<PAGE> 1
As filed with the Securities and Exchange Commission on September 23, 1999
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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)
ALTOCOM, INC. 1997 STOCK PLAN
HOTHAUS TECHNOLOGIES INC. INCENTIVE STOCK OPTION PLAN
----------
(Full title of the Plans)
----------
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)
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>
AltoCom, Inc. 1997 Stock Plan
Class A Common Stock, $.0001 par value 68,240 shares $105.3125(2) $7,186,525.00(2) $1,997.85
Class B Common Stock, $.0001 par value 68,240 shares $19.8860(3) $1,357,020.64(3) $377.25
- ---------------------------------------------------------------------------------------------------------------------------------
HotHaus Technologies Inc.
Incentive Stock Option Plan
Class A Common Stock, $.0001 par value 169,719 shares $105.3125(2) $17,873,532.19(2) $4,968.84
Class B Common Stock, $.0001 par value 169,719 shares $3.0940(3) $525,110.59(3) $145.98
- ---------------------------------------------------------------------------------------------------------------------------------
Total $26,942,188.42 $7,489.92
=================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Broadcom's Class A Common Stock or Class B Common Stock which become
issuable under the AltoCom, Inc. 1997 Stock Plan and the HotHaus
Technologies Inc. Incentive Stock Option Plan 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 Common
Stock 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 September 21, 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 hereby incorporates by reference into
this Registration Statement the following documents previously filed with the
Securities and Exchange Commission:
(a) Broadcom's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, filed with the SEC on March 31, 1999;
(b) Broadcom's Quarterly Reports on Form 10-Q for the fiscal
quarter ended March 31, 1999, filed with the SEC on May 17,
1999 and the fiscal quarter ended June 30, 1999, filed with
the SEC on August 16, 1999;
(c) Broadcom's Current Reports on Form 8-K filed with the SEC on
January 27, 1999, April 28, 1999, June 1, 1999, June 23, 1999,
July 21, 1999, August 12, 1999, September 1, 1999 and
September 17, 1999; and
(d) Broadcom's Registration Statement No. 000-23993 on Form 8-A
filed with SEC 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, 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 currently requires the affirmative vote of the holders of
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<PAGE> 3
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 Common Stock and will, in general,
automatically convert into one (1) share of Class A Common Stock upon the sale
or transfer 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.
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<PAGE> 4
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
- -------------- -------
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 AltoCom, Inc. 1997 Stock Plan.
99.2 Form of Notice of Stock Option Grant and related form of Stock
Option Agreement for AltoCom, Inc. 1997 Stock Plan.
99.3 Form of Stock Purchase Agreement for AltoCom, Inc. 1997 Stock
Plan.
99.4 HotHaus Technologies Inc. Incentive Stock Option Plan,
together with form of Stock Option Agreement for HotHaus
Technologies Inc. Incentive Stock Option Plan.
99.5 Form of Option Assumption Agreement - AltoCom Plan.
99.6 Form of Option Assumption Agreement - HotHaus Plan.
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
AltoCom, Inc. 1997 Stock Plan and the HotHaus Technologies Inc. Incentive Stock
Option Plan.
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
II-3
<PAGE> 5
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 SEC, 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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<PAGE> 6
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 21st day of September,
1999.
BROADCOM CORPORATION
By: /s/ HENRY T. NICHOLAS
----------------------------------
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 President, Chief Executive Officer September 21, 1999
- ---------------------------------- and Co-Chairman
Henry T. Nicholas III, Ph.D. (Principal Executive Officer)
/s/ HENRY SAMUELI Vice President of Research & September 21, 1999
- ---------------------------------- Development, Chief Technical Officer
Henry Samueli, Ph.D. and Co-Chairman
/s/ WILLIAM J. RUEHLE Vice President and Chief Financial September 21, 1999
- ---------------------------------- Officer (Principal Financial and
William J. Ruehle Accounting Officer)
/s/ ALAN E. ROSS Director September 21, 1999
- ----------------------------------
Alan E. Ross
/s/ MYRON S. EICHEN Director September 21, 1999
- ----------------------------------
Myron S. Eichen
/s/ WERNER F. WOLFEN Director September 21, 1999
- ----------------------------------
Werner F. Wolfen
</TABLE>
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<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
BROADCOM CORPORATION
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Exhibit
------- -------
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 AltoCom, Inc. 1997 Stock Plan.
99.2 Form of Notice of Stock Option Grant and related form of Stock
Option Agreement for AltoCom, Inc. 1997 Stock Plan.
99.3 Form of Stock Purchase Agreement for AltoCom, Inc. 1997 Stock
Plan.
99.4 HotHaus Technologies Inc. Incentive Stock Option Plan,
together with form of Stock Option Agreement for HotHaus
Technologies Inc. Incentive Stock Option Plan.
99.5 Form of Option Assumption Agreement - AltoCom Plan.
99.6 Form of Option Assumption Agreement - HotHaus Plan.
<PAGE> 1
EXHIBIT 5.1
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
September 23, 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 237,959 shares of the Company's Class A Common Stock and 237,959
shares of the Company's Class B Common Stock (collectively, the "Shares") and
related stock options under (i) the AltoCom, Inc. 1997 Stock Plan, and (ii) the
HotHaus Technologies Inc. Incentive Stock Option Plan (collectively, the
"Plans").
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. 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 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.
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 or the
Shares.
Very truly yours,
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 AltoCom, Inc. 1997 Stock Plan and
the HotHaus Technologies Inc. Incentive Stock Option Plan, of our report dated
January 26, 1999 (except for Note 2 as to which the date is May 31, 1999, and
Notes 9 and 13 as to which the date is August 31, 1999) with respect to the
consolidated financial statements of Broadcom Corporation included in its
Current Report on Form 8-K dated September 17, 1999, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Orange County, California
September 21, 1999
<PAGE> 1
EXHIBIT 99.1
ALTOCOM, INC.
1997 STOCK PLAN
ADOPTED ON JULY 2, 1997
(AMENDED AND RESTATED SEPTEMBER 28, 1998)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE NO.
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<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE...........................................1
SECTION 2. ADMINISTRATION......................................................1
(a) Committees of the Board of Directors....................................1
(b) Authority of the Board of Directors.....................................1
SECTION 3. ELIGIBILITY.........................................................1
(a) General Rule............................................................1
(b) Ten-Percent Shareholders................................................1
SECTION 4. STOCK SUBJECT TO PLAN...............................................2
(a) Basic Limitation........................................................2
(b) Additional Shares.......................................................2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.............................2
(a) Stock Purchase Agreement................................................2
(b) Duration of Offers and Nontransferability of Rights.....................2
(c) Purchase Price..........................................................2
(d) Withholding Taxes.......................................................2
(e) Restrictions on Transfer of Shares and Minimum Vesting..................3
(f) Accelerated Vesting.....................................................3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.....................................3
(a) Stock Option Agreement..................................................3
(b) Number of Shares........................................................3
(c) Exercise Price..........................................................3
(d) Withholding Taxes.......................................................3
(e) Exercisability..........................................................4
(f) Accelerated Exercisability..............................................4
(g) Basic Term..............................................................4
(h) Nontransferability......................................................4
(i) Termination of Service (Except by Death)................................4
(j) Leaves of Absence.......................................................5
(k) Death of Optionee.......................................................5
(l) No Rights as a Shareholder..............................................5
(m) Modification, Extension and Assumption of Options.......................5
(n) Restrictions on Transfer of Shares and Minimum Vesting..................5
(o) Accelerated Vesting.....................................................6
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
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PAGE NO.
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<S> <C>
SECTION 7. PAYMENT FOR SHARES..................................................6
(a) General Rule............................................................6
(b) Surrender of Stock......................................................6
(c) Services Rendered.......................................................6
(d) Promissory Note.........................................................6
(e) Exercise/Sale...........................................................7
(f) Exercise/Pledge.........................................................7
SECTION 8. ADJUSTMENT OF SHARES................................................7
(a) General.................................................................7
(b) Mergers and Consolidations..............................................7
(c) Reservation of Rights...................................................7
SECTION 9. SECURITIES LAWS REQUIREMENTS........................................8
(a) General.................................................................8
(b) Financial Reports.......................................................8
SECTION 10. NO RETENTION RIGHTS................................................8
SECTION 11. DURATION AND AMENDMENTS............................................8
(a) Term of the Plan........................................................8
(b) Right to Amend or Terminate the Plan....................................8
(c) Effect of Amendment or Termination......................................9
SECTION 12. DEFINITIONS........................................................9
SECTION 13. EXECUTION.........................................................11
</TABLE>
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<PAGE> 4
ALTOCOM, INC. 1997 STOCK PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The purpose of the Plan is to offer selected individuals an opportunity
to acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. ADMINISTRATION.
(a) COMMITTEES OF THE BOARD OF DIRECTORS. The Plan may be administered
by one or more Committees. Each Committee shall consist of two or more members
of the Board of Directors who have been appointed by the Board of Directors.
Each Committee shall have such authority and be responsible for such functions
as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.
(b) AUTHORITY OF THE BOARD OF DIRECTORS. Subject to the provisions of
the Plan, the Board of Directors shall have full authority and discretion to
take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of Directors
shall be final and binding on all Purchasers, all Optionees and all persons
deriving their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
(a) GENERAL RULE. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Options or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.
(B) TEN-PERCENT SHAREHOLDERS. An individual who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company, its
Parent or any of its Subsidiaries shall not be eligible for designation as an
Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the Fair
Market Value of a Share on the date of grant, (ii) the Purchase Price (if any)
is at least 100% of the Fair Market Value of a Share and (iii) 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. For purposes of this Subsection (b), in determining
stock ownership, the attribution rules of Section 424(d) of the Code shall be
applied.
1
<PAGE> 5
SECTION 4. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. The aggregate number of Shares that may be issued
under the Plan (upon exercise of Options or other rights to acquire Shares)
shall not exceed 3,861,218(1) Shares, subject to adjustment pursuant to Section
8. The number of Shares that are subject to Options or other rights outstanding
at any time under the Plan shall not exceed the number of Shares that 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 or
other right for any reason expires or is canceled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that Shares issued
under the Plan are reacquired by the Company pursuant to any forfeiture
provision, right of repurchase or right of first refusal, such Shares shall
again be available for the purposes of the Plan, except that the aggregate
number of Shares which may be issued upon the exercise of ISOs shall in no event
exceed 3,861,218 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
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 Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.
(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) PURCHASE PRICE. The Purchase Price of Shares to be offered under
the Plan shall not be less than 85% of the Fair Market Value of such Shares, and
a higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.
- --------------
(1) The Board approved a 2-for-1 stock split on April 7, 1998, and the Shares
were automatically adjusted from 1,700,000 to 3,400,000. On September 28,
1998, the board approved of a share increase equal to 461,218 (post-split)
Shares for a total of 3,861,218 Shares, as required by the financing which
was approved by the Board on April 7, 1998.
2
<PAGE> 6
(d) WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
(e) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of a Purchaser who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
at least as rapidly as 20% per year over the five-year period commencing on the
date of the award or sale of the Shares. Any such right may be exercised only
within 90 days after the termination of the Purchaser's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.
(f) ACCELERATED VESTING. Unless the applicable Stock Purchase Agreement
provides otherwise, any right to repurchase a Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject to a
Change in Control before the Purchaser's Service terminates and (ii) the
repurchase right is not assigned to the entity that employs the Purchaser
immediately after the Change in Control or to its parent or subsidiary.
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 Board of Directors 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.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two sentences, the Exercise Price under any Option shall be determined
by the Board of Directors at its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
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<PAGE> 7
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors 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 Board of Directors 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. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable at least as rapidly as 20% per
year over the five-year period commencing on the date of the grant. Subject to
the preceding sentence, the exercisability provisions of any Stock Option
Agreement shall be determined by the Board of Directors at its sole discretion.
(f) ACCELERATED EXERCISABILITY. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if (i) the Company is subject to a Change in Control before
the Optionee's Service terminates, (ii) such Options do not remain outstanding,
(iii) such Options are not assumed by the surviving corporation or its parent
and (iv) the surviving corporation or its parent does not substitute options
with substantially the same terms for such Options.
(g) BASIC TERM. The Stock Option Agreement shall specify the term of
the Option. The term shall not exceed 10 years from the date of grant, and a
shorter term may be required by Section 3(b). Subject to the preceding sentence,
the Board of Directors at its sole discretion shall determine when an Option is
to expire.
(h) NONTRANSFERABILITY. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's 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.
(i) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (g)
above;
(ii) The date three months after the termination of the Optionee's
Service for any reason other than Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability.
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<PAGE> 8
The Optionee may exercise all or part of the Optionee's Options at any
time before the expiration of such Options under the preceding sentence, but
only to the extent that such Options had become exercisable before the
Optionee's Service terminated (or became exercisable as a result of the
termination) and the underlying Shares had vested before the Optionee's Service
terminated (or vested as a result of the termination). The balance of such
Options shall lapse when the Optionee's Service terminates. In the event that
the Optionee dies after the termination of the Optionee's Service but before the
expiration of the Optionee's Options, all or part of such Options may be
exercised (prior to expiration) by the executors or administrators of the
Optionee's estate or by any person who has acquired such Options directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that such Options had become exercisable before the Optionee's Service
terminated (or became exercisable as a result of the termination) and the
underlying Shares had vested before the Optionee's Service terminated (or vested
as a result of the termination).
(j) LEAVES OF ABSENCE. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(k) DEATH OF OPTIONEE. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (g)
above; or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time
before the expiration of such Options under the preceding sentence by the
executors or administrators of the Optionee's estate or by any person who has
acquired such Options directly from the Optionee by beneficiary designation,
bequest or inheritance, but only to the extent that such Options had become
exercisable before the Optionee's death or became exercisable as a result of the
death. The balance of such Options shall lapse when the Optionee dies.
