the Company,
by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a
securities broker to sell Shares and to
deliver all or part of the sale proceeds to
the Company in payment of the aggregate
Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or the sale of
shares acquired upon exercise of this option.
RESTRICTIONS ON RESALE By signing this Agreement, you agree not to sell
any option Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit a sale.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view to
the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act of
1933 but an exemption is available which requires
an investment representation or other
representation, you shall represent and agree at
the time of exercise that the Shares being
acquired upon exercising this option are being
acquired for investment, and not with a view to
the sale or distribution thereof,
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<PAGE> 5
and shall make such other representations as are
deemed necessary or appropriate by the Company and
its counsel.
THE COMPANY'S RIGHT OF In the event that you propose to sell, pledge or
FIRST REFUSAL otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you
must give a written "Transfer Notice" to the
Company describing fully the proposed transfer,
including the number of Shares proposed to be
transferred, the proposed transfer price and the
name and address of the proposed transferee. The
Transfer Notice shall be signed both by you and by
the proposed new transferee and must constitute a
binding commitment of both parties to the transfer
of the Shares. The Company shall have the right to
purchase all, and not less than all, of the Shares
on the terms of the proposal described in the
Transfer Notice (subject, however, to any change
in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of
First Refusal within 30 days after the date when
the Transfer Notice was received by the Company.
The Company's rights under this Subsection shall
be freely assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date when
it received the Transfer Notice, you may, not
later than 90 days following receipt of the
Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in the Transfer Notice within 60 days after
the date when the Company received the Transfer
Notice (or within such longer period as may have
been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee
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<PAGE> 6
of the Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
RIGHT OF REPURCHASE Following termination of your employment for any
reason, the Company shall have the right to
purchase all of those Shares that you have or will
acquire under this option. If the Company fails to
provide you with written notice of its intention
to purchase such Shares before or within 30 days
of the date the Company receives written notice
from you of your termination of employment, the
Company's right to purchase such Shares shall
terminate. If the Company exercises its right to
purchase such Shares, the Company will consummate
the purchase of such Shares within 60 days of the
date of its written notice to you. The purchase
price for any Shares repurchased shall be the
higher of the Fair Market Value of those Shares on
the date of purchase or the aggregate Exercise
Price for those Shares and shall be paid in cash.
The Company's right of repurchase shall terminate
in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do
any of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will. Regardless of any marital
property settlement agreement, the Company is not
obligated to honor a notice of exercise from your
spouse or former spouse, nor is the Company
obligated to recognize such individual's interest
in your option in any other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any
subsidiaries) in any capacity. The Company (and
any subsidiaries) reserve the right to terminate
your service at any time and for any reason.
STOCKHOLDER RIGHTS You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for
your option Shares has been issued. No adjustments
are made for dividends or other rights if the
applicable record date occurs before your stock
certificate is issued, except as described in the
Plan.
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<PAGE> 7
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the
Plan. Your option shall be subject to the terms of
the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of California.
THE PLAN AND OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan.
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<PAGE> 8
This Agreement and the Plan constitute the entire
understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option
are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
8
<PAGE> 9
NOTICE OF EXERCISE
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia Inc.
830 Hillview Court #280
Milpitas, CA 95035
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Nonstatutory Stock Option Agreement for
Employees, Directors and Consultants of Armedia Inc. dated ____________, 199__
(the "Stock Option Agreement") and the 1996 Stock Incentive Plan (the "Plan") of
Armedia Inc. (the "Company"), I hereby elect to purchase ______________ shares
of the Class A Common Stock of the Company (the "Common Stock") at aggregate
exercise price of $___________. I enclose my check in the amount of
$___________.
The Common Stock is to be issued and registered in the name(s)
of:
_______________________________
_______________________________
I understand that there may be tax consequences as a result of
the purchase or disposition of the Common Stock, and I have consulted with any
tax consultants I wished to consult and I am not relying on the Company for any
tax advice. I understand that my exercise is governed by my Stock Option
Agreement and the Plan and agree to abide by and be bound by their terms and
conditions. I represent that the Common Stock is being acquired solely for my
own account and not as a nominee for any other party, or for investment, and
that I will not offer, sell or otherwise dispose of any such Common Stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
Dated: ____________, 199_.
