<PAGE> 1
As filed with the Securities and Exchange Commission on March 23, 2000
Registration No. 333-_______
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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)
BROADCOM CORPORATION 1998 STOCK INCENTIVE PLAN
BLUESTEEL NETWORKS, INC. 1999 STOCK INCENTIVE PLAN
BLUESTEEL NETWORKS, INC. 1999 NON-EMPLOYEE STOCK PLAN
DIGITAL FURNACE CORPORATION AMENDED AND RESTATED STOCK INCENTIVE PLAN
STELLAR SEMICONDUCTOR, INC. 1999 EQUITY INCENTIVE PLAN
STELLAR SEMICONDUCTOR, INC. 1997 STOCK OPTION/STOCK ISSUANCE 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
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====================================================================================================================================
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
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<S> <C> <C> <C> <C>
Broadcom Corporation
1998 Stock Incentive Plan 9,416,902 shares $199.18750(2) $1,875,729,167.13(2) $495,192.50
Class A common stock, $.0001 par value
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BlueSteel Networks, Inc.
1999 Stock Incentive Plan 131,058 shares $199.18750(2) $26,105,115.38(2) $6,891.75
Class A common stock, $.0001 par value 131,058 shares $55.05789(3) $7,215,776.95(3) $1,904.97
Class B common stock, $.0001 par value
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BlueSteel Networks, Inc.
1999 Non-Employee Stock Plan 1,094 shares $199.18750(2) $217,911.13(2) $57.53
Class A common stock, $.0001 par value 1,094 shares $56.33080(3) $61,625.90(3) $16.27
Class B common stock, $.0001 par value
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Digital Furnace Corporation
Amended and Restated Stock Incentive Plan 85,257 shares $199.18750(2) $16,982,128.69(2) $4,483.28
Class A common stock, $.0001 par value 85,257 shares $2.10710(3) $179,645.02(3) $47.43
Class B common stock, $.0001 par value
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Stellar Semiconductor, Inc.
1999 Equity Incentive Plan 59,234 shares $199.18750(2) $11,798,672.38(2) $3,114.85
Class A common stock, $.0001 par value 59,234 shares $64.42936(3) $3,816,408.71(3) $1,007.53
Class B common stock, $.0001 par value
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Stellar Semiconductor, Inc.
1997 Stock Option/Stock Issuance Plan 53,648 shares $199.18750(2) $10,686,011.00(2) $2,821.11
Class A common stock, $.0001 par value 53,648 shares $6.87650(3) $368,910.47(3) $97.39
Class B common stock, $.0001 par value
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Total $1,953,161,372.76 $515,634.61
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</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 Broadcom 1998 Stock Incentive Plan, BlueSteel Networks,
Inc. 1999 Stock Incentive Plan, BlueSteel Networks, Inc. 1999 Non-Employee
Stock Plan, Digital Furnace Corporation Amended and Restated Stock
Incentive Plan, Stellar Semiconductor, Inc. 1999 Equity Incentive Plan and
Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance 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 March 16, 2000, 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.
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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; the fiscal quarter ended June 30, 1999, filed with the
SEC on August 16, 1999; and the fiscal quarter ended September
30, 1999, filed with the SEC on November 15, 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, September
17, 1999, September 28, 1999, November 24, 1999, February 1,
2000, February 29, 2000 and March 6, 2000; 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 (i) as otherwise required by law
or (ii) with respect to a proposed issuance of additional shares of Class B
common stock, which issuance requires the affirmative vote of the holders of a
majority of the outstanding shares of Class B common stock, voting separately as
a class, unless such issuance has been approved by at least two-thirds of the
members of the Board of Directors then in office. Each share of Class B common
stock is convertible at any time at the option of the holder into one (1) share
of Class A common stock and will automatically convert into one
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<PAGE> 3
(1) share of Class A common stock upon sale and most other transfers.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Broadcom's Articles of Incorporation limit the personal
liability of its directors for monetary damages to the fullest extent permitted
by the California General Corporation Law (the "California Law"). Under the
California Law, a director's liability to a company or its shareholders may not
be limited with respect to the following items: (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the company or its shareholders or that involve the absence of good faith on
the part of the director, (iii) any transaction from which a director derived an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the company or its shareholders in circumstances in
which the director was aware, or should have been aware, in the ordinary course
of performing a director's duties, of a risk of a serious injury to the company
or its shareholders, (v) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
company or its shareholders, (vi) contracts or transactions between the company
and a director within the scope of Section 310 of the California Law or (vii)
improper dividends, loans and guarantees under Section 316 of the California
Law. The limitation of liability does not affect the availability of injunctions
and other equitable remedies available to Broadcom's shareholders for any
violation by a director of the director's fiduciary duty to Broadcom or its
shareholders.
Broadcom's Articles of Incorporation also include an
authorization for Broadcom to indemnify its "agents" (as defined in Section 317
of the California Law) through bylaw provisions, by agreement or otherwise, to
the fullest extent permitted by law. Pursuant to this provision, Broadcom's
Bylaws provide for indemnification of Broadcom's directors, officers and
employees. In addition, Broadcom may, at its discretion, provide indemnification
to persons whom Broadcom is not obligated to indemnify. The Bylaws also allow
Broadcom to enter into indemnity agreements with individual directors, officers,
employees and other agents. These indemnity agreements have been entered into
with all directors and executive officers and provide the maximum
indemnification permitted by law. These agreements, together with Broadcom's
Bylaws and Articles of Incorporation, may require Broadcom, among other things,
to indemnify these directors or executive officers (other than for liability
resulting from willful misconduct of a culpable nature), to advance expenses to
them as they are incurred, provided that they undertake to repay the amount
advanced if it is ultimately determined by a court that they are not entitled to
indemnification, and to obtain directors' and officers' insurance if available
on reasonable terms. Section 317 of the California Law and Broadcom's Bylaws
make provision for the indemnification of officers, directors and other
corporate agents in terms sufficiently broad to indemnify such persons, under
certain circumstances, for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
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\
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<CAPTION>
Exhibit Number Exhibit
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<S> <C>
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* Broadcom Corporation 1998 Stock Incentive Plan (as Amended and Restated through
September 24, 1999).
99.2** Form of Notice of Grant of Stock Option for Broadcom Corporation 1998 Stock Incentive
Plan.
99.3** Form of Stock Option Agreement for Broadcom Corporation 1998 Stock Incentive Plan.
99.4 BlueSteel Networks, Inc. 1999 Stock Incentive Plan.
99.5 Form of Stock Option Agreements for BlueSteel Networks, Inc. 1999 Stock Incentive Plan.
99.6 Form of Stock Purchase Agreement for BlueSteel Networks, Inc. 1999 Stock Incentive
Plan.
99.7 BlueSteel Networks, Inc. 1999 Non-Employee Stock Plan.
99.8 Form of Nonstatutory Stock Option Agreement for BlueSteel Networks, Inc. 1999
Non-Employee Stock Plan.
99.9 Digital Furnace Corporation Amended and Restated Stock Incentive Plan.
99.10 Form of Stock Option Grant Certificate for Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.11 Form of Exercise and Shareholder Agreement for Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.12 Stellar Semiconductor, Inc. 1999 Equity Incentive Plan.
99.13 Form of Notice of Stock Option Grant and related form of Stock Option Agreement for
Stellar Semiconductor, Inc. 1999 Equity Incentive Plan.
99.14 Form of Early Exercise Stock Purchase Agreement for Stellar Semiconductor, Inc. 1999
Equity Incentive Plan.
99.15 Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance Plan.
99.16 Form of Notice of Grant of Stock Option and related form of Stock Option Agreement for
Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance Plan.
99.17 Form of Stock Purchase Agreement for Stellar Semiconductor, Inc. 1997 Stock
Option/Stock Issuance Plan.
99.18 Form of Stock Option Assumption Agreement -- BlueSteel Networks, Inc. 1999 Stock
Incentive Plan.
99.19 Form of Stock Option Assumption Agreement -- BlueSteel Networks, Inc. 1999
Non-Employee Stock Plan.
99.20 Form of Stock Option Assumption Agreement -- Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.21 Form of Stock Option Assumption Agreement - Stellar Semiconductor, Inc. 1999 Equity
Incentive Plan.
99.22 Form of Stock Option Assumption Agreement - Stellar Semiconductor, Inc. 1997 Stock
Option/Stock Issuance Plan.
</TABLE>
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* Exhibit 99.1 is incorporated herein by reference to Exhibit 99.4 to
Broadcom's Registration Statement on Form S-8 (File No. 333-93457), filed
with the SEC on December 22, 1999.
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** Exhibits 99.2 and 99.3 are incorporated herein by reference to Exhibits
99.2 and 99.3, respectively, to Broadcom's Registration Statement on Form
S-8 (File No. 333-60763), filed with the SEC on August 6, 1998.
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
Broadcom Corporation 1998 Stock Incentive Plan, BlueSteel Networks, Inc. 1999
Stock Incentive Plan, BlueSteel Networks, Inc. 1999 Non-Employee Stock Plan,
Digital Furnace Corporation Amended and Restated Stock Incentive Plan, Stellar
Semiconductor, Inc. 1999 Equity Incentive Plan and/or Stellar Semiconductor,
Inc. 1997 Stock Option/Stock Issuance 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 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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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 22nd day of March,
2000.
BROADCOM CORPORATION
By: /S/ HENRY T. NICHOLAS III
-------------------------------------------
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
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<S> <C> <C>
/s/ HENRY T. NICHOLAS III President, Chief Executive Officer March 22, 2000
- ---------------------------------------- and Co-Chairman
Henry T. Nicholas III, Ph.D. (Principal Executive Officer)
/s/ HENRY SAMUELI Vice President of Research & March 22, 2000
- ---------------------------------------- Development, Chief Technical Officer
Henry Samueli, Ph.D. and Co-Chairman
/s/ WILLIAM J. RUEHLE Vice President and Chief Financial March 22, 2000
- ---------------------------------------- Officer (Principal Financial and
William J. Ruehle Accounting Officer)
</TABLE>
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<TABLE>
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/s/ ALAN E. ROSS Director March 22, 2000
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Alan E. Ross
/s/ MYRON S. EICHEN Director March 22, 2000
- ----------------------------------------
Myron S. Eichen
/s/ WERNER F. WOLFEN Director March 22, 2000
- ----------------------------------------
Werner F. Wolfen
</TABLE>
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<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
BROADCOM CORPORATION
<PAGE> 9
EXHIBIT INDEX
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Exhibit Number Exhibit
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<S> <C>
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* Broadcom Corporation 1998 Stock Incentive Plan (as Amended and Restated through
September 24, 1999).
99.2** Form of Notice of Grant of Stock Option for Broadcom Corporation 1998 Stock Incentive
Plan.
99.3** Form of Stock Option Agreement for Broadcom Corporation 1998 Stock Incentive Plan.
99.4 BlueSteel Networks, Inc. 1999 Stock Incentive Plan.
99.5 Form of Stock Option Agreements for BlueSteel Networks, Inc. 1999 Stock Incentive Plan.
99.6 Form of Stock Purchase Agreement for BlueSteel Networks, Inc. 1999 Stock Incentive
Plan.