(l) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(m) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another 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. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
5
<PAGE> 9
(n) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors 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. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse at least
as rapidly as 20% per year over the five-year period commencing on the date of
the option grant. Any such repurchase right may be exercised only within 90 days
after the termination of the Optionee's Service for cash or for cancellation of
indebtedness incurred in purchasing the Shares.
(o) ACCELERATED VESTING. Unless the applicable Stock Option Agreement
provides otherwise, any right to repurchase an Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse and all of
such Shares shall become vested if (i) the Company is subject to a Change in
Control before the Optionee's Service terminates and (ii) the repurchase right
is not assigned to the entity that employs the Optionee immediately after the
Change in Control or to its parent or subsidiary.
SECTION 7. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) SERVICES RENDERED. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award.
(d) PROMISSORY NOTE. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. The Shares shall be pledged as security
for payment of the principal amount of the promissory
6
<PAGE> 10
note and interest thereon. The interest rate payable under the terms of the
promissory note shall not be less than the minimum rate (if any) required to
avoid the imputation of additional interest under the Code. Subject to the
foregoing, the Board of Directors (at its sole discretion) shall specify the
term, interest rate, amortization requirements (if any) and other provisions of
such note.
(e) EXERCISE/SALE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) EXERCISE/PLEDGE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
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 an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a
party to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company (if
the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by the
surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent
of options with substantially the same terms for such outstanding
Options; or
(iv) The cancellation of such outstanding Options without payment
of any consideration.
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<PAGE> 11
(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee or Purchaser 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 issuance 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 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. SECURITIES LAW REQUIREMENTS.
(a) GENERAL. Shares shall not be issued under the Plan unless the
issuance and delivery of such Shares comply with (or are 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 or
other securities market on which the Company's securities may then be traded.
(b) FINANCIAL REPORTS. The Company each year shall furnish to
Optionees, Purchasers and shareholders who have received Stock under the Plan
its balance sheet and income statement, unless such Optionees, Purchasers or
shareholders are key Employees whose duties with the Company assure them access
to equivalent information. Such balance sheet and income statement need not be
audited.
SECTION 10. NO RETENTION RIGHTS.
Nothing in the Plan or in any right or Option granted under the Plan
shall confer upon the Purchaser or Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Company (or any Parent or Subsidiary employing or
retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which
rights are hereby expressly reserved by each, to terminate his or her Service at
any time and for any reason, with or without cause.
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. In the event that the shareholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by the Board of Directors and may be terminated on any
earlier date pursuant to Subsection (b) below.
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<PAGE> 12
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's shareholders.
Shareholder approval shall not be required for any other amendment of the Plan.
(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 Share previously issued or any Option
previously granted under the Plan.
SECTION 12. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such
merger, consolidation or other reorganization is owned by persons who
were not shareholders of the Company immediately prior to such merger,
consolidation or other reorganization; or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(e) "COMPANY" shall mean AltoCom, Inc., a California corporation.
(f) "CONSULTANT" shall mean an individual who performs bona fide
services for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Outside Directors.
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<PAGE> 13
(g) "DISABILITY" shall mean that the Optionee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment.
(h) "EMPLOYEE" shall mean any individual who is a common-law employee
of the Company, a Parent or a Subsidiary.
(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "OPTIONEE" shall mean an individual who holds an Option.
(o) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors
who is not an Employee.
(p) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
(q) "PLAN" shall mean this AltoCom, Inc. 1997 Stock Plan.
(r) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Board of Directors.
(s) "PURCHASER" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).
(t) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
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<PAGE> 14
(u) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(v) "STOCK" shall mean the Common Stock of the Company.
(w) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to the Optionee's Option.
(x) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(y) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. 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 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors, the
Company has caused its authorized officer to execute the same.
ALTOCOM, INC.
By:______________________________
Title:___________________________
11
<PAGE> 1
EXHIBIT 99.2
ALTOCOM, INC. 1997 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
You have been granted the following option to purchase Common Stock
of AltoCom, Inc. (the "Company"):
<TABLE>
<S> <C>
Name of Optionee: (Name)
Total Number of Shares Granted: (Total Shares)
Type of Option: (ISO) Incentive Stock Option
(NSO) Nonstatutory Stock Option
Exercise Price Per Share: $ (Price Per Share)
Date of Grant: (Date Grant)
Date Exercisable: This option may be exercised, in whole or in
part, for 100% of the Shares subject to this
option at any time after the Date of Grant.
Vesting Commencement Date: (Vest Com Date)
Vesting Schedule: The Right of Repurchase shall lapse with respect
to the first 25% of the Shares subject to this
option when the Optionee completes 12 months of
continuous Service after the Vesting Commencement
Date. The Right of Repurchase shall lapse with
respect to an additional 1/42nd of the Shares
subject to this option when the Optionee completes
each month of continuous Service thereafter.
Expiration Date: (Exp Date)
</TABLE>
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 1997 Stock Plan and the Stock Option Agreement, both
of which are attached to and made a part of this document.
OPTIONEE: ALTOCOM, INC.
________________________________ By: ________________________________
________________________________ Title: _____________________________
Print Name
<PAGE> 2
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF 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.
ALTOCOM, INC. 1997 STOCK PLAN:
STOCK OPTION AGREEMENT
SECTION 1. GRANT OF OPTION.
(a) OPTION. On the terms and conditions set forth in the Notice of
Stock Option Grant and this Agreement, the Company grants to the Optionee on the
Date of Grant the option to purchase at the Exercise Price the number of Shares
set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to
be at least 100% of the Fair Market Value per Share on the Date of Grant (110%
of Fair Market Value if Section 3(b) of the Plan applies). This option is
intended to be an ISO or a Nonstatutory Option, as provided in the Notice of
Stock Option Grant.
(b) STOCK PLAN AND DEFINED TERMS. This option is granted pursuant to
the Plan, a copy of which the Optionee acknowledges having received. The
provisions of the Plan are incorporated into this Agreement by this reference.
Capitalized terms are defined in Section 14 of this Agreement.
SECTION 2. RIGHT TO EXERCISE.
(a) EXERCISABILITY. Subject to Subsections (b) and (c) below and the
other conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7.
(b) $100,000 LIMITATION. If this Option is designated as an ISO in
the Notice of Stock Option Grant, then the Optionee's right to exercise this
option shall be deferred to the extent (and only to the extent) that this option
otherwise would not be treated as an ISO by reason of the $100,000 annual
limitation under Section 422(d) of the Code, except that:
(i) The Optionee's right to exercise this option shall not be
deferred with respect to that portion of the Shares subject to this
option whose Fair Market Value as of the Date of Grant exceeds
$500,000; and
(ii) The Optionee's right to exercise this option shall no longer
be deferred in the event that (A) a Change in Control occurs, (B)
this option is not assumed by the surviving corporation or its parent
and (C) the surviving corporation or its parent does not substitute
its own option for this option.
<PAGE> 3
(c) SHAREHOLDER APPROVAL. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's shareholders.
SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this option and the
rights and privileges conferred hereby shall not be sold, pledged or otherwise
transferred (whether by operation of law or otherwise) and shall not be subject
to sale under execution, attachment, levy or similar process.
SECTION 4. EXERCISE PROCEDURES.
(a) NOTICE OF EXERCISE. The Optionee or the Optionee's representative
may exercise this option by giving written notice to the Company pursuant to
Section 13(c). The notice shall specify the election to exercise this option,
the number of Shares for which it is being exercised and the form of payment.
The notice shall be signed by the person exercising this option. In the event
that this option is being exercised by the representative of the Optionee, the
notice shall be accompanied by proof (satisfactory to the Company) of the
representative's right to exercise this option. The Optionee or the Optionee's
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under Section 5 for the full amount of the
Purchase Price.
(b) ISSUANCE OF SHARES. After receiving a proper notice of exercise,
the Company shall cause to be issued a certificate or certificates for the
Shares as to which this option has been exercised, registered in the name of the
person exercising this option (or in the names of such person and his or her
spouse as community property or as joint tenants with right of survivorship).
The Company shall cause such certificate or certificates to be deposited in
escrow or delivered to or upon the order of the person exercising this option.
(c) WITHHOLDING TAXES. In the event that the Company determines that
it is required to withhold any tax as a result of the exercise of this option,
the Optionee, as a condition to the exercise of this option, shall make
arrangements satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
this option.
SECTION 5. PAYMENT FOR STOCK.
(a) CASH. All or part of the Purchase Price may be paid in cash or
cash equivalents.
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<PAGE> 4
(b) SURRENDER OF STOCK. All or any part of the Purchase Price may be
paid by surrendering, or attesting to the ownership of, Shares that are already
owned by the Optionee. Such Shares shall be surrendered to the Company in good
form for transfer and shall be valued at their fair market value (as determined
by the Board of Directors) on the date when this option is exercised. The
Optionee shall not surrender, or attest to the ownership of, Shares in payment
of the Purchase Price if such action would cause the Company to recognize
compensation expense (or additional compensation expense) with respect to this
option for financial reporting purposes.
(c) EXERCISE/SALE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.
(d) EXERCISE/PLEDGE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
SECTION 6. TERM AND EXPIRATION.
(a) BASIC TERM. This option shall in any event expire on the
expiration date set forth in the Notice of Stock Option Grant, which date is 10
years after the Date of Grant (five years after the Date of Grant if this option
is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of
the Plan applies).
(b) TERMINATION OF SERVICE (EXCEPT BY DEATH). If the Optionee's
Service terminates for any reason other than death, then this option shall
expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (a)
above;
(ii) The date three months after the termination of the
Optionee's Service for any reason other than Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability.
The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's Service terminated. When the
Optionee's Service terminates, this option shall expire immediately with respect
to the number of Shares for which this option is not yet exercisable and with
respect to any Restricted Shares. In the event that the Optionee dies after
termination of Service but before the expiration of this option, all or part of
this option may be exercised (prior to expiration) by the executors or
administrators of the Optionee's estate or by any person who has acquired this
option directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's Service terminated.
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<PAGE> 5
(c) DEATH OF THE OPTIONEE. If the Optionee dies while in Service,
then this option shall expire on the earlier of the following dates:
(i) The expiration date determined pursuant to Subsection (a)
above; or
(ii) The date 12 months after the Optionee's death.
All or part of this option may be exercised at any time before its expiration
under the preceding sentence by the executors or administrators of the
Optionee's estate or by any person who has acquired this option directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that this option had become exercisable before the Optionee's death. When
the Optionee dies, this option shall expire immediately with respect to the
number of Shares for which this option is not yet exercisable and with respect
to any Restricted Shares.
(d) LEAVES OF ABSENCE. For any purpose under this Agreement, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for such purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(e) NOTICE CONCERNING ISO TREATMENT. If this option is designated as
an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable
tax treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
SECTION 7. RIGHT OF REPURCHASE.
(a) SCOPE OF REPURCHASE RIGHT. Unless they have become vested in
accordance with the Notice of Stock Option Grant and Subsection (c) below, the
Shares acquired under this Agreement initially shall be Restricted Shares and
shall be subject to a right (but not an obligation) of repurchase by the
Company. The Optionee shall not transfer, assign, encumber or otherwise dispose
of any Restricted Shares, except as provided in the following sentence. The
Optionee may transfer Restricted Shares (i) by beneficiary designation, will or
intestate succession or (ii) to the Optionee's spouse, children or grandchildren
or to a trust established by the Optionee for the benefit of the Optionee or the
Optionee's spouse, children or grandchildren, provided in either case that the
Transferee agrees in writing on a form prescribed by the Company to be bound by
all provisions of this Agreement. If the Optionee transfers any Restricted
Shares, then this Section 7 shall apply to the Transferee to the same extent as
to the Optionee.
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(b) CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable only during the 60-day period next following the later of:
(i) The date when the Optionee's Service terminates for any
reason, with or without cause, including (without limitation) death
or disability; or
(ii) The date when this option was exercised by the Optionee, the
executors or administrators of the Optionee's estate or any person
who has acquired this option directly from the Optionee by bequest,
inheritance or beneficiary designation.
(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse
with respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant. In addition, the Right
of Repurchase shall lapse and all of the remaining Restricted Shares shall
become vested if (i) the Company is subject to a Change in Control before the
Optionee's Service terminates and (ii) the Right of Repurchase is not assigned
to the entity that employs the Optionee immediately after the Change in Control
or to its parent or subsidiary.
(d) REPURCHASE COST. If the Company exercises the Right of
Repurchase, it shall pay the Optionee an amount equal to the Exercise Price for
each of the Restricted Shares being repurchased.
(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Optionee prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Optionee the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Optionee in the purchase of the Restricted Shares. The Right of Repurchase shall
terminate with respect to any Restricted Shares for which it has not been timely
exercised pursuant to this Subsection (e).
(f) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. Appropriate adjustments shall also, after each such
transaction, be made to the price per share to be paid upon the exercise of the
Right of Repurchase in order to reflect any
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<PAGE> 7
change in the Company's outstanding securities effected without receipt of
consideration therefor; provided, however, that the aggregate purchase price
payable for the Restricted Shares shall remain the same.
(g) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Shares to be repurchased in
accordance with this Section 7, then after such time the person from whom such
Restricted Shares are to be repurchased shall no longer have any rights as a
holder of such Restricted Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Restricted Shares
shall be deemed to have been repurchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.