___________________________________
(Signature)
___________________________________
(Please Print Name)
___________________________________
___________________________________
(Address)
<PAGE> 10
ADDENDUM
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
<PAGE> 11
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. PURPOSE 1
Section 2. DEFINITIONS. 1
(a) "Board of Directors"..........................................1
(b) "Code"........................................................1
(c) "Committee"...................................................1
(d) "Company".....................................................1
(e) "Disability"..................................................1
(f) "Employee"....................................................1
(g) "Exercise Price"..............................................2
(h) "Fair Market Value"...........................................2
(i) "ISO".........................................................2
(j) "Nonstatutory Option".........................................2
(k) "Option"......................................................2
(l) "Optionee"....................................................2
(m) "Plan"........................................................2
(n) "Service".....................................................2
(o) "Share".......................................................2
(p) "Stock".......................................................2
(q) "Stock Option Agreement"......................................2
(r) "Subsidiary"..................................................2
Section 3. ADMINISTRATION. 3
(a) Committee Membership..........................................3
(b) Committee Procedures..........................................3
(c) Committee Responsibilities....................................3
(d) Financial Reports.............................................4
Section 4. ELIGIBILITY. 5
(a) General Rule..................................................5
(b) Ten-Percent Shareholders......................................5
(c) Attribution Rules.............................................5
(d) Outstanding Stock.............................................5
Section 5. STOCK SUBJECT TO PLAN 6
(a) Basic Limitation..............................................6
(b) Additional Shares.............................................6
Section 6. TERMS AND CONDITIONS OF OPTIONS 6
(a) Stock Option Agreement........................................6
(b) Number of Shares..............................................6
</TABLE>
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<TABLE>
<S> <C> <C>
(c) Exercise Price................................................7
(d) Withholding Taxes.............................................7
(e) Exercisability................................................7
(f) Term..........................................................7
(g) Nontransferability............................................8
(h) Exercise of Options on Termination of Service.................8
(i) No Rights as a Shareholder....................................8
(j) Modification, Extension and Assumption of Options.............8
(k) Restrictions on Transfer of Shares............................9
Section 7. PAYMENT FOR SHARES 9
(a) General Rule..................................................9
(b) Surrender of Stock............................................9
(c) Promissory Notes..............................................9
(d) Cashless Exercise.............................................10
Section 8. ADJUSTMENT OF SHARES 10
(a) General.......................................................10
(b) Reorganizations...............................................10
(c) Reservation of Rights.........................................10
Section 9. LEGAL REQUIREMENTS 11
Section 10. NO EMPLOYMENT RIGHTS 11
Section 11. DURATION AND AMENDMENTS 11
(a) Term of the Plan..............................................11
(b) Right to Amend or Terminate the Plan..........................12
(c) Effect of Amendment or Termination............................12
Section 12. EXECUTION 12
</TABLE>
ii
<PAGE> 13
ARCUS TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to ac-quire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(d) "Company" shall mean Arcus Technology, Inc., a Delaware corporation.
(e) "Disability" shall mean a disability as determined by the Committee.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes of the Plan except the second
sentence of Section 4(a).
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<PAGE> 14
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
neither an ISO nor an option described in Code section 423.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Arcus Technology, Inc. 1996 Stock Option
Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power
2
<PAGE> 15
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
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<PAGE> 16
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether
such Option is to be classified as an ISO or as a Nonstatutory Option,
and to specify the provisions of the Stock Option Agreement relating to
such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
and
(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Optionees, and all persons deriving their rights
from an Optionee. No member of the Committee shall be liable for any action that
he or she has taken or has failed to take in good faith with respect to the Plan
or any Option.
(d) Financial Reports. To the extent required by applicable law, not
less often than annually, the Company shall furnish to Optionees Company
financial statements, including a balance sheet, regarding the Company's
financial condition and results of operations, unless
4
<PAGE> 17
such Optionees have duties with the Company that assure them access to
equivalent information. Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Commit-tee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a Nonstatutory Option to
the extent required by applicable law) is at least 110 percent of the Fair
Market Value of a Share on the date of grant, and (ii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its share-holders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
5
<PAGE> 18
SECTION 5. STOCK SUBJECT TO PLAN
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares which may be issued under
the Plan (upon exercise of Options) shall not exceed ____________________
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options out-standing at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
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<PAGE> 19
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant. To the
extent required by applicable law, the Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee in its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten (10) percent shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
7
<PAGE> 20
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a share-holder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another
8
<PAGE> 21
issuer) in return for the grant of new Options for the same or a different
number of Shares and at the same or a different Exercise Price or for other
consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such rights of repurchase, rights of first
refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
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<PAGE> 22
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or 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 an
10
<PAGE> 23
Option. The grant of an Option pursuant to the Plan 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, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. The Plan shall terminate
11
<PAGE> 24
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Sub-section (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION
To record the adoption of the Plan by the Company, the Board of
Directors has caused its authorized officer to execute the same.
ARCUS TECHNOLOGY, INC.
By_________________________________
As Its_____________________________
12
<PAGE> 1
EXHIBIT 99.8
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.
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia inc., a Delaware corporation (the "Company"), hereby grants an
option to purchase Shares of its common stock to the optionee named below. The
terms and conditions of the option are set forth in this cover sheet, in the
attachment and in the Company's 1996 Stock Option Plan (the "Plan").
Date of Option Grant: May 15, 1998
Name of Optionee: Sam Sambasivam
Optionee's Social Security Number: _____-____-_____
Number of Shares of Common Stock Covered by Option: 155,000
Exercise Price per Share: $0.001
Vesting Start Date: May 15, 1998
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN,
A COPY OF WHICH IS ALSO ENCLOSED.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
Attachment
<PAGE> 2
ARMEDIA INC.
1996 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
NONSTATUTORY STOCK OPTION This option is not intended to be an incentive
stock option under section 422 of the Internal
Revenue Code and will be interpreted accordingly.