99.7 BlueSteel Networks, Inc. 1999 Non-Employee Stock Plan.
99.8 Form of Nonstatutory Stock Option Agreement for BlueSteel Networks, Inc. 1999
Non-Employee Stock Plan.
99.9 Digital Furnace Corporation Amended and Restated Stock Incentive Plan.
99.10 Form of Stock Option Grant Certificate for Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.11 Form of Exercise and Shareholder Agreement for Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.12 Stellar Semiconductor, Inc. 1999 Equity Incentive Plan.
99.13 Form of Notice of Stock Option Grant and related form of Stock Option Agreement for
Stellar Semiconductor, Inc. 1999 Equity Incentive Plan.
99.14 Form of Early Exercise Stock Purchase Agreement for Stellar Semiconductor, Inc. 1999
Equity Incentive Plan.
99.15 Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance Plan.
99.16 Form of Notice of Grant of Stock Option and related form of Stock Option Agreement for
Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance Plan.
99.17 Form of Stock Purchase Agreement for Stellar Semiconductor, Inc. 1997 Stock
Option/Stock Issuance Plan.
99.18 Form of Stock Option Assumption Agreement -- BlueSteel Networks, Inc. 1999 Stock
Incentive Plan.
99.19 Form of Stock Option Assumption Agreement -- BlueSteel Networks, Inc. 1999
Non-Employee Stock Plan.
99.20 Form of Stock Option Assumption Agreement -- Digital Furnace Corporation Amended and
Restated Stock Incentive Plan.
99.21 Form of Stock Option Assumption Agreement - Stellar Semiconductor, Inc. 1999 Equity
Incentive Plan.
</TABLE>
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<TABLE>
<S> <C>
99.22 Form of Stock Option Assumption Agreement - Stellar Semiconductor, Inc. 1997 Stock
Option/Stock Issuance Plan.
</TABLE>
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* Exhibit 99.1 is incorporated herein by reference to Exhibit 99.4 to
Broadcom's Registration Statement on Form S-8 (File No. 333-93457), filed
with the SEC on December 22, 1999.
** Exhibits 99.2 and 99.3 are incorporated herein by reference to Exhibits
99.2 and 99.3, respectively, to Broadcom's Registration Statement on Form
S-8 (File No. 333-60763), filed with the SEC on August 6, 1998.
<PAGE> 1
EXHIBIT 5.1
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
March 22, 2000
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 9,747,193 shares of the Company's Class A Common Stock and 330,291
shares of the Company's Class B Common Stock (collectively, the "Shares") and
related stock options under the (i) Broadcom Corporation 1998 Stock Incentive
Plan, (ii) BlueSteel Networks, Inc. 1999 Stock Incentive Plan, (iii) BlueSteel
Networks, Inc. 1999 Non-Employee Stock Plan, (iv) Digital Furnace Corporation
Amended and Restated Stock Incentive Plan, (v) Stellar Semiconductor, Inc. 1999
Equity Incentive Plan and (vi) Stellar Semiconductor, Inc. 1997 Stock
Option/Stock Issuance 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.
<PAGE> 2
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company 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 Broadcom Corporation 1998 Stock
Incentive Plan, BlueSteel Networks, Inc. 1999 Stock Incentive Plan, BlueSteel
Networks, Inc. 1999 Non-Employee Stock Plan, Digital Furnace Corporation Amended
and Restated Stock Incentive Plan, Stellar Semiconductor, Inc. 1999 Equity
Incentive Plan and Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance
Plan, of our report dated January 26, 1999 (except for Notes 2 and 9 as to which
the date is August 31, 1999), with respect to the consolidated financial
statements and schedule of Broadcom Corporation included in its Current Report
on Form 8-K/A dated November 24, 1999, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Orange County, California
March 22, 2000
<PAGE> 1
EXHIBIT 99.4
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
(EFFECTIVE APRIL 13, 1999)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
1. Purpose...............................................................................1
2. Definitions...........................................................................1
(a) Board..........................................................................1
(b) Code...........................................................................1
(c) Committee......................................................................1
(d) Common Stock...................................................................1
(e) Company........................................................................1
(f) Consultant.....................................................................1
(g) Employee.......................................................................1
(h) Exercise Price.................................................................1
(i) Fair Market Value..............................................................1
(j) Incentive Stock Option or ISO..................................................2
(k) Non-Employee Director..........................................................2
(l) Nonstatutory Option or NSO.....................................................2
(m) Offeree........................................................................2
(n) Option.........................................................................2
(o) Optionee.......................................................................2
(q) Plan...........................................................................2
(r) Purchase Price.................................................................2
(s) Service........................................................................2
(t) Stock Option Agreement.........................................................2
(u) Stock Purchase Agreement.......................................................2
(v) Subsidiary.....................................................................2
(w) Ten Percent Stockholder........................................................2
3. Administration........................................................................3
(a) Committees of the Board........................................................3
(b) Authority of the Board.........................................................3
4. Eligibility...........................................................................3
5. Stock Subject to Plan.................................................................3
(a) Basic Limitation...............................................................3
(b) Additional Shares..............................................................3
6. Terms and Conditions of Grants or Sales...............................................3
(a) Stock Purchase Agreement.......................................................3
(b) Duration of Offers and Nontransferability of Rights............................4
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
(c) Purchase Price.................................................................4
(d) Withholding Taxes..............................................................4
(e) Restrictions on Transfer of Common Stock.......................................4
7. Terms and Conditions of Options.......................................................4
(a) Stock Option Agreement.........................................................4
(b) Number of Shares...............................................................4
(c) Exercise Price.................................................................4
(d) Withholding Taxes..............................................................5
(e) Exercisability.................................................................5
(f) Term...........................................................................5
(g) Nontransferability.............................................................5
(h) Exercise of Options on Termination of Service..................................5
(i) No Rights as a Stockholder.....................................................5
(j) Modification, Extension and Assumption of Options..............................6
(k) Restrictions on Transfer.......................................................6
8. Forms of Payment......................................................................6
(a) General Rule...................................................................6
(b) Surrender of Stock.............................................................6
(c) Promissory Notes...............................................................6
(d) Cashless Exercise..............................................................6
9. Adjustments Upon Changes in Common Stock..............................................7
(a) General........................................................................7
(b) Mergers and Consolidations.....................................................7
(c) Reservation of Rights..........................................................7
10. Legal Requirements....................................................................8
(a) Restrictions on Issuance.......................................................8
(b) Financial Reports..............................................................8
11. No Employment Rights..................................................................8
12. 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.............................................8
13. Execution.............................................................................9
</TABLE>
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<PAGE> 4
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
ADOPTED BY THE BOARD APRIL 13, 1999
APPROVED BY SHAREHOLDERS APRIL 13, 1999
1. Purpose.
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such persons to remain
in the employ of the Company and to attract new employees with outstanding
qualifications.
The Plan provides for the direct grant or sale of Common Stock and for
the grant of Options to purchase Common Stock. Options granted under the Plan
may include Nonstatutory Options as well as Incentive Stock Options intended to
qualify under section 422 of the Internal Revenue Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee consisting of one or more members
of the Board that is appointed by the Board to administer the Plan.
(d) "Common Stock" means the Company's common stock.
(e) "Company" shall mean BlueSteel Networks, Inc., a Delaware
corporation.
(f) "Consultant" shall mean an individual who performs bona fide services
to the Company, a Parent or a Subsidiary other than as an Employee or a member
of the Board.
(g) "Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(h) "Exercise Price" shall mean the amount for which one share of Common
Stock may be purchased upon exercise of an Option, as specified by the Board in
the applicable Stock Option Agreement.
(i) "Fair Market Value" shall mean the fair market value of a share of
Common Stock, as determined by the Board in good faith. Such determination shall
be conclusive and binding on all persons.
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(j) "Incentive Stock Option" or "ISO" shall mean an incentive stock
option described in Code section 422(b).
(k) "Non-Employee Director" shall mean a member of the Board who is not
an Employee.
(l) "Nonstatutory Option" or "NSO" shall mean a stock option that is not
an ISO.
(m) "Offeree" shall mean an individual to whom the Board has offered the
right to acquire Common Stock other than upon exercise of an Option.
(n) "Option" shall mean an ISO or NSO granted under the Plan entitling
the holder to purchase Common Stock.
(o) "Optionee" shall mean an individual who holds an Option.
(p) "Parent" shall have the meaning set forth in section 424(e) of the
Code.
(q) "Plan" shall mean this 1999 Stock Incentive Plan.
(r) "Purchase Price" shall mean the consideration for which one share of
Common Stock may be acquired under the Plan pursuant to a grant or sale under
Section 6, as specified by the Board.
(s) "Service" shall mean service as an Employee, Non-Employee Director or
Consultant.
(t) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to an Option, in the form attached hereto as Exhibit A.
(u) "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Common Stock under the Plan (other than
pursuant to an Option) that contains the terms, conditions and restrictions
pertaining to the acquisition of such Common Stock.
(v) "Subsidiary" shall have the meaning set forth in section 424(f) of
the Code. 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.
(w) "Ten Percent Stockholder" means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company, its Parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of section 424(d) of the Code shall be
applied.
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<PAGE> 6
3. Administration.
(a) Committees of the Board. The Plan shall be administered by the Board.
However, any or all administrative functions otherwise exercisable by the Board
may be delegated to a Committee. Members of the Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated to the
Committee. Any reference to the Board in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board has assigned a particular
function.
(b) Authority of the Board. Subject to the provisions of the Plan, the
Board 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 shall be final and binding on all
parties who have an interest in the Plan or any option or shares issued
thereunder.
4. Eligibility.
Only Employees, Non-Employee Directors and Consultants shall be eligible
for the grant of Options or the direct grant or sale of Common Stock. Only
Employees shall be eligible for the grant of ISOs.
5. Stock Subject to Plan.
(a) Basic Limitation. The stock issuable under the Plan shall be shares
of authorized but unissued or reacquired Common Stock. The maximum number of
shares of Common Stock which may be issued under the Plan shall not exceed three
million (3,000,000) shares, subject to adjustment pursuant to Section 9.
(b) Additional Shares. If any outstanding Option or other right to
acquire Common Stock for any reason expires or is canceled, forfeited or
otherwise terminated, the Common Stock allocable to the unexercised portion of
such Option or other right shall again be available for the purposes of the
Plan. If shares of Common Stock issued under the Plan are reacquired by the
Company pursuant to any right of repurchase or right of first refusal, such
shares of Common Stock shall again be available for the purposes of the Plan,
except such shares shall not be available for ISOs.
6. Terms and Conditions of Grants or Sales.
(a) Stock Purchase Agreement. Each grant or sale of Common Stock under
the Plan other than upon exercise of an Option shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such grant or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan and
that the Board 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.
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<PAGE> 7
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Common Stock under the Plan other than an Option shall automatically
expire if not exercised by the Offeree within the number of days specified by
the Board and communicated to the Offeree. Such right shall not be transferable
and shall be exercisable only by the Offeree to whom such right was granted.