(h) ESCROW. Upon issuance, the certificates for Restricted Shares
shall be deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be delivered
to the Company to be held in escrow, but only to the extent the Shares are at
the time Restricted Shares. All regular cash dividends on Restricted Shares (or
other securities at the time held in escrow) shall be paid directly to the
Optionee and shall not be held in escrow. Restricted Shares, together with any
other assets or securities held in escrow hereunder, shall be (i) surrendered to
the Company for repurchase and cancellation upon the Company's exercise of its
Right of Repurchase or Right of First Refusal or (ii) released to the Optionee
upon the Optionee's request to the extent the Shares are no longer Restricted
Shares (but not more frequently than once every six months). In any event, all
Shares which have vested (and any other vested assets and securities
attributable thereto) shall be released within 60 days after the earlier of (i)
the Optionee's cessation of Service or (ii) the lapse of the Right of First
Refusal.
SECTION 8. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event that the Optionee proposes
to sell, pledge or 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
the Optionee desires to transfer Shares acquired under this Agreement, the
Optionee shall 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, the name and address of the proposed
Transferee and proof satisfactory to the Company that the proposed sale or
transfer will not violate any applicable federal or state securities laws. The
Transfer Notice shall be signed both by the Optionee and by the proposed
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 under
Subsection (b) below) 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 (a) shall be freely
assignable, in whole or in part.
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<PAGE> 8
(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Optionee 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,
provided that any such sale is made in compliance with applicable federal and
state securities laws and not in violation of any other contractual restrictions
to which the Optionee is bound. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Optionee, shall again be subject to the Right of First
Refusal and shall require compliance with the procedure described in Subsection
(a) 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 cash or cash
equivalents paid at the time of transfer, the Company shall have the option of
paying for the Shares with cash or cash equivalents equal to the present value
of the consideration described in the Transfer Notice.
(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 8 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 8. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 8.
(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of
this Section 8 notwithstanding, in the event that the Stock is readily tradable
on an established securities market when the Optionee desires to transfer
Shares, the Company shall have no Right of First Refusal, and the Optionee shall
have no obligation to comply with the procedures prescribed by Subsections (a)
and (b) above.
(e) PERMITTED TRANSFERS. This Section 8 shall not apply to (i) a
transfer by beneficiary designation, will or intestate succession or (ii) a
transfer to the Optionee's spouse, children or to a trust established by the
Optionee for the benefit of the Optionee or the Optionee's spouse, children or
grandchildren, provided in either case that the Transferee agrees in writing on
a form prescribed by the Company to be bound by all provisions of this
Agreement. If the Optionee transfers any Shares acquired under this Agreement,
either under this Subsection (e) or after the Company has failed to exercise the
Right of First Refusal, then this Section 8 shall apply to the Transferee to the
same extent as to the Optionee.
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<PAGE> 9
(f) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
this Section 8, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to receive payment of such consideration in accordance with this
Agreement). Such Shares shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefor have been delivered as required by this Agreement.
SECTION 9. LEGALITY OF INITIAL ISSUANCE.
No Shares shall be issued upon the exercise of this option unless and
until the Company has determined that:
(a) It and the Optionee have taken any actions required to register
the Shares under the Securities Act or to perfect an exemption from the
registration requirements thereof;
(b) Any applicable listing requirement of any stock exchange on which
Stock is listed has been satisfied; and
(c) Any other applicable provision of state or federal law has been
satisfied.
SECTION 10. NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify
the sale of Shares under the Securities Act or any other applicable law. The
Company shall not be obligated to take any affirmative action in order to cause
the sale of Shares under this Agreement to comply with any law.
SECTION 11. RESTRICTIONS ON TRANSFER.
(a) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering
and sale of Shares under the Plan have been registered under the Securities Act
or have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
(b) MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, the Optionee shall not directly or indirectly sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any Shares acquired
under this Agreement without the prior written consent of the
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<PAGE> 10
Company or its underwriters. Such restriction (the "Market Stand-Off") shall be
in effect for such period of time following the date of the final prospectus for
the offering as may be requested by the Company or such underwriters. In no
event, however, shall such period exceed 180 days. The Market Stand-Off shall in
any event terminate two years after the date of the Company's initial public
offering. In the event of the declaration of a stock dividend, a spin-off, a
stock split, an adjustment in conversion ratio, a recapitalization or a similar
transaction affecting the Company's outstanding securities without receipt of
consideration, any new, substituted or additional securities which are by reason
of such transaction distributed with respect to any Shares subject to the Market
Stand-Off, or into which such Shares thereby become convertible, shall
immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect to the
Shares acquired under this Agreement until the end of the applicable stand-off
period. The Company's underwriters shall be beneficiaries of the agreement set
forth in this Subsection (b). This Subsection (b) shall not apply to Shares
registered in the public offering under the Securities Act, and the Optionee
shall be subject to this Subsection (b) only if the directors and officers of
the Company are subject to similar arrangements.
(c) INVESTMENT INTENT AT GRANT. The Optionee represents and agrees
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.
(d) INVESTMENT INTENT AT EXERCISE. In the event that the sale of
Shares under the Plan is not registered under the Securities Act but an
exemption is available which requires an investment representation or other
representation, the Optionee 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, and
shall make such other representations as are deemed necessary or appropriate by
the Company and its counsel.
(e) LEGENDS. All certificates evidencing Shares purchased under this
Agreement shall bear the following legend:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN
INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY
CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE
SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE
WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN
REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE."
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All certificates evidencing Shares purchased under this Agreement in an
unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):
"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."
(f) REMOVAL OF LEGENDS. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
(g) ADMINISTRATION. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Section 11 shall be
conclusive and binding on the Optionee and all other persons.
SECTION 12. ADJUSTMENT OF SHARES.
In the event of any transaction described in Section 8(a) of the
Plan, the terms of this option (including, without limitation, the number and
kind of Shares subject to this option and the Exercise Price) shall be adjusted
as set forth in Section 8(a) of the Plan. In the event that the Company is a
party to a merger or consolidation, this option shall be subject to the
agreement of merger or consolidation, as provided in Section 8(b) of the Plan.
SECTION 13. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the Optionee's
representative shall have any rights as a shareholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Purchase Price pursuant to Sections 4 and 5.
(b) NO RETENTION RIGHTS. Nothing in this option or in the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without
cause.
(c) NOTICE. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.
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(d) ENTIRE AGREEMENT. The Notice of Stock Option Grant, this
Agreement and the Plan constitute the entire contract between the parties hereto
with regard to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) which relate to the subject matter hereof.
(e) CHOICE OF LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State.
SECTION 14. DEFINITIONS.
(a) "AGREEMENT" shall mean this Stock Option Agreement.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time or, if a Committee has been appointed,
such Committee.
(c) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization,
if more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such
merger, consolidation or other reorganization is owned by persons
who were not shareholders of the Company immediately prior to such
merger, consolidation or other reorganization; or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.
(f) "COMPANY" shall mean AltoCom, Inc., a California corporation.
(g) "CONSULTANT" shall mean an individual who performs bona fide
services for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Outside Directors.
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(h) "DATE OF GRANT" shall mean the date specified in the Notice of
Stock Option Grant, which date shall be the later of (i) the date on which the
Board of Directors resolved to grant this option or (ii) the first day of the
Optionee's Service.
(i) "DISABILITY" shall mean that the Optionee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment.
(j) "EMPLOYEE" shall mean any individual who is a common-law
employee of the Company, a Parent or a Subsidiary.
(k) "EXERCISE PRICE" shall mean the amount for which one Share may
be purchased upon exercise of this option, as specified in the Notice of Stock
Option Grant.
(l) "FAIR MARKET VALUE" shall mean the fair market value of a Share,
as determined by the Board of Directors in good faith. Such determination shall
be conclusive and binding on all persons.
(m) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(n) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(o) "NOTICE OF STOCK OPTION GRANT" shall mean the document so
entitled to which this Agreement is attached.
(p) "OPTIONEE" shall mean the individual named in the Notice of
Stock Option Grant.
(q) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors
who is not an Employee.
(r) "PARENT" shall mean any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(s) "PLAN" shall mean the AltoCom, Inc. 1997 Stock Plan, as in
effect on the Date of Grant.
(t) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the
number of Shares with respect to which this option is being exercised.
(u) "RESTRICTED SHARE" shall mean a Share that is subject to the
Right of Repurchase.
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(v) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 8.
(w) "RIGHT OF REPURCHASE" shall mean the Company's right of
repurchase described in Section 7.
(x) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(y) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
(z) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 of the Plan (if applicable).
(aa) "STOCK" shall mean the Common Stock of the Company.
(bb) "SUBSIDIARY" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(cc) "TRANSFEREE" shall mean any person to whom the Optionee has
directly or indirectly transferred any Share acquired under this Agreement.
(dd) "TRANSFER NOTICE" shall mean the notice of a proposed transfer
of Shares described in Section 8.
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<PAGE> 1
EXHIBIT 99.3
ALTOCOM, INC. 1997 STOCK PLAN:
STOCK PURCHASE AGREEMENT
1. ACQUISITION OF SHARES.
(a) TRANSFER. On the terms and conditions set forth in the Summary of Stock
Purchase and this Agreement, the Company agrees to transfer to the Purchaser the
number of Shares set forth in the Summary of Stock Purchase. The transfer shall
occur at the offices of the Company on the date of purchase set forth in the
Summary of Stock Purchase or at such other place and time as the parties may
agree.
(b) CONSIDERATION. The Purchaser agrees to pay the Purchase Price set forth
in the Summary of Stock Purchase for each Purchased Share. The Purchase Price is
agreed to be at least 100% of the Fair Market Value of the Purchased Shares.
Payment shall be made on the transfer date in cash or cash equivalents.
(c) STOCK PLAN AND DEFINED TERMS. The transfer of the Purchased Shares is
subject to the Plan, a copy of which the Purchaser acknowledges having received.
The provisions of the Plan are incorporated into this Agreement by this
reference. Capitalized terms are defined in Section 12 of this Agreement.
2. RIGHT OF REPURCHASE.
(a) SCOPE OF REPURCHASE RIGHT. All Purchased Shares initially shall be
Restricted Shares and shall be subject to a right (but not an obligation) of
repurchase by the Company. The Purchaser shall not transfer, assign, encumber or
otherwise dispose of any Restricted Shares, except as provided in the following
sentence. The Purchaser may transfer Restricted Shares (i) by beneficiary
designation, will or intestate succession or (ii) to the Purchaser's spouse,
children or grandchildren or to a trust established by the Purchaser for the
benefit of the Purchaser or the Purchaser's spouse, children or grandchildren,
provided in either case that the Transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement. If
the Purchaser transfers any Restricted Shares, then this Section 2 shall apply
to the Transferee to the same extent as to the Purchaser.
(b) CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable only during the 60-day period next following the date when the
Purchaser's Service terminates for any reason, with or without cause, including
(without limitation) death or disability.
(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse with
respect to the Purchased Shares in accordance with the vesting schedule set
forth in the Summary of Stock Purchase. In addition, the Right of Repurchase
shall lapse and all of the remaining Restricted Shares shall become vested if
(i) the Company is subject to a Change in Control before the Purchaser's Service
terminates and (ii) the Right of Repurchase is not assigned to the entity that
employs the Purchaser immediately after the Change in Control or to its parent
or subsidiary.
(d) REPURCHASE COST. If the Company exercises the Right of Repurchase, it
shall pay the Purchaser an amount equal to the Purchase Price for each of the
Restricted Shares being repurchased.
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(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Purchaser prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Purchaser the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Purchaser in the purchase of the Restricted Shares. The Right of Repurchase
shall terminate with respect to any Restricted Shares for which it has not been
timely exercised pursuant to this Subsection (e).
(f) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. Appropriate adjustments shall also, after each such
transaction, be made to the price per share to be paid upon the exercise of the
Right of Repurchase in order to reflect any change in the Company's outstanding
securities effected without receipt of consideration therefor; provided,
however, that the aggregate purchase price payable for the Restricted Shares
shall remain the same.
(g) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with
this Section 2, then after such time the person from whom such Restricted Shares
are to be repurchased shall no longer have any rights as a holder of such
Restricted Shares (other than the right to receive payment of such consideration
in accordance with this Agreement). Such Restricted Shares shall be deemed to
have been repurchased in accordance with the applicable provisions hereof,
whether or not the certificate(s) therefor have been delivered as required by
this Agreement.
(h) ESCROW. Upon issuance, the certificates for Restricted Shares shall be
deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be delivered
to the Company to be held in escrow, but only to the extent the Purchased Shares
are at the time Restricted Shares. All regular cash dividends on Restricted
Shares (or other securities at the time held in escrow) shall be paid directly
to the Purchaser and shall not be held in escrow. Restricted Shares, together
with any other assets or securities held in escrow hereunder, shall be (i)
surrendered to the Company for repurchase and cancellation upon the Company's
exercise of its Right of Repurchase or Right of First Refusal or (ii) released
to the Purchaser upon the Purchaser's request to the extent the Purchased Shares
are no longer Restricted Shares (but not more frequently than once every six
months). In any event, all Purchased Shares which have vested (and any other
vested assets and securities attributable thereto) shall be released within 60
days after the earlier of (i) the Purchaser's cessation of Service or (ii) the
lapse of the Right of First Refusal.
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<PAGE> 3
3. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event that the Purchaser proposes to
sell, pledge or otherwise transfer to a third party any Purchased Shares, or any
interest in such Purchased Shares, the Company shall have the Right of First
Refusal with respect to all (and not less than all) of such Purchased Shares. If
the Purchaser desires to transfer Purchased Shares, the Purchaser shall give a
written Transfer Notice to the Company describing fully the proposed transfer,
including the number of Purchased Shares proposed to be transferred, the
proposed transfer price, the name and address of the proposed Transferee and
proof satisfactory to the Company that the proposed sale or transfer will not
violate any applicable federal or state securities laws. The Transfer Notice
shall be signed both by the Purchaser and by the proposed Transferee and must
constitute a binding commitment of both parties to the transfer of the Purchased
Shares. The Company shall have the right to purchase all, and not less than all,
of the Purchased Shares on the terms of the proposal described in the Transfer
Notice (subject, however, to any change in such terms permitted under Subsection
(b) below) 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 (a) shall be freely
assignable, in whole or in part.