VESTING Your right to exercise this option vests monthly
beginning on the Vesting Start Date, as shown on
the cover sheet; provided, however, no portion of
this option may be exercised prior to the
expiration of one year from the Date of Grant, as
shown on the cover sheet. The number of Shares
which may be purchased under this option by you at
the Purchase Price on or after the first
anniversary of the Date of Grant shall be equal to
the difference between (i) the product (rounded to
the nearest integer) of the number of full months
of your continuous employment with the Company
(including all days of any approved leaves of
absence) from the Vesting Starting Date times the
number of Shares covered by this option times
.02083333, minus (ii) the number of Shares
purchased pursuant to this Option prior to such
exercise. The resulting number of Shares will be
rounded to the nearest whole number. No additional
Shares will vest after your Company service has
terminated for any reason.
TERM Your option will expire in any event at the close
of business at Company headquarters on the day
before the 10th anniversary of the Date of Grant,
as shown on the cover sheet. (It will expire
earlier if your Company service terminates, as
described below.)
REGULAR TERMINATION If your service as an employee of the Company (or
any subsidiary) terminates for any reason except
death or Disability, then your option will expire
at the close of business at Company headquarters
on the 30th day after your termination date.
Notwithstanding anything else in this Agreement to
the contrary, in the event that you cease to be
employed by the Company within one year from the
Date of Grant for any reason all rights to
purchase shares under this Option shall
immediately terminate.
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<PAGE> 3
DEATH If you die as an employee of the Company (or any
subsidiary), then your option will expire at the
close of business at Company headquarters on the
date 6 months after the date of death. During that
6-month period, your estate or heirs may exercise
the vested portion of your option.
DISABILITY If your service as an employee of the Company (or
any subsidiary) terminates because of your
Disability, then your option will expire at the
close of business at Company headquarters on the
date 6 months after your termination date.
"Disability" means that you are unable to engage
in any substantial gainful activity by reason of
any medically determinable physical or mental
impairment.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go on a military leave, a sick
leave or another bona fide leave of absence, if
the leave was approved by the Company in writing.
And your service terminates in any event when the
approved leave ends, unless you immediately return
to active work.
The Company determines which leaves count for this
purpose, and when your service terminates for all
purposes under the Plan.
RESTRICTIONS ON EXERCISE The Company will not permit you to exercise this
option if the issuance of Shares at that time
would violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form.
Your notice must specify how many Shares you wish
to purchase. Your notice must also specify how
your Shares should be registered (in your name
only or in your and your spouse's names as
community property or as joint tenants with right
of survivorship). The notice will be effective
when it is received by the Company.
If someone else wants to exercise this option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled
to do so.
PERIODS OF Any other provision of this Agreement
NONEXERCISABILITY notwithstanding, the Company shall have the right
to designate one or more periods of time, each of
which shall not exceed 180 days in length, during
which this option shall not be exercisable if the
Company determines (in its sole discretion) that
such limitation on exercise could in any way
facilitate a lessening of any restriction on
transfer pursuant to the Securities Act or any
state securities laws with respect to any issuance
of securities by the Company, facilitate the
3
<PAGE> 4
registration or qualification of any securities by
the Company under the Securities Act or any state
securities laws, or facilitate the perfection of
any exemption from the registration or
qualification requirements of the Securities Act
or any applicable state securities laws for the
issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting
schedule set forth in this Agreement other than to
limit the periods during which this option shall
be exercisable.
FORM OF PAYMENT When you submit your notice of exercise, you must
include payment of the option price for the Shares
you are purchasing. Payment may be made in one (or
a combination) of the following forms:
- Your personal check, a cashier's check or a
money order.
- Common Shares which have already been owned
by you any time period specified by the
Committee and which are surrendered to the
Company. The value of the Shares, determined
as of the effective date of the option
exercise, will be applied to the option
price.
- To the extent that a public market for the
Shares exists as determined by the Company,
by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a
securities broker to sell Shares and to
deliver all or part of the sale proceeds to
the Company in payment of the aggregate
Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or the sale of
shares acquired upon exercise of this option.
RESTRICTIONS ON RESALE By signing this Agreement, you agree not to sell
any option Shares at a time when applicable laws,
regulations or Company or underwriter trading
policies prohibit a sale.
You represent and agree that the Shares to be
acquired upon exercising this option will be
acquired for investment, and not with a view to
the sale or distribution thereof.
In the event that the sale of Shares under the
Plan is not registered under the Securities Act of
1933 but an exemption is available which requires
an investment representation or other
representation, you shall represent and agree at
the time of exercise that the Shares being
acquired upon exercising this option are being
acquired for investment, and not with a view to
the sale or distribution thereof,
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<PAGE> 5
and shall make such other representations as are
deemed necessary or appropriate by the Company and
its counsel.
THE COMPANY'S RIGHT OF In the event that you propose to sell, pledge or
FIRST REFUSAL otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in
such Shares, the Company shall have the "Right of
First Refusal" with respect to all (and not less
than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you
must give a written "Transfer Notice" to the
Company describing fully the proposed transfer,
including the number of Shares proposed to be
transferred, the proposed transfer price and the
name and address of the proposed transferee. The
Transfer Notice shall be signed both by you and by
the proposed new transferee and must constitute a
binding commitment of both parties to the transfer
of the Shares. The Company shall have the right to
purchase all, and not less than all, of the Shares
on the terms of the proposal described in the
Transfer Notice (subject, however, to any change
in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of
First Refusal within 30 days after the date when
the Transfer Notice was received by the Company.