(c) Purchase Price. The Purchase Price shall be established by the Board
and set forth in the Stock Purchase Agreement and, to the extent required to
comply with the California Corporations Code or the regulations thereunder,
shall not be less than eighty-five percent (85%) of Fair Market Value (one
hundred percent (100%) for Ten Percent Stockholders). The Purchase Price shall
be payable in a form described in Section 8 or, in the discretion of the Board,
in consideration for past services rendered to the Company or for its benefit.
(d) Withholding Taxes. As a condition to the purchase of Common Stock,
the Offeree shall make such arrangements as the Board may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
(e) Restrictions on Transfer of Common Stock. No Common Stock granted or
sold under the Plan may be sold, made the subject of any short sale or loan,
hypothecated, pledged, optioned or otherwise transferred or disposed of by the
Offeree for such period of time (not to exceed one hundred eighty (180) days)
following the effective date of a registration statement covering securities of
the Company filed under the Securities Act of 1933, as amended, unless such
restriction is consented to or waived by the managing underwriter. Subject to
the preceding sentence, any Common Stock granted or sold under the Plan shall be
subject to such special conditions, rights of repurchase, rights of first
refusal and other transfer restrictions as the Board may determine. Such
restrictions shall apply in addition to any general restrictions that may apply
to all holders of Common Stock.
7. 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 that are not inconsistent
with the Plan and that the Board 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 of Common Stock that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 9. The
Stock Option Agreement shall also specify whether the Option is an ISO or a NSO.
(c) Exercise Price. An Option's Exercise Price shall be established by
the Board and set forth in a Stock Option Agreement. The Exercise Price of an
ISO shall not be less than one hundred percent (100%) of the Fair Market Value
(one hundred ten percent (110%) for Ten
4
<PAGE> 8
Percent Stockholders) on the date of grant. The Exercise Price of a NSO shall
not be less than eight-five percent (85%) of the Fair Market Value (one hundred
ten percent (110%) for Ten Percent Stockholders) on the date of grant. The
Exercise Price shall be payable in a form described in Section 8.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than that set prescribed in this paragraph if the Option grant is
attributable to the issuance or assumption of an option in a transaction to
which Code section 424(a) applies.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board 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 may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Common Stock 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 vest or become exercisable. To
the extent required to comply with the California Corporations Code or the
regulations thereunder, an Option granted to Employees who are not officers
shall vest and become exercisable no less rapidly than the rate of twenty
percent (20%) per year for each of the first five (5) years from the date of
grant. Subject to the preceding sentence, the vesting of any Option shall be
determined by the Board in its sole discretion. A Stock Option Agreement may
permit an Optionee to exercise an Option before it is vested, subject to the
Company's right of repurchase over any shares acquired under the unvested
portion of the Option (an "early exercise"), which right of repurchase shall
lapse at the same rate the Option would have vested had there been no early
exercise.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant (five
(5) years in the case of an ISO granted to a Ten Percent Stockholder). Subject
to the preceding sentence, the Board at its sole discretion shall determine when
an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only or by the guardian or legal
representative of the Optionee. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. To the extent required
to comply with the California Corporations Code or the regulations thereunder,
each Stock Option Agreement shall provide that the Optionee shall have the right
to exercise the Option following termination of the Optionee's Service, during
the Option's term, for at least thirty (30) days following termination of
Service for any reason except cause, death or disability, and for at least six
(6) months following termination of Service due to death or disability.
(i) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Common Stock
covered by an Option until such person becomes entitled to receive such Common
Stock by filing a notice of exercise and paying the Exercise Price pursuant to
the terms of such Option.
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<PAGE> 9
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Board 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 of Common Stock and at the same or a
different Exercise Price. Notwithstanding the foregoing, 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.
(k) Restrictions on Transfer. No shares of Common Stock issued upon
exercise of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
issued upon exercise of an Option shall be subject to such rights of repurchase,
rights of first refusal and other transfer restrictions as the Board may
determine. Such restrictions shall apply in addition to any restrictions that
may apply to holders of Common Stock generally. Any right to repurchase an
Optionee's Common Stock at the original Exercise Price upon termination of the
Optionee's Service shall lapse at least as rapidly as the schedule set forth in
Subsection (e) above. Any such repurchase right may be exercised only within
ninety (90) days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Common Stock.
8. Forms of Payment.
(a) General Rule. The entire Purchase Price or Exercise Price shall be
payable in cash or cash equivalents acceptable to the Company at the time of
exercise or purchase, except as otherwise provided in this Section 8.
(b) Surrender of Stock. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, payment may be made all or in part with
Common Stock that has already been owned by the Optionee or the Optionee's
representative for any time period specified by the Board and that are
surrendered to the Company in good form for transfer. Such Common Stock shall be
valued at Fair Market Value on the date when the new Common Stock is purchased
under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement or
Stock Purchase agreement so provides, payment may be made all or in part with a
full recourse promissory note executed by the Optionee. The interest rate and
other terms and conditions of such note shall be determined by the Board. The
Board may require that the Optionee pledge his or her Common Stock to the
Company for the purpose of securing the payment of such note. In no event shall
the stock certificate(s) representing such Common Stock be released to the
Optionee until such note is paid in full, unless otherwise provided in the Stock
Option Agreement or Stock Purchase Agreement.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Common Stock exists, payment may be made
all or in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a securities broker to sell Common
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<PAGE> 10
Stock and to deliver all or part of the sale proceeds to the Company in payment
of the aggregate Exercise Price.
9. Adjustments Upon Changes in Common Stock.
(a) General. In the event of a subdivision of the outstanding Common
Stock, a declaration of a dividend payable in Common Stock, a declaration of an
extraordinary dividend payable in a form other than Common Stock in an amount
that has a material effect on the value of Common Stock, a combination or
consolidation of the outstanding Common Stock into a lesser number of shares, a
recapitalization, a reclassification or a similar occurrence, the Board shall
make appropriate adjustments in one or more of (i) the number of shares of
Common Stock available for future grants of Options or other rights to acquire
Common Stock under Section 5, (ii) the number of shares of Common Stock covered
by each outstanding Option or other right to acquire Common Stock or (iii) the
Exercise Price of each outstanding Option or the Purchase Price of each other
right to acquire Common Stock.
(b) Mergers and Consolidations. In the event that the Company is a party
to a merger or consolidation, outstanding Options or other rights to acquire
Common Stock shall be subject to the agreement of merger or reorganization. Such
agreement, without an Optionee's 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 to the extent
not exercised before the merger or consolidation.
(c) Reservation of Rights. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend,
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to an Option, or the number of shares subject to any
other right to acquire Common Stock and/or the Exercise Price or Purchase Price.
The grant of an Option or other right to acquire Common Stock 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.
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<PAGE> 11
10. Legal Requirements.
(a) Restrictions on Issuance. Common Stock shall not be issued under the
Plan unless the issuance and delivery of such Common Stock complies with (or is
exempt from) all applicable requirements of law, including (without limitation)
the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state securities laws and regulations, and the regulations of any
stock exchange on which the Company's securities may then be listed, and the
Company has obtained the approval or favorable ruling from any governmental
agency that the Company determines is necessary or advisable.
(b) Financial Reports. To the extent required to comply with the
California Corporations Code or the regulations thereunder, not less often than
annually the Company shall furnish to Optionees and Offerees Company summary
financial information including a balance sheet regarding the Company's
financial condition and results of operations, unless such Optionees or Offerees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.
11. No Employment Rights.
No provision of the Plan, nor any Option granted or other right to
acquire Common Stock granted under the Plan, shall be construed to give any
person any right to become, to be treated as, or to remain an Employee,
Consultant or Non-Employee Director. The Company and its Subsidiaries reserve
the right to terminate any person's Service at any time and for any reason.
12. 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, subject to the approval of
the Company's stockholders. In the event that the stockholders fail to approve
the Plan within twelve (12) months after its adoption by the Board, any Option
grants or other right to acquire Common Stock already made shall be null and
void, and no additional Option grants or other right to acquire Common Stock
shall be made after such date. The Plan shall terminate automatically ten (10)
years after its adoption by the Board and may be terminated on any earlier date
pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board may amend or
terminate the Plan at any time. Rights under any Option granted or other right
to acquire Common Stock granted before amendment of the Plan shall not be
materially altered, or impaired adversely, by such amendment, except with
consent of the Optionee or Offeree. An amendment of the Plan shall be subject to
the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules.
(c) Effect of Amendment or Termination. No Common Stock 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 Common Stock previously issued or Option
previously granted under the Plan.
8
<PAGE> 12
13. Execution.
To record the adoption of the Plan, the Company has caused its authorized
officer to execute the same.
9
<PAGE> 1
EXHIBIT 99.5
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
BlueSteel Networks, Inc., a Delaware corporation (the "Company"), hereby
grants an option to purchase its Common Stock to the optionee named below. The
terms and conditions of the option are set forth in this Stock Option Agreement
and in the Company's 1999 Stock Incentive Plan (the "Plan").
I. GRANT INFORMATION
Date of Grant: __________, 199__
Name of Optionee: ______________________________________
Optionee's Social Security Number: ________-______-________
Type of Option: __ Incentive ("ISO")
__ Nonstatutory ("NSO")
Number of Shares of Common Stock: ___________
Exercise Price per Share: $__________
Vesting Start Date: __________, 199__
Vesting Schedule: Subject to attached Terms and Conditions,
the option shall vest as to 12/48 of
the shares on the first anniversary of
the Vesting Start Date and 1/48 of the
shares each full month thereafter. The
option shall vest as to an additional
12/48 of the shares in the event of
Optionee's Service termination due to
death or Disability.
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
IN THIS STOCK OPTION AGREEMENT, INCLUDING THE ATTACHED TERMS AND
CONDITIONS, NOTICE OF EXERCISE AND PLAN.
Optionee:
-----------------------------------------------------------------------
(Signature)
Company:
------------------------------------------------------------------------
(Signature)
Title:
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<PAGE> 2
II. TERMS AND CONDITIONS
1. VESTING. Your option vests during your Service on the dates specified
in the first page of this Stock Option Agreement. Vesting will cease if your
Service terminates for any reason.
2. SERVICE; LEAVES OF ABSENCE. Your Service shall cease when you cease
to be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. For purposes of
your option, your Service does not terminate when you go on a bona fide leave of
absence, that was approved by the Company in writing, if the terms of the leave
provide for continued service crediting, or when continued service crediting is
required by applicable law. However, for purposes of determining whether your
option is entitled to ISO status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your right to return to active
work is guaranteed by law or by a contract. Your Service terminates in any event
when the approved leave ends, unless you immediately return to active work. The
Company determines which leaves count toward Service, and when your Service
terminates for all purposes under the Plan.
3. TERM OF OPTION. Your option expires on the day before the 10th
anniversary of the Date of Grant, and will expire earlier if your Service
terminates as follows:
(a) REGULAR TERMINATION. If your Service terminates for any reason
except cause, death or Disability, then your option will expire at the close of
business at Company headquarters three (3) months after your termination date.