(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of First
Refusal within 30 days after the date when it received the Transfer Notice, the
Purchaser may, not later than 90 days following receipt of the Transfer Notice
by the Company, conclude a transfer of the Purchased Shares subject to the
Transfer Notice on the terms and conditions described in the Transfer Notice,
provided that any such sale is made in compliance with applicable federal and
state securities laws and not in violation of any other contractual restrictions
to which the Purchaser is bound. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Purchaser, shall again be subject to the Right of First
Refusal and shall require compliance with the procedure described in Subsection
(a) above. If the Company exercises its Right of First Refusal, the parties
shall consummate the sale of the Purchased 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 Purchased Shares was to be made in a form other
than cash or cash equivalents paid at the time of transfer, the Company shall
have the option of paying for the Purchased Shares with cash or cash equivalents
equal to the present value of the consideration described in the Transfer
Notice.
(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Purchased Shares subject to this Section 3 or
into which such Purchased Shares thereby become convertible shall immediately be
subject to this Section 3. Appropriate adjustments to reflect the distribution
of such securities or property shall be made to the number and/or class of
Purchased Shares subject to this Section 3.
(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 3 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Purchaser desires to transfer Purchased
Shares, the Company shall have no Right of First Refusal, and the Purchaser
shall have no obligation to comply with the procedures prescribed by Subsections
(a) and (b) above.
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<PAGE> 4
(e) PERMITTED TRANSFERS. This Section 3 shall not apply to (i) a transfer
by beneficiary designation, will or intestate succession or (ii) a transfer to
the Purchaser's spouse, children or grandchildren or to a trust established by
the Purchaser for the benefit of the Purchaser or the Purchaser's spouse,
children or grandchildren, provided in either case that the Transferee agrees in
writing on a form prescribed by the Company to be bound by all provisions of
this Agreement. If the Purchaser transfers any Purchased Shares, either under
this Subsection (e) or after the Company has failed to exercise the Right of
First Refusal, then this Section 3 shall apply to the Transferee to the same
extent as to the Purchaser.
(f) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be purchased in accordance with this
Section 3, then after such time the person from whom such Purchased Shares are
to be purchased shall no longer have any rights as a holder of such Purchased
Shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such Purchased Shares shall be deemed to have
been purchased in accordance with the applicable provisions hereof, whether or
not the certificate(s) therefor have been delivered as required by this
Agreement.
4. OTHER RESTRICTIONS ON TRANSFER.
(a) PURCHASER REPRESENTATIONS. In connection with the issuance and
acquisition of Shares under this Agreement, the Purchaser hereby represents and
warrants to the Company as follows:
(i) The Purchaser is acquiring and will hold the Purchased Shares for
investment for his or her account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of
the Securities Act.
(ii) The Purchaser understands that the Purchased Shares have not been
registered under the Securities Act by reason of a specific exemption
therefrom and that the Purchased Shares must be held indefinitely, unless
they are subsequently registered under the Securities Act or the Purchaser
obtains an opinion of counsel, in form and substance satisfactory to the
Company and its counsel, that such registration is not required. The
Purchaser further acknowledges and understands that the Company is under no
obligation to register the Purchased Shares.
(iii) The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission under the Securities Act, which permits
limited public resales of securities acquired in a non-public offering,
subject to the satisfaction of certain conditions, including (without
limitation) the availability of certain current public information about
the issuer, the resale occurring only after the holding period required by
Rule 144 has been satisfied, the sale occurring through an unsolicited
"broker's transaction," and the amount of securities being sold during any
three-month period not exceeding specified limitations. The Purchaser
acknowledges and understands that the conditions for resale set forth in
Rule 144 have not been satisfied and that the Company has no plans to
satisfy these conditions in the foreseeable future.
(iv) The Purchaser will not sell, transfer or otherwise dispose of the
Purchased Shares in violation of the Securities Act, the Securities
Exchange Act of 1934, or the rules promulgated thereunder, including Rule
144 under the Securities Act. The Purchaser agrees that he or she will not
dispose of the Purchased Shares unless and until he or she has complied
with all requirements of this Agreement applicable to the disposition of
Purchased Shares and he or she has provided the Company with written
4
<PAGE> 5
assurances, in substance and form satisfactory to the Company, that (A) the
proposed disposition does not require registration of the Purchased Shares
under the Securities Act or all appropriate action necessary for compliance
with the registration requirements of the Securities Act or with any
exemption from registration available under the Securities Act (including
Rule 144) has been taken and (B) the proposed disposition will not result
in the contravention of any transfer restrictions applicable to the
Purchased Shares under the Rules of the California Corporations
Commissioner.
(v) The Purchaser has been furnished with, and has had access to, such
information as he or she considers necessary or appropriate for deciding
whether to invest in the Purchased Shares, and the Purchaser has had an
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the issuance of the Purchased Shares.
(vi) The Purchaser is aware that his or her investment in the Company
is a speculative investment which has limited liquidity and is subject to
the risk of complete loss. The Purchaser is able, without impairing his or
her financial condition, to hold the Purchased Shares for an indefinite
period and to suffer a complete loss of his or her investment in the
Purchased Shares.
(b) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and
sale of Shares under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of the Purchased Shares (including the placement of appropriate legends
on stock certificates or the imposition of stop-transfer instructions) if, in
the judgment of the Company, such restrictions are necessary or desirable in
order to achieve compliance with the Securities Act, the securities laws of any
state or any other law.
(c) MARKET STAND-OFF. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial public
offering, the Purchaser shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, any Purchased Shares without the prior
written consent of the Company or its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time following the
date of the final prospectus for the offering as may be requested by the Company
or such underwriters. In no event, however, shall such period exceed 180 days.
The Market Stand-Off shall in any event terminate two years after the date of
the Company's initial public offering. In the event of the declaration of a
stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to
any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Purchased Shares until the end of the
applicable stand-off period. The Company's underwriters shall be beneficiaries
of the agreement set forth in this Subsection (c). This Subsection (c) shall not
apply to Shares registered in the public offering under the Securities Act, and
the Purchaser shall be subject to this Subsection (c) only if the directors and
officers of the Company are subject to similar arrangements.
5
<PAGE> 6
(d) RIGHTS OF THE COMPANY. The Company shall not be required to (i)
transfer on its books any Purchased Shares that have been sold or transferred in
contravention of this Agreement or (ii) treat as the owner of Purchased Shares,
or otherwise to accord voting, dividend or liquidation rights to, any transferee
to whom Purchased Shares have been transferred in contravention of this
Agreement.
5. SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided to the contrary, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns and be binding upon the Purchaser and the
Purchaser's legal representatives, heirs, legatees, distributees, assigns and
transferees by operation of law, whether or not any such person has become a
party to this Agreement or has agreed in writing to join herein and to be bound
by the terms, conditions and restrictions hereof.
6. NO RETENTION RIGHTS.
Nothing in this Agreement or in the Plan shall confer upon the Purchaser
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Purchaser) or of the
Purchaser, which rights are hereby expressly reserved by each, to terminate his
or her Service at any time and for any reason, with or without cause.
7. TAX ELECTION.
The acquisition of the Purchased Shares may result in adverse tax
consequences that may be avoided or mitigated by filing an election under Code
Section 83(b). Such election may be filed only within 30 days after the date of
purchase set forth in the Summary of Stock Purchase. The form for making the
Code Section 83(b) election is attached to this Agreement as an Exhibit. THE
PURCHASER SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX
CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND
DISADVANTAGES OF FILING THE CODE SECTION 83(B) ELECTION. THE PURCHASER
ACKNOWLEDGES THAT IT IS HIS OR HER SOLE RESPONSIBILITY, AND NOT THE COMPANY'S,
TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF THE PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
8. LEGENDS.
All certificates evidencing Purchased Shares shall bear the following
legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER
OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH
AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN
ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON
TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE."
6
<PAGE> 7
"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."
If required by the authorities of any state in connection with the issuance of
the Purchased Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
9. NOTICE.
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit
with the United States Postal Service, by registered or certified mail, with
postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Purchaser at the address that he or she
most recently provided to the Company.
10. ENTIRE AGREEMENT.
The Summary of Stock Purchase, this Agreement and the Plan constitute the
entire contract between the parties hereto with regard to the subject matter
hereof. They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.
11. CHOICE OF LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California, as such laws are applied to contracts entered
into and performed in such State.
12. DEFINITIONS.
(a) "AGREEMENT" shall mean this Stock Purchase Agreement.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time or, if a Committee has been appointed, such
Committee.
(c) "CHANGE IN CONTROL" shall mean:
(i) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not shareholders of the
Company immediately prior to such merger, consolidation or other
reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets.
7
<PAGE> 8
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create
a holding company that will be owned in substantially the same proportions
by the persons who held the Company's securities immediately before such
transaction.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.
(f) "COMPANY" shall mean AltoCom, Inc., a California corporation.
(g) "CONSULTANT" shall mean an individual who performs bona fide services
for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
(h) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(j) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who is
not an Employee.
(k) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(l) "PLAN" shall mean the AltoCom, Inc. 1997 Stock Plan, as amended.
(m) "PURCHASED SHARES" shall mean the Shares purchased by the Purchaser
pursuant to this Agreement.
(n) "PURCHASE PRICE" shall mean the amount for which one Share may be
purchased pursuant to this Agreement, as specified in the Summary of Stock
Purchase.
(o) "PURCHASER" shall mean the individual named in the Summary of Stock
Purchase.
(p) "RESTRICTED SHARE" shall mean a Purchased Share that is subject to the
Right of Repurchase.
(q) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 3.
(r) "RIGHT OF REPURCHASE" shall mean the Company's right of repurchase
described in Section 2.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
8
<PAGE> 9
(t) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.
(u) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 of the Plan (if applicable).
(v) "STOCK" shall mean the Common Stock of the Company.
(w) "SUBSIDIARY" shall mean any corporation (other than the Company) in an
unbroken chain or corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(x) "SUMMARY OF STOCK PURCHASE" shall mean the document so entitled to
which this Agreement is attached.
(y) "TRANSFEREE" shall mean any person to whom the Purchaser has directly
or indirectly transferred any Purchased Share.
(z) "TRANSFER NOTICE" shall mean the notice of a proposed transfer of
Purchased Shares described in Section 3.
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<PAGE> 10
EXHIBIT I
SECTION 83(b) ELECTION
This statement is made under Section 83(b) of the Internal Revenue Code of 1986,
as amended, pursuant to Treasury Regulations Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Social Security No.:
(2) The property with respect to which the election is made is ______
shares of the common stock of AltoCom, Inc.
(3) The property was transferred on ________ __, 199__.
(4) The taxable year for which the election is made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's service with the issuer is
terminated. The issuer's repurchase right lapses in a series of
installments over a ______-year period ending on ___________ ____,
_____.
(6) The fair market value of such property at the time of transfer
(determined without regard to any restriction other than a restriction
which by its terms will never lapse) is $___ per share.
(7) The amount paid for such property is $____ per share.
(8) A copy of this statement was furnished to AltoCom, Inc., for whom
taxpayer rendered the services underlying the transfer of such
property.
(9) This statement is executed on _______ __, 199___.
- ----------------------------------- ----------------------------------------
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
the Purchaser files his or her Federal income tax returns and must be filed
within 30 days after the date of purchase. This filing should be made by
registered or certified mail, return receipt requested. The Purchaser must
retain two copies of the completed form for filing with his or her Federal and
state tax returns for the current tax year and an additional copy for his or her
records.
<PAGE> 11
ALTOCOM, INC. 1997 STOCK PLAN:
SUMMARY OF STOCK PURCHASE
By your signature and the signature of the Company's representative below, you
and the Company agree that you are purchasing shares subject to the terms and
conditions of the 1997 Stock Plan and the Stock Purchase Agreement, both of
which are attached to and made a part of this document.
Name of Purchaser: (Name)
Total Number of Purchased Shares: (TotalShares)
Purchase Price Per Share: $(PricePerShare)
Date of Purchase: (DatePurchase)
Vesting Commencement Date: (VestComDate)
Vesting Schedule: The Right of Repurchase
shall lapse with respect to the
first 33 and 1/3% of the
Purchased Shares when the
Purchaser completes 12 months of
continuous Service after the
Vesting Commencement Date. The
Right of Repurchase shall lapse
with respect to an additional
1/36th of the Purchased Shares
when the Purchaser completes each
month of continuous Service
thereafter.
PURCHASER: ALTOCOM, INC.