The Company's rights under this Subsection shall
be freely assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date when
it received the Transfer Notice, you may, not
later than 90 days following receipt of the
Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in the Transfer Notice within 60 days after
the date when the Company received the Transfer
Notice (or within such longer period as may have
been specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee
5
<PAGE> 6
of the Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
RIGHT OF REPURCHASE Following termination of your employment for any
reason, the Company shall have the right to
purchase all of those Shares that you have or will
acquire under this option. If the Company fails to
provide you with written notice of its intention
to purchase such Shares before or within 30 days
of the date the Company receives written notice
from you of your termination of employment, the
Company's right to purchase such Shares shall
terminate. If the Company exercises its right to
purchase such Shares, the Company will consummate
the purchase of such Shares within 60 days of the
date of its written notice to you. The purchase
price for any Shares repurchased shall be the
higher of the Fair Market Value of those Shares on
the date of purchase or the aggregate Exercise
Price for those Shares and shall be paid in cash.
The Company's right of repurchase shall terminate
in the event that Stock is listed on an
established stock exchange or is quoted regularly
on the Nasdaq National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do
any of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will. Regardless of any marital
property settlement agreement, the Company is not
obligated to honor a notice of exercise from your
spouse or former spouse, nor is the Company
obligated to recognize such individual's interest
in your option in any other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any
subsidiaries) in any capacity. The Company (and
any subsidiaries) reserve the right to terminate
your service at any time and for any reason.
STOCKHOLDER RIGHTS You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for
your option Shares has been issued. No adjustments
are made for dividends or other rights if the
applicable record date occurs before your stock
certificate is issued, except as described in the
Plan.
6
<PAGE> 7
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number
of Shares covered by this option and the exercise
price per share may be adjusted pursuant to the
Plan. Your option shall be subject to the terms of
the agreement of merger, liquidation or
reorganization in the event the Company is subject
to such corporate activity.
LEGENDS All certificates representing the Shares issued
upon exercise of this option shall, where
applicable, have endorsed thereon the following
legends:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF
RECORD OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of California.
THE PLAN AND OTHER The text of the Plan is incorporated in this
AGREEMENTS Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan.
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<PAGE> 8
This Agreement and the Plan constitute the entire
understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option
are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
8
<PAGE> 9
NOTICE OF EXERCISE
FOR EMPLOYEES, DIRECTORS AND CONSULTANTS OF ARMEDIA INC.
Armedia Inc.
830 Hillview Court #280
Milpitas, CA 95035
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Nonstatutory Stock Option Agreement for
Employees, Directors and Consultants of Armedia Inc. dated ____________, 199__
(the "Stock Option Agreement") and the 1996 Stock Incentive Plan (the "Plan") of
Armedia Inc. (the "Company"), I hereby elect to purchase ______________ shares
of the Class A Common Stock of the Company (the "Common Stock") at aggregate
exercise price of $___________. I enclose my check in the amount of
$___________.
The Common Stock is to be issued and registered in the name(s)
of:
_______________________________
_______________________________
I understand that there may be tax consequences as a result of
the purchase or disposition of the Common Stock, and I have consulted with any
tax consultants I wished to consult and I am not relying on the Company for any
tax advice. I understand that my exercise is governed by my Stock Option
Agreement and the Plan and agree to abide by and be bound by their terms and
conditions. I represent that the Common Stock is being acquired solely for my
own account and not as a nominee for any other party, or for investment, and
that I will not offer, sell or otherwise dispose of any such Common Stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
Dated: ____________, 199_.
___________________________________
(Signature)
___________________________________
(Please Print Name)
___________________________________
___________________________________
(Address)
<PAGE> 10
ADDENDUM
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
<PAGE> 11
ARMEDIA, INC.
(FORMERLY KNOWN AS ARCUS TECHNOLOGY, INC.)