(b) CAUSE. If your Service terminates for cause (as defined by the
Company and consistent with applicable law), your option will expire
immediately.
(c) DEATH. If you die while in Service, then your option will expire at
the close of business at Company headquarters on the date twelve (12) months
after the date of death. During that twelve (12) month period, your estate or
heirs may exercise the vested portion of your option.
(d) DISABILITY. If your Service terminates because of your Disability,
then your option will expire at the close of business at Company headquarters on
the date twelve (12) months after your termination date. Disability shall have
the meaning set forth in section 22(e)(3) of the Code.
4. EXERCISE OF OPTION.
(a) LEGAL RESTRICTIONS. The Company will not permit you to exercise your
option if the issuance of Common Stock at that time would violate any law or
regulation. You represent and agree that the Common Stock to be acquired upon
exercising your option will be acquired for investment, and not with a view to
the sale or distribution thereof. If the sale of Common Stock under the Plan is
not registered under the Securities Act but an exemption is available which
requires an investment representation or other representation, you shall
represent and agree at the time of exercise to make such representations as are
deemed necessary or appropriate by the Company and its counsel.
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<PAGE> 3
(b) METHOD OF EXERCISE. To exercise your option, you must complete and
file the Company's "Notice of Exercise" form at the address given on the form,
together with full payment. The Notice of Exercise will be effective when it is
received by the Company. If someone else wants to exercise your option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so.
(c) FORM OF PAYMENT. When you submit a Notice of Exercise, you must
include payment of the aggregate Exercise Price for the Common Stock you are
purchasing. Payment may be made in one (or a combination) of the following
forms.
o Your personal check, a cashier's check or a money order.
o To the extent that a public market for Common Stock exists as
determined by the Company, by delivery (on a form approved by the
Company) of an irrevocable direction to a securities broker to
sell Common Stock and to deliver all or part of the sale proceeds
to the Company in payment of the aggregate Exercise Price.
(d) WITHHOLDING TAXES. You will not be allowed to exercise your option
unless you make acceptable arrangements to pay any withholding or other taxes
that may be due as a result of the option exercise or the sale of Common Stock
acquired upon exercise of your option.
5. EXERCISE OF OPTION BEFORE VESTING. You may not exercise your option
before it is fully vested.
6. RESALE RESTRICTIONS/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 of 1993, as
amended, including the Company's initial public offering, you shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or agree to engage in
any of the foregoing transactions with respect to any Common Stock without the
prior written consent of the Company or its underwriters, for such period of
time after the effective date of such registration statement as may be requested
by the Company or such underwriters, not to exceed one hundred eighty (180)
days. To enforce the provisions of this paragraph, the Company may impose
stop-transfer instructions with respect to the Common Stock until the end of the
applicable stand-off period. You may not to sell any Common Stock at a time when
applicable laws, regulations or Company or underwriter trading policies prohibit
a sale.
7. RIGHT OF FIRST REFUSAL. If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock. If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written notice ("Transfer Notice") to the
Company describing fully the proposed transfer, including the number of shares
proposed to be transferred, the proposed transfer price and the name and address
of the proposed transferee. The Transfer Notice shall be signed both by you and
by the proposed new transferee and must constitute a binding commitment of both
parties to the transfer of the Common Stock. The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the
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<PAGE> 4
terms of the proposal described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by delivery of a notice of
exercise of the Right of First Refusal within thirty (30) days after the date
when the Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Common Stock on
the terms set forth in the Transfer Notice within sixty (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 if the
Transfer Notice provided that payment for the Common Stock was to be made in a
form other than lawful money paid at the time of transfer, the Company shall
have the option of paying for the Common Stock with lawful money equal to the
present value of the consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock. The Company's right of First
Refusal shall terminate if the Company's Common Stock is listed on an
established stock exchange or is quoted regularly on the Nasdaq Stock Market.
8. TRANSFER OF OPTION. Prior to your death, only you may exercise your
option. You cannot transfer or assign your option. For instance, you may not
sell your option or use it as security for a loan. If you attempt to do any of
these things, your option will immediately become invalid. You may, however,
dispose of your option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise
from your spouse or former spouse, nor is the Company obligated to recognize
such individual's interest in your option in any other way.
9. NO RETENTION RIGHTS. Your option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity. The Company
reserves the right to terminate your Service at any time and for any reason.
10. STOCKHOLDER RIGHTS. You, or your estate or heirs, have no rights as
a stockholder of the Company until a certificate for your fully vested Common
Stock has been issued. No adjustments are made for dividends or other rights if
the applicable record date occurs before your stock certificate is issued,
except as described in the Plan.
11. ADJUSTMENTS TO COMMON STOCK. In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your option and the exercise price per share may be adjusted pursuant
to the Plan. Your option shall
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<PAGE> 5
be subject to the terms of the agreement of merger, liquidation or
reorganization in the event the Company is subject to such corporate activity.
12. LEGENDS. All certificates representing the Common Stock issued upon
exercise of your option shall, where applicable, have endorsed thereon any
legends required by applicable law, including the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED
TRANSFER OF THE SECURITIES. THE SECRETARY OF THE COMPANY WILL UPON
WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT REQUIRED."
13. APPLICABLE LAW. This Agreement will be interpreted and enforced
under the laws of the State of California.
14. INCORPORATION OF PLAN BY REFERENCE. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between
you and the Company regarding your option. Any prior agreements, commitments or
negotiations concerning your option are superseded.
-5-
<PAGE> 6
NOTICE OF EXERCISE
BlueSteel Networks, Inc.
1111 W. El Camino Real #109-190
Sunnyvale, CA 94087
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Stock Option Agreement dated __________, 199___ (the
"Stock Option Agreement") and the Company's 1999 Stock Incentive Plan (the
"Plan"), I hereby elect to purchase _____________ shares of the Common Stock of
the Company at aggregate exercise price of $__________. I enclose payment by my
check in the amount of $___________;
The Common Stock is to be issued and registered in the name(s) of:
--------------------------
--------------------------
I understand that there may be tax consequences as a result of the
purchase or disposition of the Common Stock, and I have consulted with any tax
consultants I wished to consult and I am not relying on the Company for any tax
advice. I understand that my exercise is governed by my Stock Option Agreement
and the Plan and agree to abide by and be bound by their terms and conditions. I
represent that the Common Stock is being acquired solely for my own account and
not as a nominee for any other party, or for investment, and that I will not
offer, sell or otherwise dispose of any such Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
Dated: __________, 199__.
----------------------------------------
(Signature)
----------------------------------------
(Please Print Name)
----------------------------------------
----------------------------------------
(Address)
<PAGE> 7
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
(WITH EXERCISE BEFORE VESTING PERMITTED)
BlueSteel Networks, Inc., a Delaware corporation (the "Company"),
hereby grants an option to purchase its Common Stock to the optionee named
below. The terms and conditions of the option are set forth in this Stock Option
Agreement and in the Company's 1999 Stock Incentive Plan (the "Plan").
I. GRANT INFORMATION
Date of Grant: __________, 199__
Name of Optionee:
Optionee's Social Security Number: ________-______-________
Type of Option: __ Incentive ("ISO")
__ Nonstatutory ("NSO")
Number of Shares of Common Stock: ___________
Exercise Price per Share: $__________
Vesting Start Date: __________, 199__
Vesting Schedule: Subject to attached
Terms and Conditions, the option
shall vest as to 12/48ths of the
shares on each the first through
fourth anniversaries of the
Vesting Start Date. The option
shall vest as to an additional
12/48ths of the shares in the
event of Optionee's Service
termination due to death or
Disability.
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THIS STOCK OPTION AGREEMENT, INCLUDING THE ATTACHED TERMS
AND CONDITIONS, NOTICE OF EXERCISE AND PLAN.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
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<PAGE> 8
II. TERMS AND CONDITIONS
1. VESTING. Your option vests during your Service on the dates
specified in the first page of this Stock Option Agreement. Vesting will cease
if your Service terminates for any reason, provided that your option may
accelerate as provided in the first page of this Stock Option Agreement in the
event that your Service has not terminated prior to your death or your
Disability.
2. SERVICE; LEAVES OF ABSENCE. Your Service shall cease when you cease
to be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. For purposes of
your option, your Service does not terminate when you go on a bona fide leave of
absence, that was approved by the Company in writing, if the terms of the leave
provide for continued service crediting, or when continued service crediting is
required by applicable law. However, for purposes of determining whether your
option is entitled to ISO status, your Service will be treated as terminating
ninety (90) days after you went on leave, unless your right to return to active
work is guaranteed by law or by a contract. Your Service terminates in any event
when the approved leave ends, unless you immediately return to active work. The
Company determines which leaves count toward Service, and when your Service
terminates for all purposes under the Plan.
3. TERM OF OPTION. Your option expires on the day before the 10th
anniversary of the Date of Grant, and will expire earlier if your Service
terminates as follows:
(a) REGULAR TERMINATION. If your Service terminates for any reason
except cause, death or Disability, then your option will expire at the close of
business at Company headquarters three (3) months after your termination date.
(b) CAUSE. If your Service terminates for cause (as defined by the
Company and consistent with applicable law), your option will expire
immediately.
(c) DEATH. If you die while in Service, then your option will expire at
the close of business at Company headquarters on the date six (6) months after
the date of death. During that six (6) month period, your estate or heirs may
exercise the vested portion of your option.
(d) DISABILITY. If your Service terminates because of your Disability,
then your option will expire at the close of business at Company headquarters on
the date six (6) months after your termination date. Disability shall have the
meaning set forth in section 22(e)(3) of the Code.
4. EXERCISE OF OPTION.
(a) LEGAL RESTRICTIONS. The Company will not permit you to exercise
your option if the issuance of Common Stock at that time would violate any law
or regulation. You represent and agree that the Common Stock to be acquired upon
exercising your option will be acquired for investment, and not with a view to
the sale or distribution thereof. If the sale of Common Stock under the Plan is
not registered under the Securities Act but an exemption is available which
requires an investment representation or other representation, you shall
represent and agree at the
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<PAGE> 9
time of exercise to make such representations as are deemed necessary or
appropriate by the Company and its counsel.
(b) METHOD OF EXERCISE. To exercise your option, you must complete and
file the Company's "Notice of Exercise" form at the address given on the form,
together with full payment. The Notice of Exercise will be effective when it is
received by the Company. If someone else wants to exercise your option after
your death, that person must prove to the Company's satisfaction that he or she
is entitled to do so.
(c) FORM OF PAYMENT. When you submit a Notice of Exercise, you must
include payment of the aggregate Exercise Price for the Common Stock you are
purchasing. Payment may be made in one (or a combination) of the following
forms.
- Your personal check, a cashier's check or a money order.
- A secured, full recourse promissory note in the form attached.
- To the extent that a public market for Common Stock exists as
determined by the Company, by delivery (on a form approved by
the Company) of an irrevocable direction to a securities
broker to sell Common Stock and to deliver all or part of the
sale proceeds to the Company in payment of the aggregate
Exercise Price.
- Your delivery of shares of Common Stock that have been owned
by you for at least six months (or such other period of time
as may be necessary to avoid adverse accounting consequences
to the Company).