By:
- --------------------------------- ---------------------------------
Title:
- --------------------------------- ---------------------------------
Print Name
<PAGE> 1
EXHIBIT 99.4
[HOTHAUS TECHNOLOGIES INC LOGO]
INCENTIVE STOCK OPTION PLAN
Version 2.0
09/24/98
<PAGE> 2
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[HOTHAUS TECHNOLOGIES INC LOGO]
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1 INTRODUCTION.............................................................1
1.1 Purpose.............................................................1
1.2 Background..........................................................1
2 DEFINITIONS..............................................................2
3 ADMINISTRATION...........................................................4
3.1 Plan Administration.................................................4
3.2 Administrator Responsibilities......................................4
4 ELIGIBILITY..............................................................5
4.1 General.............................................................5
4.2 Insiders............................................................5
4.3 Outstanding Stock...................................................5
5 STOCK SUBJECT TO PLAN....................................................6
5.1 Basic Limitation....................................................6
5.2 Additional Shares...................................................6
6 TERMS AND CONDITIONS OF OPTION...........................................7
6.1 Employee Stock......................................................7
6.2 Number of Shares....................................................7
6.3 Exercise Price......................................................7
6.4 Exercise............................................................7
6.5 Withholding Taxes...................................................8
6.6 Term................................................................8
6.7 Nontransferability..................................................8
6.8 Termination of Service (Generally)..................................8
6.9 Death of Optionee...................................................8
6.10 Leaves of Absence...................................................9
6.11 No Rights as a Stockholder..........................................9
6.12 Modification, Extension and Assumption of Options...................9
</TABLE>
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Incentive Stock Option Plans Version 2.0 ii
<PAGE> 3
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[HOTHAUS TECHNOLOGIES INC LOGO]
<TABLE>
<S> <C>
7 ESCROW AND VOTING TRUST AGREEMENTS......................................10
7.1 General Rule.......................................................10
7.2 Release of Shares from Escrow......................................10
8 PAYMENT FOR SHARES......................................................12
8.1 General Rule.......................................................12
8.2 Legal Fees.........................................................12
9 ADJUSTMENT OF SHARES....................................................13
9.1 General............................................................13
10 SECURITIES LAWS.........................................................14
10.1 General............................................................14
10.2 Residency..........................................................14
11 NO EMPLOYMENT RIGHTS....................................................15
12 DURATION AND AMENDMENTS.................................................16
12.1 Term of the Plan...................................................16
12.2 Right to Amend or Terminate the Plan...............................16
12.3 Effect of Amendment of Termination.................................16
13 TRANSITIONAL PROVISIONS.................................................17
13.1 General............................................................17
13.2 Employees Who Have Exercised Options...............................17
13.3 Employees who have not exercised options...........................17
APPENDIX A - SAMPLE STOCK OPTION AGREEMENT...................................19
APPENDIX B - ESCROW AND VOTING TRUST AGREEMENT...............................27
APPENDIX C -OPTIONS GRANTED AS AT MAY 19, 1998...............................36
</TABLE>
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Incentive Stock Option Plans Version 2.0 iii
<PAGE> 4
1 INTRODUCTION
- --------------------------------------------------------------------------------
1.1 PURPOSE
The purpose of the Plan is to offer employees and directors of the Company an
opportunity to acquire a proprietary interest in the success of the Company by
purchasing Shares in the capital of the Company, and to provide a formal
framework to govern the administration of share purchase options previously
granted to employees and directors of the Company. The share purchase options
previously granted to employees of the Company and now governed by and
administered under this Plan are described in Appendix C.
1.2 BACKGROUND
The Company instituted its first stock option plan in December 1996 ("1996
Plan"). The 1996 Plan included several provisions that have been amended with
the adoption of the current plan.
<PAGE> 5
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[HOTHAUS TECHNOLOGIES INC LOGO]
2 DEFINITIONS
- --------------------------------------------------------------------------------
2.1 "Board of Directors" means the Board of Directors of the Company, as
constituted from time to time.
2.2 "Company" means HotHaus Technologies Inc., a company incorporated under the
COMPANY ACT (BRITISH COLUMBIA).
2.3 "Director" means a member of the Company's Board of Directors.
2.4 "Director Stock Option Agreement" means the agreement between the Company
and a Director, which contains, the terms, conditions and restrictions
pertaining to his/her Options, substantially in the form as outlined in Appendix
A.
2.5 "Employee" means an employee of the Company or a Subsidiary thereof, as
defined below.
2.6 "Employee Stock Option Agreement" means the agreement between the Company
and an Employee, which contains the terms, conditions and restrictions
pertaining to his/her Options, substantially in the form as outlined in Appendix
A.
2.7 "Exercise Price" means the amount for which one Share may be purchased upon
exercise of an Option, as specified in the applicable Option Agreement.
2.8 "Escrow Agreement" means an Escrow and Voting Trust Agreement among an
escrow agent, the Company and the Optionee substantially in the form as outlined
in Appendix B.
2.9 "Fair Market Value" means the fair market value of a Share, as determined by
the most recent material transaction in the Shares.
2.10 "Option" means the right and option to purchase from time to time, all or
any part of the optioned shares granted to an Employee or Director by the
Company pursuant to an Option Agreement.
2.11 "Option Agreement" means an Employee Stock Option Agreement or a Director
Stock Option Agreement.
2.12 "Optioned Shares" means voting Common shares in the capital of the Company
subject to an Option.
2.13 "Person" includes an individual, corporation, partnership, party, trust,
fund, association and any other organized group of persons and the personal or
other legal representative of a person to whom the context can apply according
to the law.
2.14 "Optionee" means an individual who holds an Option.
2.15 "Plan" means the incentive stock option plan described herein.
2.16 "Share" means a voting Common share in the capital of the Company.
2.17 "Subsidiary" has the meaning ascribed thereto in the Securities Act
(British Columbia). An entity that attains the status of a Subsidiary on a date
after the adoption of the Plan will be considered a Subsidiary commencing as of
the date on which it attains such status.
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3 ADMINISTRATION
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3.1 PLAN ADMINISTRATION
Unless otherwise determined by the Board of Directors, the Administrator of the
Plan will be the President of the Company. The Board of Directors may at any
time appoint an alternate Administrator or a committee to function as the
Administrator.
3.2 ADMINISTRATOR RESPONSIBILITIES
Subject to the provisions of the Plan and the overriding authority of the Board
of Directors to manage the business and affairs of the Company, the
Administrator will have full authority and discretion to take the following
actions:
(a) To interpret the Plan and to apply its provisions;
(b) To adopt, amend or rescind procedures and forms relating to
the Plan;
(c) To execute, on behalf of the Company, any instrument required
to carry out the purposes of the Plan;
(d) To determine when and to whom Options are to be granted under
the Plan, subject to the approval of the Board;
(e) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Administrator will be
final and binding. The Administrator will not be liable for any action that he
has taken or has failed to take in good faith with respect to the Plan, any
Option, or any right to acquire Shares under the Plan.
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4 ELIGIBILITY
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4.1 GENERAL
Employees and Directors who are not employees, contractors or agents of Texas
Instruments Inc. (TI) and Working Opportunity Fund (EVCC) Ltd. (WOF) are
eligible to receive a grant of Options under the Plan.
4.2 INSIDERS
"Insider" means,
(a) a director or senior officer of the Company,
(b) a director or senior officer of a Person that is itself an insider or
subsidiary of the Company, or
(c) a Person that has
(i) direct or indirect beneficial ownership of,
(ii) control or direction over, or
(iii) a combination of direct or indirect beneficial ownership of
and control or direction over securities of the Company
carrying more than 10% of the voting rights attached to all
the Company's outstanding voting securities, excluding for the
purpose of the calculation of the percentage held, any
securities held by the Person as underwriter in the course of
a distribution.
If required under the rules of a stock exchange to which the Company has made
application to list any of its securities, Option Agreements representing
Options granted to Insiders must be approved by an ordinary resolution of the
members of the Company entitled to vote at a general meeting of the Company
prior to the exercise of any of the Options represented by such agreements.
4.3 OUTSTANDING STOCK
For the purposes of Paragraph 4.2 above, "outstanding voting securities"
includes all securities actually issued and outstanding but does not include
securities authorized for issuance under outstanding Options.
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5 STOCK SUBJECT TO PLAN
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5.1 BASIC LIMITATION
Options granted under the Plan will be Options to acquire previously allotted,
but unissued Shares. The aggregate number of Shares reserved and allotted for
issuance under the Plan will, subject to Article 9, not exceed 15% of the total
number of Shares then outstanding on a fully-diluted basis, including the total
number of Shares allotted or to be allotted for issuance under the Plan, but
excluding: (a) Shares previously issued pursuant to the exercise of Options by
employees of the Company; and (b) Shares allotted for issuance to TI and WOF on
exercise of outstanding warrants, but not yet issued. The number of Shares that
are subject to Options governed by this Plan will not exceed the number of
Shares that are then reserved and allotted for issuance under the Plan. The
Company, during the currency of this Plan, will at all times have reserved and
allotted for issuance sufficient Shares to satisfy the requirements of this
Plan.
5.2 ADDITIONAL SHARES
If any outstanding Option or other right expires or is canceled or otherwise
terminated for any reason, then the Shares allocable to the unexercised portion
of the Option or other right will again be available for the purposes of the
Plan. If Shares issued under the Plan are reacquired by the Company pursuant to
any forfeiture provision or right of repurchase at the original Purchase Price,
then the Shares will again be available for the purposes of the Plan.
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6 TERMS AND CONDITIONS OF OPTION
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6.1 EMPLOYEE STOCK
Each grant of an Option under the Plan will be evidenced by an Option Agreement
(substantially in the form set out in Appendix A) between the Optionee and the
Company. The provisions of the various Option Agreements entered into under the
Plan need not be identical.
6.2 NUMBER OF SHARES
Each Option Agreement will specify the number of Shares that are subject to the
Option.
6.3 EXERCISE PRICE
Each Option Agreement will specify the Exercise Price and will provide for the
adjustment of the Exercise Price in accordance with Article 9. The Exercise
Price will be payable in a form described in Article 8.
6.4 EXERCISE
Each Option Agreement will specify the date when all or any installment of the
Option becomes exercisable. Where applicable, the Option Agreement will refer to
a corresponding Escrow Agreement.
The following schedule indicates the standard schedule for Options to become
exercisable (i.e., the vesting period):
o 25% of the total grant following completion of 12 consecutive months of
employment
o 50% of the total grant following completion of 24 consecutive months of
employment
o 75% of the total grant following completion of 36 consecutive months of
employment
o 100% of the total grant following completion of 48 consecutive months
of employment
Notwithstanding the foregoing provisions of this section, but subject to
applicable stock exchange rules and policies, if any, Optionees will be able to
exercise all unexercised options after one of the following events:
(a) an initial public offering of the Company's securities has
closed; or
(b) more than 50% of the voting share capital of the Company has
been acquired by a person or group not dealing at arm's length
who is or are not now shareholders of the Company or an
affiliate, subsidiary or relative of such a shareholder, other
than by way of security given in good faith.
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6.5 WITHHOLDING TAXES
As a condition to the exercise of an Option, the Optionee must comply with any
conditions that the Administrator may impose in connection with the satisfaction
of any withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
6.6 TERM
The Option Agreements will specify the term of each Option. The term will not
exceed 7 years from the date of grant. Subject to such term limit, the
Administrator at its sole discretion will determine when an Option is to expire.
6.7 NONTRANSFERABILITY
No option will be transferable by the Optionee other than by will or by
intestacy. An Option may be exercised during the lifetime of the Optionee only
by the Optionee or by the legal guardian or representative of the Optionee. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the lifetime of the Optionee, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.
Any attempt to transfer, assign, pledge or hypothecate any of an Optionee's
Option, whether by operation of law or otherwise, or to make such Option subject
to execution, attachment or similar process is void.
6.8 TERMINATION OF SERVICE (GENERALLY)
If an Optionee ceases to be an Employee or Director prior to the Expiry Date
defined in the Option Agreement to which such Optionee is a party, the Options
held by such Optionee, to the extent they remain unexercised, will terminate and
be of no further force or effect whatsoever at 5:00 p.m., Vancouver time, on the
thirtieth day after the date upon which the Optionee ceases to be an Employee or
Director.
6.9 DEATH OF OPTIONEE
In the event of the death of an Optionee on or prior to the Expiry Date defined
in an Option Agreement to which such Optionee is a party, the Options held by
such Optionee, to the extent they remain unexercised, may be exercised by the
personal representative of the Optionee at any time prior to the earlier of 5:00
p.m., Vancouver time, on the first anniversary of the date of death of the
Optionee and the Expiry Date, and all other rights to Optioned Shares will
cease.
6.10 LEAVES OF ABSENCE
For purposes of Paragraphs 6.7 and 6.8, an Optionee's status as an Employee will
be deemed to continue during a leave of absence (as determined by the
Administrator).
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6.11 NO RIGHTS AS A STOCKHOLDER
An Optionee will have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for the Shares acquired upon the exercise of such Option.
6.12 MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS
Within the limitations of the Plan, the Administrator may modify, extend or
assume outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another 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. Despite the foregoing, no modification of an Option
will, without the consent of the Optionee, impair his or her rights or increase
his or her obligations under an Option Agreement.
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7 ESCROW AND VOTING TRUST AGREEMENTS
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7.1 GENERAL RULE
Concurrent with the execution of an Option Agreement, an Optionee may be
required to enter into an Escrow Agreement pertaining to the escrow of Shares
acquired on the exercise of an Option.
7.2 RELEASE OF SHARES FROM ESCROW
Any shares acquired on the exercise of an Option that are to be held in escrow
by an escrow agent, will be so held until one of the following events has
occurred:
(a) an initial public offering of the Company's securities has closed; or
(b) more than 50% of the voting share capital of the Company has been
acquired by a person or group not dealing at arm's length who is or are
not now shareholders of the Company or an affiliate, subsidiary or
relative of such a shareholder, other than by way of security given in
good faith; or
(c) the Optionee has been continuously employed by the Company for a period
of 12 consecutive months in which case the escrow agent will only
release from escrow hereunder the number of Shares that is the lesser
of all Shares held in escrow hereunder and twenty-five percent (25%) of
the aggregate number of shares of the Company which the Optionee is
entitled to acquire under the Option, and any remaining shares will
remain held in escrow pursuant to the applicable Escrow Agreement; or
(d) the Optionee has been continuously employed by the Company for a period
of 24 consecutive months in which case the escrow agent will only
release from escrow hereunder the number of Shares that is the lesser
of all Shares held in escrow hereunder and fifty percent (50%) of the
aggregate number of shares of the Company which the Optionee is
entitled to acquire under the Option, and any remaining shares will
remain held in escrow pursuant to the applicable Escrow Agreement; or
(e) the Optionee has been continuously employed by the Company for a period
of 36 consecutive months in which case the escrow agent will only
release from escrow hereunder the number of Shares that is the lesser
of all Shares held in escrow hereunder and seventy-five percent (75%)
of the aggregate number of shares of the Company which the Optionee is
entitled to acquire under the Option, and any remaining shares will
remain held in escrow pursuant to the applicable Escrow Agreement; or
(f) the Optionee has been continuously employed by the Company for a period
of 48 consecutive months; or
(g) the Optionee is deceased; or
(h) the Optionee and the Company have agreed to release Shares from escrow.