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. PURPOSE 1
Section 2. DEFINITIONS. 1
(a) "Board of Directors"..........................................1
(b) "Code"........................................................1
(c) "Committee"...................................................1
(d) "Company".....................................................1
(e) "Disability"..................................................1
(f) "Employee"....................................................1
(g) "Exercise Price"..............................................2
(h) "Fair Market Value"...........................................2
(i) "ISO".........................................................2
(j) "Nonstatutory Option".........................................2
(k) "Option"......................................................2
(l) "Optionee"....................................................2
(m) "Plan"........................................................2
(n) "Service".....................................................2
(o) "Share".......................................................2
(p) "Stock".......................................................2
(q) "Stock Option Agreement"......................................2
(r) "Subsidiary"..................................................2
Section 3. ADMINISTRATION. 3
(a) Committee Membership..........................................3
(b) Committee Procedures..........................................3
(c) Committee Responsibilities....................................3
(d) Financial Reports.............................................4
Section 4. ELIGIBILITY. 5
(a) General Rule..................................................5
(b) Ten-Percent Shareholders......................................5
(c) Attribution Rules.............................................5
(d) Outstanding Stock.............................................5
Section 5. STOCK SUBJECT TO PLAN 6
(a) Basic Limitation..............................................6
(b) Additional Shares.............................................6
Section 6. TERMS AND CONDITIONS OF OPTIONS 6
(a) Stock Option Agreement........................................6
(b) Number of Shares..............................................6
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C>
(c) Exercise Price................................................7
(d) Withholding Taxes.............................................7
(e) Exercisability................................................7
(f) Term..........................................................7
(g) Nontransferability............................................8
(h) Exercise of Options on Termination of Service.................8
(i) No Rights as a Shareholder....................................8
(j) Modification, Extension and Assumption of Options.............8
(k) Restrictions on Transfer of Shares............................9
Section 7. PAYMENT FOR SHARES 9
(a) General Rule..................................................9
(b) Surrender of Stock............................................9
(c) Promissory Notes..............................................9
(d) Cashless Exercise.............................................10
Section 8. ADJUSTMENT OF SHARES 10
(a) General.......................................................10
(b) Reorganizations...............................................10
(c) Reservation of Rights.........................................10
Section 9. LEGAL REQUIREMENTS 11
Section 10. NO EMPLOYMENT RIGHTS 11
Section 11. DURATION AND AMENDMENTS 11
(a) Term of the Plan..............................................11
(b) Right to Amend or Terminate the Plan..........................12
(c) Effect of Amendment or Termination............................12
Section 12. EXECUTION 12
</TABLE>
ii
<PAGE> 13
ARCUS TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to ac-quire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(d) "Company" shall mean Arcus Technology, Inc., a Delaware corporation.
(e) "Disability" shall mean a disability as determined by the Committee.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes of the Plan except the second
sentence of Section 4(a).
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<PAGE> 14
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
neither an ISO nor an option described in Code section 423.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Arcus Technology, Inc. 1996 Stock Option
Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power
2
<PAGE> 15
of all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
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<PAGE> 16
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether
such Option is to be classified as an ISO or as a Nonstatutory Option,
and to specify the provisions of the Stock Option Agreement relating to
such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
and
(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Optionees, and all persons deriving their rights
from an Optionee. No member of the Committee shall be liable for any action that
he or she has taken or has failed to take in good faith with respect to the Plan
or any Option.
(d) Financial Reports. To the extent required by applicable law, not
less often than annually, the Company shall furnish to Optionees Company
financial statements, including a balance sheet, regarding the Company's
financial condition and results of operations, unless
4
<PAGE> 17
such Optionees have duties with the Company that assure them access to
equivalent information. Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Commit-tee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and a Nonstatutory Option to
the extent required by applicable law) is at least 110 percent of the Fair
Market Value of a Share on the date of grant, and (ii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its share-holders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
5
<PAGE> 18
SECTION 5. STOCK SUBJECT TO PLAN
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares which may be issued under
the Plan (upon exercise of Options) shall not exceed ____________________
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options out-standing at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
6
<PAGE> 19
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant. To the
extent required by applicable law, the Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee in its sole
discretion. The Exercise Price shall be payable in a form described in Section
7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five (5)
years for ten (10) percent shareholders as provided in Section 4(b)). Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
7
<PAGE> 20
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a share-holder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another
8
<PAGE> 21
issuer) in return for the grant of new Options for the same or a different
number of Shares and at the same or a different Exercise Price or for other
consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such rights of repurchase, rights of first
refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid in
full.
9
<PAGE> 22
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or 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 an
10
<PAGE> 23
Option. The grant of an Option pursuant to the Plan 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, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. The Plan shall terminate
11
<PAGE> 24
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Sub-section (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION
To record the adoption of the Plan by the Company, the Board of
Directors has caused its authorized officer to execute the same.
ARCUS TECHNOLOGY, INC.
By_________________________________
As Its_____________________________
12
<PAGE> 1
EXHIBIT 99.9
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
EPIGRAM, INC.
1996 STOCK PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day of May,
1999 by Broadcom Corporation, a California corporation ("Broadcom").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the Common Stock of Epigram, Inc., a
California corporation ("Epigram"), which were granted to Optionee under the
Epigram, Inc. 1996 Stock Plan (the "Plan") and are each evidenced by the
following agreement between Epigram and Optionee: a Stock Option Agreement (the
"Option Agreement").
WHEREAS, Epigram has been acquired by Broadcom through the merger (the
"Merger") of Epic Acquisition Corporation ("MergerSub"), a wholly-owned
subsidiary of Broadcom, with and into Epigram, pursuant to the Merger Agreement
and Plan of Reorganization dated April 23, 1999 by and among Broadcom, MergerSub
and Epigram (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement require
Broadcom to assume all obligations of Epigram under all outstanding options
under the Plan at the consummation of the Merger and to issue to the holder of
each outstanding option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Reorganization Agreement,
the exchange ratio (the "Exchange Ratio") in effect for the Merger is .315182283
of a share of Broadcom Class B Common Stock ("Broadcom Stock") for each
outstanding share of Epigram Common Stock ("Epigram Stock").