(d) WITHHOLDING TAXES. You will not be allowed to exercise your option
unless you make acceptable arrangements to pay any withholding or other taxes
that may be due as a result of the option exercise or the sale of Common Stock
acquired upon exercise of your option.
5. EXERCISE OF OPTION BEFORE VESTING ("EARLY EXERCISE"). You may
exercise your option before it is fully vested.
Common Stock received upon the exercise of the unvested portion of your
option shall be subject to the Company's right of repurchase, which right of
repurchase shall lapse at the rate the option would have vested had there been
no exercise. The Company's right of repurchase shall terminate ninety (90) days
after the later of (a) your Service termination or (b) your date of exercise.
The certificates for the Common Stock subject to the Company's right of
repurchase shall be deposited in escrow with the Secretary of the Company to be
held as described herein. Each deposited certificate shall be accompanied by a
duly executed Assignment Separate from Certificate in the form attached. The
deposited certificates, shall remain in escrow until such time or times as the
certificates are to be released or otherwise surrendered for cancellation as
discussed below.
All regular cash dividends on the Common Stock (or other securities at
the time held in escrow) shall be paid directly to you and shall not be held in
escrow. However, in the event of
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<PAGE> 10
any stock dividend, stock split, recapitalization or other change affecting the
Company's outstanding Common Stock as a class effected without receipt of
consideration, any new, substituted or additional securities or other property
which is by reason of such transaction distributed shall be immediately
delivered to the Secretary of the Company to be held in escrow hereunder, but
only to the extent the Common Stock is at the time subject to the escrow
requirements hereof.
The Common Stock held in escrow hereunder shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Company for repurchase and cancellation:
- As your interest in the Common Stock vests, the certificates
for such vested Common Stock shall be released from escrow and
delivered to you, at your request, in accordance with the
following schedule:
- The initial release of any vested Common Stock (or
other vested assets and securities) from escrow shall
be effected within thirty (30) days following the
expiration of the initial twelve (12) month period
measured from the Vesting Start Date.
- Subsequent releases of any vested Common Stock from
escrow shall be effected at annual intervals
thereafter, with the first such annual release to
occur twenty-four (24) months after the Vesting Start
Date.
- Upon termination of your Service, any escrowed Common
Stock in which you are at the time vested shall be
promptly released from escrow.
- Should the Company exercise its right of repurchase with
respect to any unvested Common Stock held at the time in
escrow hereunder, then the escrowed certificates for such
unvested Common Stock shall, concurrently with the payment of
the purchase price for such Common Stock, be surrendered to
the Company for cancellation, and you shall have no further
rights with respect to such Common Stock.
- Should the Company elect not to exercise its right of
repurchase with respect to any Common Stock held at the time
in escrow hereunder, then the escrowed certificates for such
Common Stock shall be surrendered to you.
6. RESALE RESTRICTIONS/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 of 1993, as
amended, including the Company's initial public offering, you shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or agree to engage in
any of the foregoing transactions with respect to any Common Stock without the
prior written consent of the Company or its underwriters, for such period of
time after the effective date of such registration statement as may be requested
by the Company or such underwriters, not to exceed one hundred eighty (180)
days. To enforce the provisions of this paragraph, the Company may
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<PAGE> 11
impose stop-transfer instructions with respect to the Common Stock until the end
of the applicable stand-off period. You may not sell any Common Stock at a time
when applicable laws, regulations or Company or underwriter trading policies
prohibit a sale.
7. RIGHT OF FIRST REFUSAL. If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock. If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written notice ("Transfer Notice") to the
Company describing fully the proposed transfer, including the number of shares
proposed to be transferred, the proposed transfer price and the name and address
of the proposed transferee. The Transfer Notice shall be signed both by you and
by the proposed new transferee and must constitute a binding commitment of both
parties to the transfer of the Common Stock. The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Common Stock on
the terms set forth in the Transfer Notice within sixty (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 if the
Transfer Notice provided that payment for the Common Stock was to be made in a
form other than lawful money paid at the time of transfer, the Company shall
have the option of paying for the Common Stock with lawful money equal to the
present value of the consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock. The Company's right of First
Refusal shall terminate if the Company's Common Stock is listed on an
established stock exchange or is quoted regularly on the Nasdaq Stock Market.
8. TRANSFER OF OPTION. Prior to your death, only you may exercise your
option. You cannot transfer or assign your option. For instance, you may not
sell your option or use it as security for a loan. If you attempt to do any of
these things, your option will immediately become invalid. You may, however,
dispose of your option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of
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<PAGE> 12
exercise from your spouse or former spouse, nor is the Company obligated to
recognize such individual's interest in your option in any other way.
9. NO RETENTION RIGHTS. Your option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity. The Company
reserves the right to terminate your Service at any time and for any reason.
10. STOCKHOLDER RIGHTS. You, or your estate or heirs, have no rights as
a stockholder of the Company until a certificate for your fully vested Common
Stock has been issued. No adjustments are made for dividends or other rights if
the applicable record date occurs before your stock certificate is issued,
except as described in the Plan.
11. ADJUSTMENTS TO COMMON STOCK. In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your option and the exercise price per share may be adjusted pursuant
to the Plan. Your option shall be subject to the terms of the agreement of
merger, consolidation or other corporate reorganization in the event the Company
is subject to such corporate activity.
12. LEGENDS. All certificates representing the Common Stock issued upon
exercise of your option shall, where applicable, have endorsed thereon any
legends required by applicable law, including the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY
AND THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN
TRANSFER RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL UPON AN
ATTEMPTED TRANSFER OF THE SECURITIES AND CERTAIN REPURCHASE RIGHTS IN
FAVOR OF THE COMPANY 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."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY
IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT
REQUIRED."
13. APPLICABLE LAW. This Agreement will be interpreted and enforced
under the laws of the State of California.
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<PAGE> 13
14. INCORPORATION OF PLAN BY REFERENCE. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between
you and the Company regarding your option. Any prior agreements, commitments or
negotiations concerning your option are superseded.
-7-
<PAGE> 14
NOTICE OF EXERCISE
BlueSteel Networks, Inc.
67 East Evelyn Avenue, Suite 350
Mountain View, CA 94041
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Stock Option Agreement dated __________, _____ (the
"Stock Option Agreement") and the Company's 1999 Stock Incentive Plan (the
"Plan"), I hereby elect to purchase _____________ shares of the Common Stock of
the Company at aggregate exercise price of $__________. I enclose payment and
other documents (check all that are applicable):
| | My check in the amount of $___________;
| | My promissory note for $___________;
| | If I am exercising an unvested option, I also enclose an
executed Assignment Separate From Certificate. I am aware of
the tax consequences of exercising before my options is
vested, including the requirement that I file any election
under Section 83(b) of the Internal Revenue Code within 30
days of my exercise.
The Common Stock is to be issued and registered in the name(s) of:
_______________________________________________
I understand that there may be tax consequences as a result of the
purchase or disposition of the Common Stock, and I have consulted with any tax
consultants I wished to consult and I am not relying on the Company for any tax
advice. I understand that my exercise is governed by my Stock Option Agreement
and the Plan and agree to abide by and be bound by their terms and conditions. I
represent that the Common Stock is being acquired solely for my own account and
not as a nominee for any other party, or for investment, and that I will not
offer, sell or otherwise dispose of any such Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
Dated: __________, _____.
________________________________________
(Signature)
________________________________________
(Please Print Name)
________________________________________
(Address)
<PAGE> 15
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Agreement
dated as of __________, 199__, the undersigned hereby sells, assigns and
transfers unto ___________________________ (__________) shares of the Common
Stock of BlueSteel Networks, Inc., a Delaware corporation, standing in the
undersigned's name on the books of said corporation represented by certificate
No. _________ herewith, and does hereby irrevocably constitute and appoint
________________________________________ attorney to transfer the said stock on
the books of the said corporation with full power of substitution in the
premises.
Dated: __________, 19__.
________________________________________
Signature
________________________________________
Print Name
<PAGE> 16
TAX CONSEQUENCES RELATED TO YOUR INCENTIVE STOCK OPTION
THIS MEMORANDUM IS PROVIDED TO YOU MERELY AS A SERVICE AND IS NOT MEANT
TO ADVISE YOU AS TO YOUR PERSONAL TAX SITUATION OR WHETHER OR NOT TO MAKE AN
83(B) ELECTION. YOU SHOULD CONTACT YOUR PERSONAL LEGAL OR TAX ADVISERS WITH
RESPECT TO THE STATE AND FEDERAL INCOME TAX TREATMENT OF PURCHASING AND
DISPOSING OF YOUR STOCK.
INTERNAL REVENUE CODE SECTIONS
Section 421 of the Internal Revenue Code (the "Code") provides rules
for the tax treatment of "incentive stock options"("ISOs"), as that term is
defined by Section 422 of the Code. Section 83 of the Code provides special
rules for the tax treatment of property which is received in connection with the
performance of services and which is subject to vesting.
ISO TAX TREATMENT - USUALLY NO TAX UNTIL YOU SELL YOUR STOCK
Your option is intended to be an ISO. If you hold the stock you are
purchasing under your option for more than two (2) years from the date of grant
and more than one (1) year from the date of exercise, upon any subsequent sale
or other disposition of such shares you will have capital gains or loss. Capital
gains are taxed at reduced rates if you held the shares for more than 1 year
(20% federal rate).
If you sell or dispose of the stock within two (2) years from the date
of grant or within 1 year from the date of exercise (a "disqualifying
disposition"), the special capital gains tax treatment of Code Section 421 will
not apply. Generally, in that event, you will recognize taxable ordinary income
in an amount equal to the lesser of: (i) the excess of the fair market value of
the shares at the time of exercise over the exercise price of the option, or
(ii) your actual gain on the purchase and sale. The gain (if any) in excess of
the amount of ordinary income recognized, or the loss (if any) will be a capital
gain or loss. An exception to this general rule applies if your stock is subject
to the company's repurchase right (see "Early Exercise" below).
ALTERNATIVE MINIMUM TAX - POTENTIAL TAX AT EXERCISE
The alternative minimum tax is a separately computed tax that is
imposed only if and to the extent it exceeds your regular tax for the taxable
year. Basically, the alternative minimum tax is an amount equal to twenty-six
percent (26%) of your "alternative minimum taxable income" for the year of up to
$175,000 and twenty-eight percent (28%) of any excess ($87,500 in the case of a
married individual filing a separate return). "Alternative minimum taxable
income" generally is determined by (i) reducing adjusted gross income by an
exemption amount ($45,000 for joint declarations and $33,750 for single
taxpayers, less $0.25 for each dollar of alternative minimum taxable income in
excess of $150,000 or $112,500, respectively) and certain specifically defined
deductions, and (ii) by adding to the amount so calculated certain tax
preference items and other adjustments.
As a general rule, when you exercise an ISO, the excess of the (1) fair
market value of the stock acquired on the date of exercise over (2) the exercise
price (the "spread") is added to your alternative minimum taxable income.