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The length of service and percentages in (c) above may be amended pursuant to
Article 13.3 or by the Administrator.
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8 PAYMENT FOR SHARES
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8.1 GENERAL RULE
Prior to acquisition of Shares by an Optionee pursuant to an Option Agreement,
the applicable Exercise Price times the number of Shares so acquired must be
paid by such Optionee to the Company by way of a draft or certified cheque in
Canadian dollars.
8.2 LEGAL FEES
Where an Optionee exercises Options during the first five business days of a
calendar quarter, the Company will be responsible for paying all legal fees
associated with the issuance of the Shares so acquired. Where an Optionee
exercises Options at any other time, the Optionee will be required to pay such
fees.
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9 ADJUSTMENT OF SHARES
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9.1 GENERAL
In the event the authorized capital of the Company, as presently constituted, is
consolidated into a lesser number of Shares or subdivided into a greater number
of Shares, the number of Shares in respect of which an Option remains
unexercised shall be decreased or increased proportionately, as the case may be,
and the then prevailing Exercise Price to be paid by the Optionee will be
correspondingly decreased or increased as applicable. The Company expressly
reserves the right to re-designate or convert the Optioned Shares and any Shares
issued as a consequence of the exercise of an Option to any other class of
common shares of the Company at not less than a 1:1 ratio on conversion. In the
event the Company will determine to amalgamate or merge with any other company
or companies (and the right to do so is hereby expressly reserved) whether by
way of statutory amalgamation, sale of its assets and undertaking or otherwise
howsoever, then and in each such event the number of shares in the corporation
resulting from such amalgamation or merger in respect of which the Option
remains unexercised will be such number of shares in the corporation as would
have been acquired by the Optionee pursuant to the amalgamation or merger had
the Option been fully exercised immediately prior to the date of such
amalgamation or merger and the Exercise Price will be correspondingly decreased
or increased as applicable.
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10 SECURITIES LAWS
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10.1 GENERAL
Options will not be granted under the Plan nor will any Shares be issued
pursuant to an exercise of any Option unless the grant, or issuance and delivery
of the Shares, as the case may be, complies with (or is exempt from) all
applicable requirements of law and the regulations of any stock exchange on
which the Company's securities may then be listed.
10.2 RESIDENCY
No Employee or Director who is a resident of the United States or any territory
or possession thereof will be eligible to be an Optionee unless his or her
participation in the Plan can be accomplished pursuant to and in accordance with
and without violation of any securities laws or other legislation of the United
States or of any applicable state, territory or possession thereof.
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11 NO EMPLOYMENT RIGHTS
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No provision of the Plan, nor any right or Option granted under the Plan, will
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.
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12 DURATION AND AMENDMENTS
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12.1 TERM OF THE PLAN
The Plan, as set out herein, will become effective on the date of its adoption
by the Board of Directors, subject to the approval of the Company's
shareholders. In the event that the shareholders fail to approve the Plan on or
before the date 12 months after its adoption by the Board of Directors,
(a) the Plan will terminate,
(b) any Options already granted pursuant to the Plan will be
canceled, and
(c) any Shares already issued pursuant to an exercise of Options
granted under the Plan will be repurchased by the Company at
the original Exercise Price for which such Shares were
acquired.
In any event, the Plan will terminate 10 years after its adoption by the Board
of Directors and may be terminated on any earlier date pursuant to Paragraph
12.3 below.
12.2 RIGHT TO AMEND OR TERMINATE THE PLAN
The Board of Directors may amend, suspend or terminate the Plan at any time and
for any reason; provided, however, that any amendment of the Plan which
increases the number of Shares available for issuance under the Plan (except as
provided in Article 9) or which materially changes the class of persons who are
eligible for the grant of Options will be subject to the approval of the
Company's shareholders. Shareholder approval will not be required for any other
amendment of the Plan.
12.3 EFFECT OF AMENDMENT OF TERMINATION
No Shares will be issued or sold under the Plan after the termination thereof,
except upon exercise of an Option granted prior to the termination. The
termination of the Plan, or any amendment thereof, will not affect any Share
previously issued or any Option previously granted under the Plan (except as
provided in Paragraph 12.1).
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13 TRANSITIONAL PROVISIONS
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13.1 GENERAL
As outlined in Article 1.2, this Plan replaces the 1996 Plan. These transitional
provisions provide for options that have been granted under the 1996 Plan. The
purpose of these provisions is to ensure the fair treatment of all employees who
hold Options granted under the 1996 plan or Shares acquired in respect of the
same.
13.2 EMPLOYEES WHO HAVE EXERCISED OPTIONS
As at May 19, 1998 the Company has six (6) employees who have exercised Options
granted under the 1996 Plan. Each such employee has signed an Escrow Agreement.
Each of the applicable Escrow Agreements contains section 4.2, which applies the
following timeline to releasing shares from escrow:
o 40% after completion of 36 consecutive months of service.
o 100% after completion of 60 consecutive months of service.
Section 4.2 of these escrow agreements will be amended to change the vesting
period to be consistent with Article 6.4 of this Plan.
There is one employee who has exercised only 50% of the options available to
him. Since this employee has worked continuously for 24 months effective April
1, 1998, he would be eligible to exercise 50% of his options, according to
Article 6.4. Therefore the shares which he currently holds in escrow will be
released from escrow forthwith upon the adoption of the Plan by the Board of
Directors. The remaining options available to this employee will be subject to
the transitional provisions outlined in Section 13.3 below.
The Company will prepare instructions for the escrow agent to release the
applicable share certificates and instruct legal counsel to make the appropriate
changes to the share certificates and the Company's records.
13.3 EMPLOYEES WHO HAVE NOT EXERCISED OPTIONS
Where Employees were granted options under the 1996 Plan ("1996 Options") and
such options remain unexercised, those Employees will have two choices available
to them if and when they elect to exercise their 1996 Options.
(i) Each such Employee can elect to exercise his or her 1996 Options based
on the vesting period formula set out in section 6.4 of the Plan.
(ii) Alternately, he or she will have a one-time opportunity to exercise
100% of his or her 1996 Options. However, shares acquired pursuant to
such exercise that would not yet have been acquirable under the formula
set out in section 6.4 of the Plan will be subject to
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an Escrow Agreement, including provisions for the release of such
Shares from escrow according to the same vesting period schedule set
out in section 6.4 of the Plan.
Consistent with the application of the 1996 Policy, the Company will allow
Employees to exercise 1996 Options during a designated week prior to the
Company's fiscal year end (typically done in the first week of a fiscal
quarter).
Examples:
Under the choice set out in (i) above, an Employee who commenced employment with
the Company on February 1, 1997 and was, at that time, granted 1996 Options to
acquire up to 5,000 Shares, can elect to exercise his or her 1996 Options to
acquire up to 1,250 Shares (i.e., 25% of 5,000) at any time after February 1,
1998. The Shares issued pursuant to such exercise will not be subject to an
Escrow Agreement.
Under the choice set out in (ii) above, an Employee who commenced employment
with the Company on February 1, 1997 and was, at that time, granted 1996 Options
to acquire up to 5,000 Shares, would be eligible to exercise 100% of his or her
1996 Options. However, 75% of the Shares so acquired (i.e., 3,750 Shares) would
be subject to an Escrow Agreement. The Shares held in escrow would be released
25% (i.e. 1,250 Shares) after February 1, 1999, 25% after February 1, 2000, and
25% after February 1, 2001.
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APPENDIX A - SAMPLE STOCK OPTION AGREEMENT
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EMPLOYEE STOCK OPTION AGREEMENT
THIS AGREEMENT made the 3rd day of June, 1998.
BETWEEN:
HOTHAUS TECHNOLOGIES INC.,
170 - 6651 Fraserwood Place, Richmond, B.C., V6W 1J3
(hereinafter called the "Company")
OF THE FIRST PART
AND:
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Optionee is an employee of the Company;
B. The Company wishes the Optionee to continue as an employee and to
continue to receive the benefit of the employee's services;
C. The Company may conduct a public offering of its securities at some
time;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payment of
$1.00 and other good and valuable consideration (the receipt and sufficiency of
which is hereby acknowledged), the parties agree as follows:
1. DEFINITIONS. In this agreement (including Schedule "A" hereto):
(a) "BUSINESS DAY" means a day on which commercial banking
institutions in Vancouver, British Columbia are open for the
transaction of business;
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(b) "COMMISSIONS" means the securities commissions in Canada with
which the Company files the Prospectus;
(c) "ESCROW AGREEMENT" means an Escrow and Voting Trust Agreement
substantially in the form outlined in Appendix B to the
Incentive Stock Option Plan adopted by the Company's Board of
Directors;
(d) "EXCHANGES" means the stock exchanges on which the Company has
made application to list any of its securities;
(e) "EXERCISE PRICE" means:
(i) if the Option is exercised prior to the Prospectus
Receipt Date, $X.XX per Optioned Share; or
(ii) if the Option is exercised after the Prospectus
Receipt Date, a price per Optioned Share determined
in accordance with the policies of the Commissions
and the policies of the Exchanges;
(f) "EXPIRY DATE" means 5:00 p.m., Vancouver time, on the day
which is the earlier of:
(i) seven (7) calendar years from the date of this
Employee Stock Option Agreement; and
(ii) the maximum term permitted for stock options under
the policies of the Exchanges;
(g) "INSIDER" means,
(a) a director or senior officer of the Company,
(b) a director or senior officer of a person that is
itself an insider or subsidiary of the Company, or
(c) a person that has
(i) direct or indirect beneficial ownership of,
(ii) control or direction over, or
(iii) a combination of direct or indirect
beneficial ownership of and of control or
direction over securities of the Company
carrying more than 10% of the voting rights
attached to all the Company's outstanding
voting securities, excluding, for the
purpose of the calculation of the percentage
held, any securities held by the person as
underwriter in the course of a distribution.
(h) "NOTICE OF EXERCISE" means a notice in writing addressed to
the Company confirming the exercise by the Optionee, in whole
or in part, of the Option and
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setting out the number of Optioned Shares in respect
of which the Option is being exercised;
(i) "OPTION" means the right and option to purchase, from
time to time, all, or any part of the Optioned Shares
granted to the Optionee by the Company pursuant to
paragraph 2 hereof;
(j) "OPTIONED SHARES" means the voting Common shares in
the capital of the Company subject to the Option;
(k) "PERSON" includes an individual, corporation,
partnership, party, trust, fund, association and any
other organized group of persons and the personal or
other legal representative of a person to whom the
context can apply according to law;
(l) "PROSPECTUS" means the preliminary prospectus of the
Company with respect to the initial public offering
of its securities;
(m) "PROSPECTUS RECEIPT DATE" means the last date on
which receipts for the Prospectus are issued by each
of the Commissions ; and
(n) "SHARES" means the voting Common shares in the
capital of the Company.
2. GRANT OF OPTION. The Company hereby grants to the Optionee, as an incentive
and in consideration of Optionee's services as an employee, subject to the terms
and conditions hereinafter set forth, the Option to purchase an aggregate total
of XXX Optioned Shares at the Exercise Price.
3. TERMINATION. Subject to paragraphs 4 and 5, the Option granted herein shall
terminate on the Expiry Date and be of no further force or effect whatsoever.
4. DEATH OF OPTIONEE. In the event of the death of the Optionee on or prior to
the Expiry Date, the Option, to the extent it remains unexercised, may be
exercised by the personal representative of the Optionee at any time prior to
the earlier of 5:00 p.m., Vancouver time, on the first anniversary of the date
of death of the Optionee and the Expiry Date, and all other rights to Optioned
Shares shall cease.
5. EMPLOYMENT. The Company represents and warrants that the Optionee is a bona
fide employee as of the date hereof. If the Optionee ceases to be an employee
prior to the Expiry Date, the Option shall terminate and be of no further force
or effect whatsoever at 5:00 p.m., Vancouver time, on the thirtieth day after
the date upon which the Optionee ceases to be an employee.
6. EXERCISE. Subject to the provisions hereof, the Optionee may exercise the
Option to purchase Shares at the times and in the amounts set out in Schedule
"A" to this agreement by giving to the Company a Notice of Exercise together
with a certified cheque or bank draft drawn
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on a Canadian chartered bank in favour of the Company in full payment of the
Exercise Price for the number of Shares then being purchased.
7. TRADING RESTRICTIONS. The Optionee acknowledges that he is aware that Shares
acquired on exercise of Options may be subject to restrictions on transfer
imposed under the Company's articles of incorporation and applicable securities
laws, and that he has been cautioned to consult independent legal counsel if he
has any concerns about a transfer of such Shares.
8. CERTIFICATES. The Company shall, within 10 business days after receipt of the
Notice of Exercise deliver to the Optionee a share certificate representing the
number of Optioned Shares with respect to which the Option was exercised, issued
as of the date of the Notice of Exercise.