WHEREAS, this Stock Option Assumption Agreement is effective as of the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Broadcom in connection
with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Epigram Stock subject to the options
outstanding under the Plan held by Optionee immediately prior to the Effective
Time (the "Epigram Options") and the exercise price payable per share are set
forth in Exhibit(s) A hereto. Broadcom hereby assumes, as of the Effective Time,
all the duties and obligations of Epigram under each of the Epigram Options. In
connection with such assumption, the number of shares of Broadcom
<PAGE> 2
Stock purchasable under each Epigram Option hereby assumed and the exercise
price payable thereunder have been adjusted to reflect the Exchange Ratio.
Accordingly, the number of shares of Broadcom Stock subject to each Epigram
Option hereby assumed shall be as specified for that option in attached
Exhibit(s) A, and the adjusted exercise price payable per share of Broadcom
Stock under the assumed Epigram Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed Epigram
Option is to assure that the difference between the aggregate fair market value
of the shares of Broadcom Stock purchasable under each such option and the
aggregate exercise price of such shares as adjusted pursuant to this Agreement
will, immediately after the consummation of the Merger, be not less than the
difference which existed, immediately prior to the Merger, between the then
aggregate fair market value of the Epigram Stock subject to the Epigram Option
and the aggregate exercise price of such shares in effect at such time under the
Option Agreement. Such adjustments are also intended to preserve, immediately
after the Merger, on a per share basis, the same ratio of exercise price per
option share to fair market value per share as that which existed under the
Epigram Option immediately prior to the Merger. Such adjustments are also
intended to preserve, to the extent applicable, the Incentive Stock Option
status of the assumed Epigram Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each Epigram Option hereby
assumed by Broadcom:
(a) Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (as incorporated into such Option
Agreement) (i) to the "Company" shall mean Broadcom, (ii) to "Common
Stock" shall mean shares of Broadcom Stock, (iii) to the "Board" shall
mean the Board of Directors of Broadcom and (iv) to the "Committee"
shall mean the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date of each assumed
Epigram Option and all other provisions which govern either the
exercise or the termination of the assumed Epigram Option shall remain
the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Stock Option Assumption
Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option Agreement, none of
your options assumed by Broadcom in connection with the transaction
will terminate and cease to be outstanding upon the consummation of the
Merger. Each Epigram Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed Epigram Option shall thereafter
continue to vest for any remaining unvested shares of Broadcom Stock
subject to that option on the same terms and in accordance with the
same installment vesting schedule as those in effect under the
applicable Option Agreement immediately prior to the Effective Time;
2.
<PAGE> 3
provided, however, that the number of shares of Broadcom Stock subject
to each such installment shall be adjusted to reflect the Exchange
Ratio.
(d) For purposes of applying any and all provisions of the
Option Agreement and the Plan relating to Optionee's status as an
employee of or a consultant to Epigram, Optionee shall be deemed to
continue in such status as an employee or a consultant for so long as
Optionee renders services as an employee of or a consultant to Broadcom
or any present or future Broadcom subsidiary. Accordingly, the
provisions of the Option Agreement governing the termination of the
assumed Epigram Options upon Optionee's cessation of service as an
employee of or a consultant to Epigram shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Broadcom and its subsidiaries, and each assumed Epigram Option shall
accordingly terminate, within the designated time period in effect
under the Option Agreement for that option, following such cessation of
service as an employee of or a consultant to Broadcom and its
subsidiaries.
(e) The adjusted exercise price payable for the Broadcom Stock
subject to each assumed Epigram Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option.
For purposes of determining the holding period of any shares of
Broadcom Stock delivered in payment of such adjusted exercise price,
the period for which such shares were held as Epigram Stock prior to
the Merger shall be included.
(f) In order to exercise each assumed Epigram Option, Optionee
must deliver to Broadcom a written notice of exercise in which the
number of shares of Broadcom Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Broadcom
Stock and should be delivered to Broadcom at the following address:
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92618
Attention: Manager of Shareholder Services
4. Except to the extent specifically modified by this Stock Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Broadcom has caused this Stock Option Assumption
Agreement to be executed on its behalf by its duly-authorized officer as of the
31st day of May, 1999.
BROADCOM CORPORATION
By:
David A. Dull, Esq.
Vice President, General Counsel
and Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands and agrees that all rights and liabilities
with respect to each of his or her Epigram Options hereby assumed by Broadcom
are as set forth in the Option Agreement, the Plan and this Stock Option
Assumption Agreement.
DATED: __________________, 1999
----------------------------------------
SIGNATURE OF OPTIONEE
----------------------------------------
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.10
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
MAVERICK NETWORKS
1998 STOCK PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day of May,
1999 by Broadcom Corporation, a California corporation ("Broadcom").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the Common Stock of Maverick Networks,
a California corporation ("Maverick"), which were granted to Optionee under the
Maverick Networks 1998 Stock Plan (the "Plan") and are each evidenced by the
following agreement between Maverick and Optionee: a Stock Option Agreement (the
"Option Agreement").
WHEREAS, Maverick has been acquired by Broadcom through the merger (the
"Merger") of Maverick with and into Broadcom, pursuant to the Strategic Alliance
Agreement and Plan of Merger, dated January 25, 1999 by and between Broadcom and
Maverick, as amended (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Broadcom to
assume all obligations of Maverick under all outstanding options under the Plan
at the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is .141831948 of
a share of Broadcom Class B Common Stock ("Broadcom Stock") for each outstanding
share of Maverick Common Stock or Maverick Preferred Stock ("Maverick Stock").