<PAGE> 17
EARLY EXERCISE - EXERCISE BEFORE VESTING
If your option agreement permits you to "early exercise," you can
exercise an unvested option and, instead, receive unvested stock. Unvested stock
is stock that the Company can buy back from you at the price you paid. The
unvested stock will become vested - meaning that the Company's buy-back right
lapses - as the option would have vested.
The main reasons for exercising before you are vested are: (i) to
minimize the ordinary income portion (and maximize the capital gains portion) of
your option gain and (ii) to minimize your alternative minimum tax liability. To
gain these tax advantages, you must file an 83(b) election within thirty (30)
days after your exercise.
ALTERNATIVE MINIMUM TAX CONSEQUENCES OF EARLY EXERCISE
If you early exercise and do not file an 83(b) election, the addition
to your alternative minimum taxable income is not calculated on the date of
exercise. Instead, it is calculated on the date your stock vests. This means
that the excess of (i) the fair market value of the stock on the date of vesting
over (ii) the option exercise price, will be included in alternative minimum
taxable income for the year in which the date of vesting occurs.
However, if you make a valid 83(b) election within thirty (30) days
from the date of exercise, you can use the fair market value on the date of
exercise (determined without regard to the repurchase option) to calculate any
potential alternative minimum tax in the year of exercise. Thus, if you early
exercise while the fair market value of the stock is low and make an 83(b)
election, you can minimize your potential alternative minimum tax liability.
ORDINARY INCOME TAX CONSEQUENCES OF EARLY EXERCISE
If you early exercise and do not file an 83(b) election, upon a
disqualifying disposition you will have ordinary income equal to the excess of
(i) the fair market value of the shares on the date(s) your rights in the shares
"vested" over (ii) the exercise price. The amount of ordinary income recognized
will normally be limited to your gain. Any gain that is not taxed as ordinary
income will be capital gain.
Because Section 83 is used to measure ordinary income following a
disqualifying disposition, it may be possible to make an election under Section
83(b) of the Code within 30 days of the exercise of your option, so that the
ordinary income you recognize upon a disqualifying disposition will be no
greater than the spread between (i) the option exercise price, and (ii) the
value of the stock on the date of exercise (rather than the date the option
vests). Thus, if you exercise early and file an 83(b) election, any increase in
the fair market value of the stock after the date of exercise would be capital
gain.
However, because there is no express IRS authority advising that an
83(b) election can limit the recognition of ordinary income upon a disqualifying
disposition, you should consult with your tax advisor before relying on such an
election.
YOU HAVE ONLY THIRTY (30) DAYS FROM THE DATE OF EXERCISE TO FILE THE
ELECTION.
<PAGE> 18
INSTRUCTIONS FOR FILING ELECTIONS
Attached is a form of election under Section 83(b). If you wish to make
the election described above, you should complete, sign and date the election
and then proceed as follows:
(a) Make four (4) copies of the completed election.
(b) Mail the signed original election to the IRS Service Center with
which you file your federal income tax return. This should be mailed via
certified mail, return receipt requested. This election should be sent
immediately, as you have only thirty (30) days from the date of purchase to make
the election; no waivers, late filings or extensions are permitted. See
http://www.irs.ustreas.gov/prod/where_file/index.html for a listing of IRS
Service Centers.
(c) Deliver one (1) copy of the completed election to the Company for
its files.
(d) Attach one (1) copy of the election to your IRS Personal Income Tax
Return (Form 1040) when you file it next year.
(e) Attach one (1) copy of the election to your California income tax
return (Form 540) when you file it next year (assuming you file a California
income tax return).
(f) Retain one (1) copy of the election for your personal permanent
records.
A separate 83(b) election is not required to be filed in California if
you file a federal Section 83(b) election.
IT IS YOUR RESPONSIBILITY, NOT THE COMPANY'S, TO MAKE SURE THAT THE
ELECTION IS PROPERLY MAILED TO THE TAXING AUTHORITIES AND ATTACHED TO
YOUR TAX RETURN FILED NEXT YEAR.
Remember, that, if you desire to make the election, a separate election
must be made with regard to the exercise of each portion of your option if any
of the stock acquired is subject to a risk of forfeiture.
<PAGE> 19
Internal Revenue Service Center
_______________________________
_______________________________
Re: Protective Election Under Section 83(b) of the Internal Revenue
Code of 1986
Ladies and Gentlemen:
I hereby made a protective election under section 83(b) of the Internal
Revenue Code of 1986 to include in gross income on the date of transfer any
excess of fair market value over purchase price with respect to the transfer of
the property described below:
1. Name:______________________________________________________
2. Address:___________________________________________________
3. Social Security Number:____________________________________
4. Tax Year of Election: Calendar Year of____________________.
5. Description of Property: _________ shares of Common Stock of BlueSteel
Networks, Inc. (the "Company").
6. Date of Property Transfer: _________.
7. Nature of Property Restrictions: Property is subject to the Company's
right to repurchase the stock at the undersigned's original purchase
price if the undersigned ceases to be associated with the Company,
which right will generally lapse over a designated vesting period.
8. Fair Market Value at the Time of Transfer: $_________ per share for an
aggregate of $_________. The Fair Market Value at the time of transfer
was determined without regard to any lapse restrictions as defined in
section 1.83-3(i) of the Income Tax Regulations.
9. Amount Paid for Property: $_________ per share for an aggregate of
$_________.
10. A copy of this election has been furnished to the Company, the person
for whom the services are performed.
Sincerely,
_____________________________________________
Signature
_____________________________________________
Date
<PAGE> 1
EXHIBIT 99.6
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
STOCK PURCHASE AGREEMENT
BlueSteel Networks, Inc., a Delaware corporation (the "Company"), hereby
sells shares of its Common Stock to the purchaser named below. The terms and
conditions of the sale are set forth in this Stock Purchase Agreement and in the
Company's 1999 Stock Incentive Plan (the "Plan").
I. SALE INFORMATION
Date of this Agreement: __________, 199__
Name of Purchaser: _______________________
Purchaser's Social Security Number: ________-______-________
Number of Shares of Common Stock: ___________
Sale Price per Share: $__________
Vesting Schedule: Subject to attached Terms and
Conditions, the shares sold under this
Agreement shall vest as to 12/48 of
the shares on the first anniversary of
the Date of this Agreement and 1/48
of the shares each full month
thereafter. Shares shall vest as to an
additional 12/48 in the event of
Purchaser's Service termination due to
death or disability.
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
IN THIS STOCK PURCHASE AGREEMENT, INCLUDING THE ATTACHED TERMS AND
CONDITIONS AND PLAN.
Purchaser:
----------------------------------------------------------------------
(Signature)
Company:
------------------------------------------------------------------------
(Signature)
Title:
--------------------------------------------------------------------------
<PAGE> 2
II. TERMS AND CONDITIONS
1. VESTING. The shares sold to you under this Agreement vest during your
Service on the dates specified in the first page of this Stock Purchase
Agreement. Vesting will cease if your Service terminates for any reason.
2. RIGHT OF REPURCHASE FOR UNVESTED SHARES. In the event that your
Service to the Company terminates for any reason, the Company will have the
right to purchase all of the shares subject to this Agreement that have not yet
vested. If the Company exercises its right to purchase such unvested shares, the
Company will consummate the purchase within sixty (60) days of its written
notice to you. The purchase price for any shares repurchased shall be the price
that you paid for those shares and shall be paid in cash. The Company's right of
repurchase shall terminate ninety (90) days after your Service termination.
3. SERVICE; LEAVES OF ABSENCE. Your Service shall cease when you cease
to be actively employed by, or a consultant or adviser to, the Company (or any
subsidiary) as determined in the sole discretion of the Board. Your Service
terminates in any event when the approved leave ends, unless you immediately
return to active work. The Company determines which leaves count toward Service,
and when your Service terminates for all purposes under the Plan.
4. ESCROW. The certificates for the Common Stock subject to the
Company's right of repurchase shall be deposited in escrow with the Secretary of
the Company to be held in accordance with the provisions of this paragraph. Each
deposited certificate shall be accompanied by a duly executed Assignment
Separate from Certificate in the form attached. The deposited certificates,
shall remain in escrow until such time or times as the certificates are to be
released or otherwise surrendered for cancellation as discussed below. Upon
delivery of the certificates to the Company, you shall be issued an instrument
of deposit acknowledging the number of shares of Common Stock delivered in
escrow to the Secretary of the Company.
All regular cash dividends on the Common Stock (or other securities at
the time held in escrow) shall be paid directly to you and shall not be held in
escrow. However, in the event of any stock dividend, stock split,
recapitalization or other change affecting the Company's outstanding Common
Stock as a class effected without receipt of consideration, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed shall be immediately delivered to the Secretary of the
Company to be held in escrow hereunder, but only to the extent the Common Stock
is at the time subject to the escrow requirements hereof.
The Common Stock held in escrow hereunder shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Company for repurchase and cancellation:
o As your interest in the Common Stock vests, the certificates for
such vested Common Stock shall be released from escrow and
delivered to you, at your request, in accordance with the
following schedule:
- The initial release of any vested Common Stock (or other
vested assets and securities) from escrow shall be
effected within thirty
<PAGE> 3
(30) days following the expiration of the initial twelve
(12) month period measured from the Vesting Start Date.
- Subsequent releases of any vested Common Stock from
escrow shall be effected at annual intervals thereafter,
with the first such annual release to occur twenty-four
(24) months after the Date of this Agreement.
- Upon termination of your Service, any escrowed Common
Stock in which you are at the time vested shall be
promptly released from escrow.
o Should the Company exercise its right of repurchase with respect
to any unvested Common Stock held at the time in escrow
hereunder, then the escrowed certificates for such unvested
Common Stock shall, concurrently with the payment of the purchase
price for such Common Stock, be surrendered to the Company for
cancellation, and you shall have no further rights with respect
to such Common Stock.
o Should the Company elect not to exercise its right of repurchase
with respect to any Common Stock held at the time in escrow
hereunder, then the escrowed certificates for such Common Stock
shall be surrendered to you.
5. SECTION 83(b) ELECTION. Under Section 83 of the Internal Revenue Code
of 1986, as amended (the "Code"), the different between the purchase price paid
for the Common Stock and their fair market value on the date any forfeiture
restrictions applicable to such Common Stock lapse will be reportable as
ordinary income at that time. For this purposes, "forfeiture restrictions"
include the Company's Repurchase Right as to unvested shares described above.
You may elect to be taxed at the time the shares are acquired to the extent the
fair market value of the shares differs from the purchase price rather than when
such shares cease to be subject to such forfeiture restrictions, by filing an
election under Section 83(b) of the Code with the Internal Revenue Service
within thirty (30) days after the date of purchase. The form for making this
election is attached as Exhibit B hereto. Failure to make this filing within the
thirty (30) day period will result in the recognition of ordinary income by you
(in the event the fair market value of the shares increases after the date of
purchase) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR
SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH
RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE AN 83(b) ELECTION.