9. LEGAL FEES. If an Optionee delivers a Notice of Exercise to the Company
during the first five business days of a calendar quarter, the Company will pay
all legal fees arising in connection with the subject issuance of Shares. If an
Optionee delivers a Notice of Exercise to the Company at any other time, the
Optionee will pay all legal fees arising in connection with the subject issuance
of Shares.
10. APPROVALS. If the Optionee is an Insider of the Company or the Optionee is
not a full-time employee, this agreement is subject to the approval by ordinary
resolution of the members of the Company entitled to vote at a general meeting
of the Company prior to the exercise of the Option if required under the terms
of the policies of the Exchanges.
11. OPTIONEE BOUND TO ACCOMMODATE. The Optionee shall be bound by any
modification of the terms and conditions of this agreement as may be required by
the Commissions or the Exchanges as a condition precedent for the issuance of a
receipt for the Prospectus or the granting of a conditional listing of the
Shares on the Exchanges.
12. NO OBLIGATION. Nothing herein contained shall obligate:
(a) the Optionee to purchase any Optioned Shares except those
Optioned Shares in respect of which the Optionee shall have
exercised his Option in the manner hereinbefore provided;
(b) the Company to conduct a public offering of its securities.
13. ADJUSTMENT. In the event the authorized capital of the Company, as presently
constituted, is consolidated into a lesser number of Shares or subdivided into a
greater number of Shares, the number of Shares in respect of which the Option
remains unexercised shall be decreased or increased proportionately, as the case
may be, and the then prevailing Exercise Price to be paid by the Optionee shall
be correspondingly decreased or increased as applicable. The Company expressly
reserves the right to re-designate or convert the Optioned Shares and any Shares
issued as a consequence of the exercise of the Option to any other class of
common shares
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Incentive Stock Option Plans Version 2.0 21
<PAGE> 25
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[HOTHAUS TECHNOLOGIES INC LOGO]
of the Company at not less than a 1:1 ratio on conversion. In the
event the Company shall determine to amalgamate or merge with any other company
or companies (and the right to do so is hereby expressly reserved) whether by
way of statutory amalgamation, sale of its assets and undertaking or otherwise
howsoever, then and in each such event the number of shares in the corporation
resulting from such amalgamation or merger in respect of which the Option
remains unexercised shall be such number of shares in the corporation as would
have been acquired by the Optionee pursuant to the amalgamation or merger had
the Option been fully exercised immediately prior to the date of such
amalgamation or merger and the Exercise Price shall be correspondingly decreased
or increased as applicable.
14. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights whatsoever as a
shareholder of the Company in respect of any of the Optioned Shares including,
without limitation, any right to receive dividends or other distribution
therefrom, except those Optioned Shares in respect of which the Option has been
properly exercised in accordance with paragraph 6 hereof.
15. TIME OF ESSENCE. Time shall be of the essence of this agreement.
16. ENUREMENT. This agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, personal
representatives, administrators, successors and permitted assigns.
17. ASSIGNMENT. Subject to paragraph 4, this agreement shall not be transferable
or assignable by the Optionee.
18. AMENDMENT: Any amendment to this agreement shall be in writing and, if such
amendment is made after the Prospectus Receipt Date shall be subject to:
(a) the approval of the Exchanges; and
(b) if required by an Exchange, the approval by ordinary
resolution of the members of the Company entitled to vote at a
general meeting of the Company.
19. REFERENCES. Wherever the plural or masculine are used throughout this
agreement, the same shall be construed as meaning singular or feminine or neuter
or the body politic or corporate where the context of the parties thereto
required.
20. NOTICE. Any notice or other communication required or permitted to be given
under this agreement shall be in writing and shall be sufficiently given if
delivered in person during normal business hours on a business day or sent by
prepaid registered mail in either case addressed to the intended recipient at
his address set out on the first page of this agreement. Each notice sent in
accordance with this paragraph shall be deemed to have been given on the date of
delivery, if delivered, and, if sent by prepaid registered mail, on the third
business day after the date of mailing. If at the time of giving of such notice
or prior to the deemed receipt thereof there is a disruption of postal services,
such notice shall be delivered. Any party may
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Incentive Stock Option Plans Version 2.0 22
<PAGE> 26
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[HOTHAUS TECHNOLOGIES INC LOGO]
change its address for notice by giving notice to the other party in accordance
with this paragraph.
21. FURTHER ASSURANCES. The Optionee shall execute and deliver such further
documents as may be required by the Company to give effect to this agreement,
obtain a receipt from a Commission for the Prospectus or to effect the listing
of the Shares on the Exchanges.
22. ESCROW. The Optionee may be required to enter into an Escrow Agreement
pertaining to any Optioned Shares purchased prior to June 30, 1998.
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Incentive Stock Option Plans Version 2.0 23
<PAGE> 27
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[HOTHAUS TECHNOLOGIES INC LOGO]
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the day and year first above written.
THE CORPORATE SEAL of HOTHAUS TECHNOLOGIES INC. was )
hereunto affixed in the presence of: )
)
)
)
/s/ )
- -----------------------------------------------------
Authorized Signatory ) C/S
)
/s/ )
- -----------------------------------------------------
Authorized Signatory )
SIGNED, SEALED AND DELIVERED by )
)
- ---------------------------------------------------- )
)
in the presence of:
--------------------
Name )
)
Address )
)
Occupation )
)
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Incentive Stock Option Plans Version 2.0 24
<PAGE> 28
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[HOTHAUS TECHNOLOGIES INC LOGO]
Schedule "A"
To the Option Agreement between Optionee and HotHaus Technologies Inc., dated
The Optionee will be entitled to purchase:
(i) up to XXX Shares (being 25% of the total grant of Options provided for
in the Option Agreement) on or after 2/1/96 (being the date on which
the Optionee will have completed 12 consecutive months of employment
with the Company);
(ii) up to XXX Shares (being 50% of the total grant of Options provided for
in the Option Agreement), less the number of Optioned Shares already
purchased by the Optionee, on or after 2/1/97 (being the date on which
the Optionee will have completed 24 consecutive months of employment
with the Company);
(iii) up to XXX Shares (being 75% of the total grant of Options provided for
in the Option Agreement), less the number of Optioned Shares already
purchased by the Optionee, on or after 2/1/98 (being the date on which
the Optionee will have completed 36 consecutive months of employment
with the Company); and
(iv) up to XXX Shares (being 100% of the total grant of Options provided for
in the Option Agreement), less the number of Optioned Shares already
purchased by the Optionee, on or after 2/1/99 (being the date on which
the Optionee will have completed 48 consecutive months of employment
with the Company).
Notwithstanding the foregoing provisions of this schedule, but subject to the
remaining terms of the Option Agreement, the Optionee will be able to exercise
up to 100% of his Options on the terms and conditions described in paragraph (a)
and (b) below:
(a) If the Company files a preliminary prospectus in connection with an initial
public offering of its securities, the Company will immediately thereafter give
a notice of that occurrence to the Optionee. In addition, the Company will
endeavour to negotiate with the Exchange to permit the exercise of options at a
price less than the initial public offering price. The Optionee will have 30
days from the giving of such notice to exercise up to 100% of his Options. Any
Options remaining unexercised after such 30 day period will, subject to any
amendments made to this agreement pursuant to section 11 of the Option
Agreement, remain exercisable; or
(b) If more than 50% of the voting share capital of the Company is acquired by a
person or group not dealing at arm's length who was or were not, as at starting
date, shareholders of the Company or an affiliate, subsidiary or relative of
such a shareholder, other than by way of security given in good faith, the
Company will immediately thereafter give a notice of that occurrence to the
Optionee. The Optionee will after the giving of such notice by the Company be
entitled to exercise 100% of his Options at any time.
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Incentive Stock Option Plans Version 2.0 25
<PAGE> 29
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[HOTHAUS TECHNOLOGIES INC LOGO]
APPENDIX B - ESCROW AND VOTING TRUST AGREEMENT
- --------------------------------------------------------------------------------
ESCROW AND VOTING TRUST AGREEMENT
THIS AGREEMENT is dated for reference __________ , 1998 and made
AMONG:
MONTREAL TRUST COMPANY OF CANADA
4th Floor, 510 Burrard Street
Vancouver, B.C.
V6K 3B9
(the "Escrow Agent")
AND:
HOTHAUS TECHNOLOGIES INC.
#170 - 6651 Fraserwood Place
Richmond, B.C.
V6W 1J3
(the "Company ")
AND:
(the "Shareholder")
(collectively, the "Parties")
WHEREAS:
A. The Shareholder has or is about to acquire Shares in the capital of the
Company pursuant to the exercise of the Shareholder's Option to
purchase Shares pursuant to an Employee Stock Option Agreement between
the Company and the Shareholder;
B. The Shareholder and the Company desire that all Shares acquired on the
exercise of the Option prior to the date which is five (5) years from
the date of this Agreement be held in escrow by the Escrow Agent on the
terms and for the period of time provided herein and that during such
period of escrow the Shares be subject to a voting trust; and
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Incentive Stock Option Plans Version 2.0 26
<PAGE> 30
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[HOTHAUS TECHNOLOGIES INC LOGO]
C. The Escrow Agent has agreed to act as escrow agent in respect of the
Shares upon the acquisition of the Shares by the Shareholder.
NOW THEREFORE in consideration of the covenants contained in this agreement and
other good and valuable consideration (the receipt and sufficiency of which is
acknowledged), the Parties agree as follows:
1. INTERPRETATION
In this agreement:
(a) "ACKNOWLEDGEMENT" means an acknowledgement and agreement to be bound in
the form attached as Schedule A to this Agreement;
(b) "AGREEMENT" means this Escrow and Voting Trust Agreement and any
amendment made thereto;
(c) "EMPLOYEE STOCK OPTION AGREEMENT" means the agreement of the same name
between the Company and the Shareholder dated as of _______, 1998.
(d) "OPTION" means the option to purchase Shares exercisable pursuant to
the Employee Stock Option Agreement;
(e) "SHARES" means all shares in the capital of the Company issued to the
Shareholder from time to time pursuant to the exercise of the
Shareholder's Option;
2. PLACEMENT OF SHARES IN ESCROW
Immediately upon receipt of Shares on each exercise of the Option prior to the
date which is five (5) calendar years from the date hereof, the Shareholder will
deliver all certificate(s) representing such Shares, endorsed in blank for
transfer, to the Escrow Agent and the Escrow Agent will hold such Shares and
certificates in escrow in accordance with the terms of this Agreement.
3. TRANSFER WITHIN ESCROW
3.1 The Shareholder shall not transfer any escrowed Shares or any interest
therein until such Shares are released from escrow except with the
prior written consent of the Company.
3.2 The Escrow Agent shall not effect a transfer of any Shares within
escrow unless the Escrow Agent has received
(a) a copy of the Acknowledgement executed by the person to whom
the shares are to be transferred, and
(b) a letter from the Company consenting to the transfer.
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Incentive Stock Option Plans Version 2.0 27
<PAGE> 31
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[HOTHAUS TECHNOLOGIES INC LOGO]
3.3 Upon the death or bankruptcy of a Shareholder while Shares are held in
escrow, the Escrow Agent shall hold the escrowed Shares subject to this
Agreement for the person that is legally entitled to become the
registered owner of the Shares.
3.4 The Shareholder shall not pledge, hypothecate, mortgage, encumber or
charge in any manner the Shares held in escrow at any time either
before or after delivery into escrow without the prior written consent
of the Company.
4. RELEASE FROM ESCROW
4.1 The Shareholder irrevocably directs the Escrow Agent to retain the
Shares until the Shares are released from escrow pursuant to subsection
4.2 or are surrendered for cancellation pursuant to section 5.
4.2 The Escrow Agent shall not release any Shares from escrow unless and
until the Escrow Agent has received a letter from the Company
confirming that one of the following events has occurred:
(a) an initial public offering of the Company's securities has
been fully subscribed; or
(b) more than 50% of the voting share capital of the Company has
been acquired by a person or group not dealing at arm's length
who is or are not now shareholders of the Company or an
affiliate, subsidiary or relative of such a shareholder, other
than by way of security given in good faith; or
(c) the Shareholder has been continuously employed by the Company
for a period of 36 consecutive months from the date of this
Agreement in which event the Escrow Agent will only release
from escrow hereunder the number of Shares that is the lesser
of all Shares held in escrow hereunder and forty percent (40%)
of the aggregate number of shares of the Company which the
Shareholder is entitled to acquire under the Option, and any
remaining Shares shall remain held in escrow pursuant to this
Agreement; or
(d) The Shareholder has been continuously employed by the Company
for a period of 60 consecutive months from the date of this
Agreement; or
(e) the Shareholder is deceased; or
(f) the Shareholder and the Company have agreed to release Shares
from escrow.
After receipt of such a letter the Escrow Agent will deliver the
applicable Shares out of escrow to the Shareholder. In the event that a
share certificate must be re-issued to accommodate a partial release of
Shares, the Company shall co-operate to provide additional certificates
to replace certificates representing Shares held in escrow.
4.3 Company shall not delay delivery to the Escrow Agent of the letter
referred to in subsection 4.2 if and when the grounds for issuing such
a letter exist.
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Incentive Stock Option Plans Version 2.0 28
<PAGE> 32
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[HOTHAUS TECHNOLOGIES INC LOGO]
5. SURRENDER FOR CANCELLATION
5.1 The Shareholder is entitled to remain the owner of the Shares while in
escrow except that Shares that remain held in escrow hereunder must be
surrendered to the Company by way of gift if at any time prior to 60
months from the date of this Agreement :
(a) the Shareholder ceases to be an employee of the Company,
except upon death;
(b) the Shareholder is declared bankrupt or otherwise acknowledges
his or her insolvency;
(c) the Shareholder is convicted in or out of the Province of
British Columbia of an offence:
(i) in connection with the promotion, formation or
management of a corporation; or
(ii) involving fraud; or
(d) the Shareholder fails to deliver any Shares into escrow as
required herein or otherwise fails to comply with the terms of
this Agreement.