WHEREAS, this Stock Option Assumption Agreement is effective as of the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Broadcom in connection
with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Maverick Stock subject to the options
outstanding under the Plan held by Optionee immediately prior to the Effective
Time (the "Maverick Options") and the exercise price payable per share are set
forth in Exhibit(s) A hereto. Broadcom hereby assumes, as of the Effective Time,
all the duties and obligations of Maverick under each of the Maverick Options.
In connection with such assumption, the number of shares of Broadcom Stock
purchasable under each Maverick Option hereby assumed and the exercise
<PAGE> 2
price payable thereunder have been adjusted to reflect the Exchange Ratio.
Accordingly, the number of shares of Broadcom Stock subject to each Maverick
Option hereby assumed shall be as specified for that option in attached
Exhibit(s) A, and the adjusted exercise price payable per share of Broadcom
Stock under the assumed Maverick Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed Maverick
Option is to assure that the difference between the aggregate fair market value
of the shares of Broadcom Stock purchasable under each such option and the
aggregate exercise price of such shares as adjusted pursuant to this Agreement
will, immediately after the consummation of the Merger, be not less than the
difference which existed, immediately prior to the Merger, between the then
aggregate fair market value of the Maverick Stock subject to the Maverick Option
and the aggregate exercise price of such shares in effect at such time under the
Option Agreement. Such adjustments are also intended to preserve, immediately
after the Merger, on a per share basis, the same ratio of exercise price per
option share to fair market value per share as that which existed under the
Maverick Option immediately prior to the Merger. Such adjustments are also
intended to preserve, to the extent applicable, the Incentive Stock Option
status of the assumed Maverick Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each Maverick Option hereby
assumed by Broadcom:
(a) Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (as incorporated into such Option
Agreement) (i) to the "Company" shall mean Broadcom, (ii) to "Common
Stock" shall mean shares of Broadcom Stock, (iii) to the "Board" shall
mean the Board of Directors of Broadcom and (iv) to the "Committee"
shall mean the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date of each assumed
Maverick Option and all other provisions which govern either the
exercise or the termination of the assumed Maverick Option shall remain
the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Stock Option Assumption
Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option Agreement, none of
your options assumed by Broadcom in connection with the transaction
will terminate and cease to be outstanding upon the consummation of the
Merger. Each Maverick Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed Maverick Option shall thereafter
continue to vest for any remaining unvested shares of Broadcom Stock
subject to that option on the same terms and in accordance with the
same installment vesting schedule as those in effect under the
applicable Option Agreement immediately prior to the Effective Time;
2.
<PAGE> 3
provided, however, that the number of shares of Broadcom Stock subject
to each such installment shall be adjusted to reflect the Exchange
Ratio.
(d) For purposes of applying any and all provisions of the
Option Agreement and the Plan relating to Optionee's status as an
employee of or a consultant to Maverick, Optionee shall be deemed to
continue in such status as an employee or a consultant for so long as
Optionee renders services as an employee of or a consultant to Broadcom
or any present or future Broadcom subsidiary. Accordingly, the
provisions of the Option Agreement governing the termination of the
assumed Maverick Options upon Optionee's cessation of service as an
employee of or a consultant to Maverick shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Broadcom and its subsidiaries, and each assumed Maverick Option shall
accordingly terminate, within the designated time period in effect
under the Option Agreement for that option, following such cessation of
service as an employee of or a consultant to Broadcom and its
subsidiaries.
(e) The adjusted exercise price payable for the Broadcom Stock
subject to each assumed Maverick Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option.
For purposes of determining the holding period of any shares of
Broadcom Stock delivered in payment of such adjusted exercise price,
the period for which such shares were held as Maverick Stock prior to
the Merger shall be included.
(f) In order to exercise each assumed Maverick Option,
Optionee must deliver to Broadcom a written notice of exercise in which
the number of shares of Broadcom Stock to be purchased thereunder must
be indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Broadcom
Stock and should be delivered to Broadcom at the following address:
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92618
Attention: Manager of Shareholder Services
4. Except to the extent specifically modified by this Stock Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Broadcom has caused this Stock Option Assumption
Agreement to be executed on its behalf by its duly-authorized officer as of the
31st day of May, 1999.
BROADCOM CORPORATION
By:
David A. Dull, Esq.
Vice President, General Counsel
and Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands and agrees that all rights and liabilities
with respect to each of his or her Maverick Options hereby assumed by Broadcom
are as set forth in the Option Agreement, the Plan and this Stock Option
Assumption Agreement.
DATED: __________________, 1999
-----------------------------------------
SIGNATURE OF OPTIONEE
-----------------------------------------
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.11
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
GRANTS OUTSIDE
OPTION PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day of May,
1999 by Broadcom Corporation, a California corporation ("Broadcom").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the Common Stock of Armedia, Inc., a
Delaware corporation ("Armedia"), which were granted to Optionee and are
evidenced by the following agreement between Armedia and Optionee: a
Nonstatutory Stock Option Agreement (the "Option Agreement").