6. RESALE RESTRICTIONS/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 of 1993, as
amended, including the Company's initial public offering, you shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or agree to engage in
any of the foregoing transactions with respect to any Common Stock without the
prior written
<PAGE> 4
consent of the Company or its underwriters, for such period of time after the
effective date of such registration statement as may be requested by the Company
or such underwriters (not to exceed one hundred eighty (180) days). To enforce
the provisions of this paragraph, the Company may impose stop-transfer
instructions with respect to the Common Stock until the end of the applicable
stand-off period. You may not to sell any Common Stock at a time when applicable
laws, regulations or Company or underwriter trading policies prohibit a sale.
7. RIGHT OF FIRST REFUSAL. If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Purchase
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock. If you desire to transfer Common Stock acquired under this Stock
Purchase Agreement, you must give a written notice ("Transfer Notice") to the
Company describing fully the proposed transfer, including the number of shares
proposed to be transferred, the proposed transfer price and the name and address
of the proposed transferee. The Transfer Notice shall be signed both by you and
by the proposed new transferee and must constitute a binding commitment of both
parties to the transfer of the Common Stock. The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Common Stock on
the terms set forth in the Transfer Notice within sixty (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 if the
Transfer Notice provided that payment for the Common Stock was to be made in a
form other than lawful money paid at the time of transfer, the Company shall
have the option of paying for the Common Stock with lawful money equal to the
present value of the consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock. The Company's right of First
Refusal shall terminate if the Company's Common Stock is listed on an
established stock exchange or is quoted regularly on the Nasdaq Stock Market.
8. NO RETENTION RIGHTS. Your option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity. The Company
reserves the right to terminate your Service at any time and for any reason.
<PAGE> 5
9. ADJUSTMENTS TO COMMON STOCK. In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by this Agreement and the repurchase price per share may be adjusted
pursuant to the Plan. The shares subject to this Agreement shall be subject to
the terms of the agreement of merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
10. LEGENDS. All certificates representing the Common Stock issued upon
exercise of your option shall, where applicable, have endorsed thereon the
following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED
TRANSFER OF THE SECURITIES AND CERTAIN REPURCHASE RIGHTS IN FAVOR OF THE
COMPANY 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."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT REQUIRED."
11. APPLICABLE LAW. This Agreement will be interpreted and enforced
under the laws of the State of California.
12. INCORPORATION OF PLAN BY REFERENCE. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between
you and the Company regarding this sale of Common Stock. Any prior agreements,
commitments or negotiations are superseded.
<PAGE> 6
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ________________ hereby sells, assigns and transfers
unto BlueSteel Networks, Inc., a Delaware corporation (the "Company"),
_________________ (________) shares of Common Stock of the Company represented
by Certificate No. _____ herewith and does hereby irrevocably constitute and
appoint _________________________ Attorney to transfer the said stock on the
books of the Company with full power of substitution in the premises.
Dated: ____________, 19__.
------------------------------------------
Print Name
------------------------------------------
Signature
Spousal Consent (if applicable)
________________ (Purchaser's spouse) indicates by the execution of this
Assignment his or her consent to be bound by the terms herein as to his or her
interests, whether as community property or otherwise, if any, in the shares of
Common Stock.
------------------------------------------
Signature
INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS
"REPURCHASE OPTION" SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL
SIGNATURES ON THE PART OF PURCHASER.
<PAGE> 7
EXHIBIT B
Internal Revenue Service Center
_________________________________
_________________________________
Re: Election Under Section 83(b) of the Internal Revenue Code of 1986
Ladies and Gentlemen:
I hereby elect under section 83(b) of the Internal Revenue Code of 1986
to include in gross income any excess of fair market value over purchase price
with respect to the transfer of the property described below:
1. Name:___________________________
2. Address:________________________
________________________
________________________
3. Social Security Number: _______________________
4. Tax Year of Election: Calendar Year of 199___.
5. Description of Property: _________ shares of Common Stock of BlueSteel
Networks, Inc., a Delaware corporation (the "Company").
6. Date of Property Transfer: __________, 199__
7. Nature of Property Restrictions: Property is subject to the Company's
right to repurchase the stock at the undersigned's original purchase
price if the undersigned ceases to be associated with the Company, which
right will generally lapse over a designated four (4) year period.
8. Fair Market Value at the Time of Transfer: $_____ per share for an
aggregate of $_________. The Fair Market Value at the time of transfer
was determined without regard to any lapse restrictions as defined in
section 1.83-3(i) of the Income Tax Regulations.
9. Amount Paid for Property: $________ per share for an aggregate of
$________.
10. A copy of this election has been furnished to the Company, the person
for whom the services are performed.
Sincerely,
----------------------------------------
Signature
----------------------------------------
Date
<PAGE> 1
EXHIBIT 99.7
BLUESTEEL NETWORKS, INC.
1999 NON-EMPLOYEE STOCK PLAN
(Effective April 13, 1999)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. PURPOSE......................................................................1
SECTION 2. DEFINITIONS..................................................................1
(a) "Board"......................................................................1
(b) "Code".......................................................................1
(c) "Committee"..................................................................1
(d) "Common Stock"...............................................................1
(e) "Company"....................................................................1
(f) "Exercise Price".............................................................1
(g) "Fair Market Value"..........................................................1
(h) "Offeree"....................................................................1
(i) "Option".....................................................................1
(j) "Optionee"...................................................................2
(k) "Plan".......................................................................2
(l) "Purchase Price".............................................................2
(m) "Stock Option Agreement".....................................................2
(n) "Stock Purchase Agreement"...................................................2
SECTION 3. ADMINISTRATION...............................................................2
(a) Committees of the Board......................................................2
(b) Authority of the Board.......................................................2
SECTION 4. ELIGIBILITY..................................................................2
SECTION 5. STOCK SUBJECT TO PLAN........................................................2
(a) Basic Limitation.............................................................2
(b) Additional Shares............................................................3
SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES......................................3
(a) Stock Purchase Agreement.....................................................3
(b) Duration of Offers and Nontransferability of Rights..........................3
(c) Purchase Price...............................................................3
(d) Withholding Taxes............................................................3
(e) Restrictions on Transfer of Common Stock.....................................3
SECTION 7. TERMS AND CONDITIONS OF OPTIONS..............................................4
(a) Stock Option Agreement.......................................................4
(b) Number of Shares.............................................................4
(c) Exercise Price...............................................................4
(d) Withholding Taxes............................................................4
(e) Exercisability...............................................................4
(f) Term.........................................................................4
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(g) Nontransferability...........................................................4
(h) No Rights as a Stockholder...................................................4
(i) Modification, Extension and Assumption of Options............................5
(j) Restrictions on Transfer.....................................................5
SECTION 8. FORMS OF PAYMENT.............................................................5
(a) General Rule.................................................................5
(b) Surrender of Stock...........................................................5
(c) Promissory Notes.............................................................5
(d) Cashless Exercise............................................................5
SECTION 9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.....................................6
(a) General......................................................................6
(b) Mergers and Consolidations...................................................6
(c) Reservation of Rights........................................................6
SECTION 10. LEGAL REQUIREMENTS...........................................................7
SECTION 11. DURATION AND AMENDMENTS......................................................7
(a) Term of the Plan.............................................................7
(b) Right to Amend or Terminate the Plan.........................................7
(c) Effect of Amendment or Termination...........................................7
SECTION 12. EXECUTION....................................................................7
</TABLE>
<PAGE> 4
BLUESTEEL NETWORKS, INC.
1999 NON-EMPLOYEE STOCK PLAN
Adopted By the Board April 13, 1999
Approved By Stockholders April 13, 1999
SECTION 1. PURPOSE.
The purpose of the Plan is to offer incentives to select persons by
providing an opportunity to acquire a proprietary interest in the success of the
Company.
The Plan provides for the direct grant or sale of Common Stock and for the
grant of Options to purchase Common Stock.
SECTION 2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company, as
constituted from time to time.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean a committee consisting of one or more members
of the Board that is appointed by the Board to administer the Plan.
(d) "COMMON STOCK" means the Company's common stock.
(e) "COMPANY" shall mean BlueSteel Networks, Inc., a Delaware corporation.
(f) "EXERCISE PRICE" shall mean the amount for which one share of Common
Stock may be purchased upon exercise of an Option, as specified by the Board in
the applicable Stock Option Agreement.
(g) "FAIR MARKET VALUE" shall mean the fair market value of a share of
Common Stock, as determined by the Board in good faith. Such determination shall
be conclusive and binding on all persons.
(h) "OFFEREE" shall mean an individual to whom the Board has offered the
right to acquire Common Stock other than upon exercise of an Option.
(i) "OPTION" shall mean an option granted under the Plan entitling the
holder to purchase Common Stock, which shall not qualify as an incentive stock
option under Section 422(b) of the Code.
1
<PAGE> 5
(j) "OPTIONEE" shall mean an individual who holds an Option.
(k) "PLAN" shall mean this 1999 Non-Employee Stock Plan.
(l) "PURCHASE PRICE" shall mean the consideration for which one share of
Common Stock may be acquired under the Plan pursuant to a grant or sale under
Section 6, as specified by the Board.
(m) "STOCK OPTION AGREEMENT" shall mean the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to an Option.
(n) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Common Stock under the Plan (other than
pursuant to an Option) that contains the terms, conditions and restrictions
pertaining to the acquisition of such Common Stock.
SECTION 3. ADMINISTRATION.
(a) COMMITTEES OF THE BOARD. The Plan shall be administered by the Board.
However, any or all administrative functions otherwise exercisable by the Board
may be delegated to a Committee. Members of the Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated to the
Committee. Any reference to the Board in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board has assigned a particular
function.
(b) AUTHORITY OF THE BOARD. Subject to the provisions of the Plan, the
Board 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 shall be final and binding on all
parties who have an interest in the Plan or any option or shares issued
thereunder.
SECTION 4. ELIGIBILITY.
Only those persons or entities who utilize the Company's services, or who
refer others to such services, shall be eligible for the grant of Options or the
direct grant or sale of Common Stock under this Plan.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The maximum number of shares
of Common
2
<PAGE> 6
Stock which may be issued under the Plan shall not exceed five hundred thousand
(500,000) shares, subject to adjustment pursuant to Section 9.
(b) ADDITIONAL SHARES. If any outstanding Option or other right to acquire
Common Stock for any reason expires or is canceled, forfeited or otherwise
terminated, the Common Stock allocable to the unexercised portion of such Option
or other right shall again be available for the purposes of the Plan. If shares
of Common Stock issued under the Plan are reacquired by the Company pursuant to
any right of repurchase or right of first refusal, such shares of Common Stock
shall again be available for the purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each grant or sale of Common Stock under the
Plan other than upon exercise of an Option shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such grant or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan and
that the Board 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 Common Stock under the Plan other than an Option shall automatically
expire if not exercised by the Offeree within the number of days specified by
the Board and communicated to the Offeree. Such right shall not be transferable
and shall be exercisable only by the Offeree to whom such right was granted.
(c) PURCHASE PRICE. The Purchase Price shall be established by the Board
and set forth in the Stock Purchase Agreement. The Purchase Price shall be
payable in a form described in Section 8 or, in the discretion of the Board, in
consideration for past services rendered to the Company or for its benefit.