5.2 Upon surrender of Shares by the Shareholder to the Company pursuant to
subsection 5.1 the Company will cancel such shares and refund any
monies paid by the Shareholder to acquire such Shares on the exercise
of the Option.
6. VOTING AND OTHER RIGHTS
Subject to the terms of this Agreement, while Shares are held in escrow pursuant
to this Agreement the Shareholder shall be and remain the owner of title to such
Shares and shall be entitled to receive any and all dividends paid thereon
except that during such period of escrow the Shareholder agrees it will not
personally exercise the voting rights attached to Shares and the Shareholder
hereby appoints and constitutes the President of the Company from time to time,
as its attorney with full and exclusive power and authority to:
(a) exercise or abstain from exercising all voting rights attached to
Shares as the President may determine;
(b) execute any waiver required to be obtained from the Shareholder in
connection with any allotment or issuance of shares in the capital of
the Company; and
(c) consent to any reorganization of the Company that does not amount to a
disposition of the Shares,
all until such time as all Shares are released from escrow as provided herein.
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Incentive Stock Option Plans Version 2.0 29
<PAGE> 33
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[HOTHAUS TECHNOLOGIES INC LOGO]
7. PROXIES
The Shareholder will from time to time execute and deliver to the President of
the Company such proxies and other documents as the President may reasonably
request to implement the terms of this Agreement and to confirm the power and
authority granted hereby and the Shareholder hereby appoints and constitutes the
President of the Company from time to time as its attorney with full power and
authority to execute and deliver on its behalf and in its place and stead such
proxies and other documents as are not for any reason so executed in timely
fashion by the Shareholder or to register the Shares or any of them in his name
if necessary in order to secure the voting rights thereon.
8. SURVIVAL AND DELEGATION OF AUTHORITY
The authority of the President of the Company granted under this Agreement is to
continue during the period of time that any Shares are held in escrow pursuant
to this Agreement notwithstanding the death, mental infirmity or bankruptcy of
the Shareholder and is not revocable by the Shareholder for any reason during
such time. The President may delegate the authority granted herein to such
person or persons as the President may determine from time to time.
9. AMENDMENT OF AGREEMENT
This agreement may be amended only by a written agreement among the Parties.
10. INDEMNIFICATION OF ESCROW AGENT
The Company and the Shareholder, jointly and severally, release, indemnify and
save harmless the Escrow Agent from all costs, charges, claims, demands,
damages, losses and expenses resulting from the Escrow Agent's compliance in
good faith with this agreement.
11. RESIGNATION OF ESCROW AGENT
11.1 If the Escrow Agent wishes to resign as escrow agent in respect of the
Shares, the Escrow Agent shall give notice to the Company.
11.2 If the Company wishes the Escrow Agent to resign as escrow agent in
respect of the Shares, the Company shall give notice to the Escrow
Agent.
11.3 A notice referred to in subsection 11.1 or 11.2 shall be in writing and
delivered to
(a) the Company at:
#170 - 6651 Fraserwood Place
Richmond, British Columbia
V6W 1J3
(b) the Escrow Agent at:
4th Floor, 510 Burrard Street
Vancouver, British Columbia
V6K 3B9
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Incentive Stock Option Plans Version 2.0 30
<PAGE> 34
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[HOTHAUS TECHNOLOGIES INC LOGO]
and the notice shall be deemed to have been received on the date of
delivery. The Company or the Escrow Agent may change its address for
notice by giving notice to the other party in accordance with this
subsection.
11.4 A copy of a notice referred to in subsection 11.1 or 11.2 shall
concurrently be delivered to the Shareholder at the address first noted
above.
11.5 The resignation of the Escrow Agent shall be effective and the Escrow
Agent shall cease to be bound by this agreement on the date that is 180
days after the date of receipt of the notice referred to in subsection
11.1 or 11.2 or on such other date as the Escrow Agent and the Company
may agree upon (the "resignation date").
11.6 The Company shall, before the resignation date and with the written
consent of the Shareholder, appoint another escrow agent and that
appointment shall be binding on the Company and the Shareholders.
12. FURTHER ASSURANCES
The Parties shall execute and deliver any documents and perform any acts
necessary to carry out the intent of this Agreement.
13. TIME
Time is of the essence of this agreement.
14. GOVERNING LAWS
This agreement shall be construed in accordance with and governed by the laws of
British Columbia and the laws of Canada applicable in British Columbia.
15. COUNTERPARTS
This agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which shall constitute one agreement.
16. LANGUAGE
Wherever a singular expression is used in this agreement, that expression is
deemed to include the plural or the body corporate where required by the
context.
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Incentive Stock Option Plans Version 2.0 31
<PAGE> 35
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[HOTHAUS TECHNOLOGIES INC LOGO]
17. ENUREMENT
This Agreement enures to the benefit of and is binding on the Parties and their
heirs, executors, administrators, successors and permitted assigns.
The Parties have executed and delivered this agreement as of the date of
reference of this agreement.
SIGNED, SEALED AND DELIVERED by _________ )
in the presence of: )
)
)
) (seal)
- ------------------------------------------ ) -------------------------------
Witness name )
)
- ------------------------------------------ )
Address )
)
- ------------------------------------------ )
)
)
- ------------------------------------------ )
Occupation )
THE CORPORATE SEAL of )
HOTHAUS TECHNOLOGIES INC. was )
hereunto affixed in the presence of: )
)
)
)
)
- ------------------------------------------ )
Authorized Signatory ) C/S
)
)
- ------------------------------------------ )
Authorized Signatory )
THE CORPORATE SEAL of )
)
- --------------------------------- )
was hereunto affixed in the presence of: )
) C/S
)
)
- ------------------------------------------ )
Authorized Signatory )
)
)
- ------------------------------------------ )
Authorized Signatory )
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Incentive Stock Option Plans Version 2.0 32
<PAGE> 36
SCHEDULE A
ACKNOWLEDGEMENT AND AGREEMENT TO BE BOUND
TO: HOTHAUS TECHNOLOGIES INC.
AND TO: MONTREAL TRUST COMPANY OF CANADA
I acknowledge that:
(a) I have entered into an agreement with (Shareholder) under which ______
shares of HotHaus Technologies Inc. (the "Shares") will be transferred
to me upon receipt of approval by the Company; and
(b) the Shares are held in escrow subject to an escrow agreement dated for
reference _____ , 1997 (the "Escrow Agreement"), a copy of which is
attached as Schedule A to this acknowledgement.
In consideration of $1.00 and other good and valuable consideration (the receipt
and sufficiency of which is acknowledged) I agree, effective upon the transfer
to me of the Shares, to be bound by the Escrow Agreement in respect of the
shares as if I were an original signatory to the Escrow Agreement.
DATED at Richmond on ______ , 1997.
SIGNED, SEALED AND DELIVERED )
by_______________________________ )
in the presence of: )
)
)
) (seal)
- ---------------------------------- ) ------------------------------------
Witness name )
)
- ---------------------------------- )
Address )
)
- ---------------------------------- )
)
)
- ---------------------------------- )
Occupation )
)
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Incentive Stock Option Plans Version 2.0 33
<PAGE> 37
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[HOTHAUS TECHNOLOGIES INC LOGO]
APPENDIX C -OPTIONS GRANTED AS AT
MAY 19, 1998
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Incentive Stock Option Plans Version 2.0 34
<PAGE> 1
EXHIBIT 99.5
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
ALTOCOM, INC.
1997 STOCK PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day
of August, 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 AltoCom,
Inc., a California corporation ("AltoCom"), which were granted to Optionee under
the AltoCom, Inc. 1997 Stock Plan (the "Plan") and are each evidenced by the
following agreement between AltoCom and Optionee: a Stock Option Agreement (the
"Option Agreement").
WHEREAS, AltoCom has been acquired by Broadcom through the
merger (the "Merger") of Alto Acquisition Corp. ("MergerSub"), a wholly-owned
subsidiary of Broadcom, with and into AltoCom, pursuant to the Merger Agreement
and Plan of Reorganization dated August 10, 1999 by and among Broadcom,
MergerSub and AltoCom (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of AltoCom 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
.07184670 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of AltoCom Common Stock ("AltoCom 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 AltoCom Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "AltoCom 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 AltoCom under each
<PAGE> 2
of the AltoCom Options. In connection with such assumption, the number of shares
of Broadcom Stock purchasable under each AltoCom 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
AltoCom 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 AltoCom Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed AltoCom
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 AltoCom Stock subject to the AltoCom 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
AltoCom 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 AltoCom Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each AltoCom 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 "Stock"
shall mean 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
AltoCom Option and all other provisions which govern either the
exercise or the termination of the assumed AltoCom 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 outstanding upon the consummation of the
Merger. Each AltoCom Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed AltoCom 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
2
<PAGE> 3
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.
(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 AltoCom, 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 AltoCom Options upon Optionee's cessation of service as an
employee of or a consultant to AltoCom shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Broadcom and its subsidiaries, and each assumed AltoCom 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 AltoCom 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 AltoCom Stock prior to
the Merger shall be included.
(f) In order to exercise each assumed AltoCom 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 or must specify the arrangement for the payment of the purchase
price as permitted in Section 5 of the Plan. This notice 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 August, 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 AltoCom 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 99.6
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
HOTHAUS TECHNOLOGIES INC.
INCENTIVE STOCK OPTION PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 31st day of
August, 1999 by Broadcom Corporation, a California corporation ("Broadcom").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase voting common shares of HotHaus Technologies
Inc., a British Columbia corporation ("HotHaus"), which were granted to Optionee
under the HotHaus Technologies Inc. Incentive Stock Option Plan (the "Plan") and
are each evidenced by the following agreement between HotHaus and Optionee: an
Employee [Director] Stock Option Agreement (the "Option Agreement").
WHEREAS, HotHaus has been acquired by Broadcom (the "Acquisition"),
pursuant to that certain Acquisition Agreement, dated July 15, 1999, by and
among Broadcom, HotHaus, Broadcom (BVI) Limited, 585573 B.C. Ltd. (now known as
HH Acquisition Inc.) and 3030814 Nova Scotia ULC (now known as HH Acquisition
ULC) (the "Acquisition Agreement").
WHEREAS, the provisions of the Acquisition Agreement require Broadcom
to assume all obligations of HotHaus under all outstanding options under the
Plan upon consummation of the Acquisition 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 Acquisition Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Acquisition is .30720961
of a share of Broadcom Class B Common Stock (the "Broadcom Stock") for each
outstanding common share of HotHaus (the "HotHaus Stock") and for each option to
purchase HotHaus Stock.
WHEREAS, this Stock Option Assumption Agreement is effective as of the
consummation of the Acquisition (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 Acquisition.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of HotHaus Stock subject to the options
outstanding under the Plan held by Optionee immediately prior to the Effective
Time (the "HotHaus 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 HotHaus under each of the HotHaus Options. In
connection with such assumption, the number of shares of Broadcom Stock
purchasable under each HotHaus 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 HotHaus 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 HotHaus
Option shall also be as indicated for that option in attached Exhibit(s) A.
Optionee acknowledges and agrees that, upon consummation of the Acquisition, the
exercise price of the Option shall be expressed in U.S. dollars, based upon the
currency exchange rate of Canadian dollars in U.S. dollars as of the Effective
Time.
2. The intent of the foregoing adjustments to each assumed HotHaus
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 Stock
Option Assumption Agreement will, immediately after the consummation of the
Acquisition, be not less than the difference which existed, immediately prior to
the Acquisition, between the then aggregate fair market value of the HotHaus
Stock subject to the HotHaus 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 Acquisition, 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 HotHaus Option immediately prior to
the Acquisition.
3. The following provisions shall govern each HotHaus Option hereby
assumed by Broadcom:
(a) Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (i) to the "Company" shall mean
Broadcom, (ii) to "Common shares" or "Shares" shall mean shares of
Broadcom Stock, and (iii) to the "Board" shall mean the Board of
Directors of Broadcom.
(b) The grant date and the expiration date of each assumed
HotHaus Option and all other provisions which govern either the
exercise or the termination of the assumed HotHaus 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 the
options assumed by Broadcom in connection with the transaction will
terminate or cease to be outstanding upon the consummation of the
Acquisition. Each HotHaus Option shall be assumed by Broadcom as of the
Effective Time and shall be fully vested pursuant to the terms of the
Option Agreement as a consequence of the Acquisition.
(d) For purposes of applying any and all provisions of the
Option Agreement and the Plan relating to Optionee's status as an
Employee or Director of HotHaus, Optionee shall be deemed to continue
in such status as an Employee or a Director for so long as Optionee
renders services as an Employee
2.
<PAGE> 3
of or a Director to Broadcom or any present or future Broadcom
subsidiary. Accordingly, the provisions of the Option Agreement
governing the termination of the assumed HotHaus Options upon
Optionee's cessation of service as an Employee of or a Director to
HotHaus shall hereafter be applied on the basis of Optionee's cessation
of Employee or Director status with Broadcom and its subsidiaries, and
each assumed HotHaus 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 or a
Director of Broadcom and its subsidiaries.
(e) The adjusted exercise price payable for the Broadcom Stock
subject to each assumed HotHaus 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 HotHaus Stock prior to
the Acquisition shall be included.
(f) In order to exercise each assumed HotHaus 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 Acquisition 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 August, 1999.
BROADCOM CORPORATION
By:
----------------------------------------
David A. Dull, Esq.
Vice President, General Counsel and
Secretary
AGREEMENT AND 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 HotHaus 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.