WHEREAS, Armedia has been acquired by Broadcom through the merger (the
"Merger") of ARM Acquisition, Inc. ("MergerSub"), a wholly-owned subsidiary of
Broadcom, with and into Armedia, pursuant to the Agreement and Plan of
Reorganization dated April 23, 1999 by and among Broadcom, MergerSub and Armedia
(the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement require
Broadcom to assume all obligations of Armedia under all outstanding options at
the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Reorganization Agreement,
the exchange ratio (the "Exchange Ratio") in effect for the Merger is .03765544
of a share of Broadcom Class B Common Stock ("Broadcom Stock") for each
outstanding share of Armedia Common Stock ("Armedia Stock").
WHEREAS, this Stock Option Assumption Agreement is effective as of the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options which have become necessary by
reason of the assumption of those options by Broadcom in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Armedia Stock subject to the outstanding
options held by Optionee immediately prior to the Effective Time (the "Armedia
Options") and the exercise price payable per share are set forth in Exhibit(s) A
hereto. Broadcom hereby assumes, as of the Effective Time, all the duties and
obligations of Armedia under each of the Armedia Options. In connection with
such assumption, the number of shares of Broadcom Stock purchasable under each
Armedia Option hereby assumed and the exercise price payable
<PAGE> 2
thereunder have been adjusted to reflect the Exchange Ratio. Accordingly, the
number of shares of Broadcom Stock subject to each Armedia Option hereby assumed
shall be as specified for that option in attached Exhibit(s) A, and the adjusted
exercise price payable per share of Broadcom Stock under the assumed Armedia
Option shall also be as indicated for that option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed Armedia
Option is to assure that the difference between the aggregate fair market value
of the shares of Broadcom Stock purchasable under each such option and the
aggregate exercise price of such shares as adjusted pursuant to this Agreement
will, immediately after the consummation of the Merger, be not less than the
difference which existed, immediately prior to the Merger, between the then
aggregate fair market value of the Armedia Stock subject to the Armedia Option
and the aggregate exercise price of such shares in effect at such time under the
Option Agreement. Such adjustments are also intended to preserve, immediately
after the Merger, on a per share basis, the same ratio of exercise price per
option share to fair market value per share as that which existed under the
Armedia Option immediately prior to the Merger.
3. The following provisions shall govern each Armedia Option hereby
assumed by Broadcom:
(a) Unless the context otherwise requires, all references in
each Option Agreement (i) to the "Company" shall mean Broadcom, (ii) to
"Common Stock" shall mean shares of Broadcom Stock, (iii) to the "Board
of Directors" shall mean the Board of Directors of Broadcom and (iv) to
the "Committee" shall mean the Option Committee of the Board of
Directors of Broadcom.
(b) The grant date and the expiration date of each assumed
Armedia Option and all other provisions which govern either the
exercise or the termination of the assumed Armedia Option shall remain
the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Stock Option Assumption
Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option Agreement, none of
your options assumed by Broadcom in connection with the transaction
will terminate and cease to be outstanding upon the consummation of the
Merger. Each Armedia Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed Armedia Option shall thereafter
continue to vest for any remaining unvested shares of Broadcom Stock
subject to that option on the same terms and in accordance with the
same installment vesting schedule as those in effect under the
applicable Option Agreement immediately prior to the Effective Time;
provided, however, that the number of shares of Broadcom Stock subject
to each such installment shall be adjusted to reflect the Exchange
Ratio.
2.
<PAGE> 3
(d) For purposes of applying any and all provisions of the
Option Agreement to Optionee's status as an employee of or a consultant
to Armedia, Optionee shall be deemed to continue in such status as an
employee or a consultant for so long as Optionee renders services as an
employee of or a consultant to Broadcom or any present or future
Broadcom subsidiary. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed Armedia Options upon
Optionee's cessation of service as an employee of or a consultant to
Armedia shall hereafter be applied on the basis of Optionee's cessation
of employee or consultant status with Broadcom and its subsidiaries,
and each assumed Armedia Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement for that
option, following such cessation of service as an employee of or a
consultant to Broadcom and its subsidiaries.
(e) The adjusted exercise price payable for the Broadcom Stock
subject to each assumed Armedia Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option.
For purposes of determining the holding period of any shares of
Broadcom Stock delivered in payment of such adjusted exercise price,
the period for which such shares were held as Armedia Stock prior to
the Merger shall be included.
(f) In order to exercise each assumed Armedia Option, Optionee
must deliver to Broadcom a written notice of exercise in which the
number of shares of Broadcom Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Broadcom
Stock and should be delivered to Broadcom at the following address:
Broadcom Corporation
16215 Alton Parkway
Irvine, California 92618
Attention: Manager of Shareholder Services
4. Except to the extent specifically modified by this Stock Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Broadcom has caused this Stock Option Assumption
Agreement to be executed on its behalf by its duly-authorized officer as of the
31st day of May, 1999.
BROADCOM CORPORATION
By:
David A. Dull, Esq.
Vice President, General Counsel
and Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands and agrees that all rights and liabilities
with respect to each of his or her Armedia Options hereby assumed by Broadcom
are as set forth in the Option Agreement and this Stock Option Assumption
Agreement.
DATED: __________________, 1999
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SIGNATURE OF OPTIONEE
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PRINT NAME
4.