(d) WITHHOLDING TAXES. As a condition to the purchase of Common Stock, the
Offeree shall make such arrangements as the Board may require for the
satisfaction of any federal, state or local withholding tax obligations that may
arise in connection with such purchase.
(e) RESTRICTIONS ON TRANSFER OF COMMON STOCK. No Common Stock granted or
sold under the Plan may be sold, made the subject of any short sale or loan,
hypothecated, pledged, optioned or otherwise transferred or disposed of by the
Offeree for such period of time (not to exceed one hundred eighty (180) days)
following the effective date of a registration statement covering securities of
the Company filed under the Securities Act of 1933, as amended, unless such
restriction is consented to or waived by the managing underwriter. Subject to
the preceding sentence, any Common Stock granted or sold under the Plan shall be
subject to such special conditions, rights of repurchase, rights of first
refusal and other transfer restrictions as the Board may determine. Such
restrictions shall apply in addition to any general restrictions that may apply
to all holders of Common Stock.
3
<PAGE> 7
SECTION 7. 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 that are not inconsistent
with the Plan and that the Board 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 of Common Stock that are subject to the Option and shall provide for
the adjustment of such number in accordance with Section 9.
(c) EXERCISE PRICE. An Option's Exercise Price shall be established by the
Board and set forth in a Stock Option Agreement. The Exercise Price shall be
payable in a form described in Section 8.
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board 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 may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Common Stock 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 vest or become exercisable. The
vesting of any Option shall be determined by the Board in its sole discretion.
(f) TERM. The Stock Option Agreement shall specify the term of the Option.
The term shall not exceed ten (10) years from the date of grant. Subject to the
preceding sentence, the Board at its sole discretion shall determine when an
Option is to expire.
(g) NONTRANSFERABILITY. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only or by the guardian or legal
representative of the Optionee. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(h) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Common Stock
covered by an Option until such person becomes entitled to receive such Common
Stock by filing a notice of exercise and paying the Exercise Price pursuant to
the terms of such Option.
4
<PAGE> 8
(i) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board 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 of Common Stock and at the same or a
different Exercise Price. Notwithstanding the foregoing, 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.
(j) RESTRICTIONS ON TRANSFER. No shares of Common Stock issued upon
exercise of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
issued upon exercise of an Option shall be subject to such rights of repurchase,
rights of first refusal and other transfer restrictions as the Board may
determine. Such restrictions shall apply in addition to any restrictions that
may apply to holders of Common Stock generally.
SECTION 8. FORMS OF PAYMENT.
(a) GENERAL RULE. The entire Purchase Price or Exercise Price shall be
payable in cash or cash equivalents acceptable to the Company at the time of
exercise or purchase, except as otherwise provided in this Section 8.
(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, payment may be made all or in part with
Common Stock that has already been owned by the Optionee or the Optionee's
representative for any time period specified by the Board and that are
surrendered to the Company in good form for transfer. Such Common Stock shall be
valued at Fair Market Value on the date when the new Common Stock is purchased
under the Plan.
(c) PROMISSORY NOTES. To the extent that a Stock Option Agreement or Stock
Purchase agreement so provides, payment may be made all or in part with a full
recourse promissory note executed by the Optionee. The interest rate and other
terms and conditions of such note shall be determined by the Board. The Board
may require that the Optionee pledge his or her Common Stock to the Company for
the purpose of securing the payment of such note. In no event shall the stock
certificate(s) representing such Common Stock be released to the Optionee until
such note is paid in full, unless otherwise provided in the Stock Option
Agreement or Stock Purchase Agreement.
(d) CASHLESS EXERCISE. To the extent that a Stock Option Agreement so
provides and a public market for the Common Stock exists, payment may be made
all or in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a securities broker to sell Common Stock and to deliver all or part
of the sale proceeds to the Company in payment of the aggregate Exercise Price.
5
<PAGE> 9
SECTION 9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) GENERAL. In the event of a subdivision of the outstanding Common
Stock, a declaration of a dividend payable in Common Stock, a declaration of an
extraordinary dividend payable in a form other than Common Stock in an amount
that has a material effect on the value of Common Stock, a combination or
consolidation of the outstanding Common Stock into a lesser number of shares, a
recapitalization, a reclassification or a similar occurrence, the Board shall
make appropriate adjustments in one or more of (i) the number of shares of
Common Stock available for future grants of Options or other rights to acquire
Common Stock under Section 5, (ii) the number of shares of Common Stock covered
by each outstanding Option or other right to acquire Common Stock or (iii) the
Exercise Price of each outstanding Option or the Purchase Price of each other
right to acquire Common Stock.
(b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party
to a merger or consolidation, outstanding Options or other rights to acquire
Common Stock shall be subject to the agreement of merger or reorganization. Such
agreement, without an Optionee's 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, provided that the
Company shall permit an Optionee to exercise vested Options either at or
before the merger or consolidation.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend,
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Common Stock subject to an Option, or the number of shares subject to any
other right to acquire Common Stock and/or the Exercise Price or Purchase Price.
The grant of an Option or other right to acquire Common Stock 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.
6
<PAGE> 10
SECTION 10. LEGAL REQUIREMENTS.
Common Stock shall not be issued under the Plan unless the issuance and
delivery of such Common Stock complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed, and the Company has obtained the
approval or favorable ruling from any governmental agency that the Company
determines is necessary or advisable.
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. The Plan shall terminate
automatically ten (10) years after its adoption by the Board and may be
terminated on any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or terminate
the Plan at any time. Rights under any Option granted or other right to acquire
Common Stock granted before amendment of the Plan shall not be materially
altered, or impaired adversely, by such amendment, except with consent of the
Optionee or Offeree. An amendment of the Plan shall be subject to the approval
of the Company's stockholders only to the extent required by applicable laws,
regulations or rules.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Common Stock 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 Common Stock previously issued or Option
previously granted under the Plan.
SECTION 12. EXECUTION.
To record the adoption of the Plan, the Company has caused its authorized
officer to execute the same.
7
<PAGE> 1
EXHIBIT 99.8
BLUESTEEL NETWORKS, INC.
1999 NON-EMPLOYEE STOCK PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
BlueSteel Networks, Inc., a Delaware corporation (the "Company"), hereby
grants an option to purchase its Common Stock to the optionee named below. The
terms and conditions of the option are set forth in this Stock Option Agreement
and in the Company's 1999 Non-Employee Stock Plan (the "Plan").
I. GRANT INFORMATION
Date of Grant: __________, 199__
Name of Optionee: _______________________________________
Optionee's Social Security Number: ________-______-________
Number of Shares of Common Stock: ___________
Exercise Price per Share: $__________
Vesting Schedule: [Vesting to be determined]
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
IN THIS STOCK OPTION AGREEMENT, INCLUDING THE ATTACHED TERMS AND
CONDITIONS, NOTICE OF EXERCISE AND PLAN.
Optionee:_______________________________________________________________________
(Signature)
Company:________________________________________________________________________
(Signature)
Title:__________________________________________________________________________
<PAGE> 2
II. TERMS AND CONDITIONS
1. VESTING. Your option vests on the dates specified in the first page
of this Stock Option Agreement.
2. TERM OF OPTION. Your option expires on the day before the 5th
anniversary of the Date of Grant.
3. EXERCISE OF OPTION.
(a) LEGAL RESTRICTIONS. The Company will not permit you to exercise
your option if the issuance of Common Stock at that time would
violate any law or regulation. You represent and agree, which by
your execution of the Stock Option Agreement you hereby confirm,
that the Common Stock to be acquired upon exercising your option
will be acquired for investment, and not with a view to the sale
or distribution thereof. You understand that your option is not,
and any Common Stock acquired on exercise thereof at the time of
issuance may not be, registered under the Securities Act of
1933, as amended, on the ground that the issuance of securities
hereunder is exempt from registration under the Securities Act
pursuant to section 4(2) thereof, and that the Company's
reliance on such exemption is based on your representations set
forth herein. You realize that the basis for the exemption may
not be present if, notwithstanding such representations, you
have in mind merely acquiring the securities for a fixed or
determinable period in the future, or for a market rise, or for
sale if the market does not rise. You do not have any such
intention. If the sale of Common Stock under the Plan is not
registered under the Securities Act but an exemption is
available which requires an investment representation or other
representation, you shall represent and agree at the time of
exercise to make such representations as are deemed necessary or
appropriate by the Company and its counsel.
(b) METHOD OF EXERCISE. To exercise your option, you must complete
and file the Company's "Notice of Exercise" form at the address
given on the form, together with full payment. The Notice of
Exercise will be effective when it is received by the Company.
If someone else wants to exercise your option after your death,
that person must prove to the Company's satisfaction that he or
she is entitled to do so.
(c) FORM OF PAYMENT. When you submit a Notice of Exercise, you must
include payment of the aggregate Exercise Price for the Common
Stock you are purchasing. Payment may be made in one (or a
combination) of the following forms.
- Your personal check, a cashier's check or a money order.
- To the extent that a public market for Common Stock
exists as determined by the Company, by delivery (on a
form approved by the
<PAGE> 3
Company) of an irrevocable direction to a securities
broker to sell Common Stock and to deliver all or part
of the sale proceeds to the Company in payment of the
aggregate Exercise Price.
(d) WITHHOLDING TAXES. You will not be allowed to exercise your
option unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a result of the
option exercise or the sale of Common Stock acquired upon
exercise of your option.
4. EXERCISE OF OPTION BEFORE VESTING. You may not exercise your option
before it is fully vested.
5. RESALE RESTRICTIONS/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 of 1993, as
amended, including the Company's initial public offering, you shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or agree to engage in
any of the foregoing transactions with respect to any Common Stock without the
prior written consent of the Company or its underwriters, for such period of
time after the effective date of such registration statement as may be requested
by the Company or such underwriters, not to exceed one hundred eighty (180)
days. To enforce the provisions of this paragraph, the Company may impose
stop-transfer instructions with respect to the Common Stock until the end of the
applicable stand-off period. You may not to sell any Common Stock at a time when
applicable laws, regulations or Company or underwriter trading policies prohibit
a sale.
6. RIGHT OF FIRST REFUSAL. If you propose to sell, pledge or otherwise
transfer to a third party any Common Stock acquired under this Stock Option
Agreement, or any interest in such Common Stock, the Company shall have the
"Right of First Refusal" with respect to all (and not less than all) of such
Common Stock. If you desire to transfer Common Stock acquired under this Stock
Option Agreement, you must give a written notice ("Transfer Notice") to the
Company describing fully the proposed transfer, including the number of shares
proposed to be transferred, the proposed transfer price and the name and address
of the proposed transferee. The Transfer Notice shall be signed both by you and
by the proposed new transferee and must constitute a binding commitment of both
parties to the transfer of the Common Stock. The Company shall have the right to
purchase all, and not less than all, of the Common Stock on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted in the next paragraph) by delivery of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company.
If the Company fails to exercise its Right of First Refusal before or
within thirty (30) days after the date when it received the Transfer Notice, you
may, not later than ninety (90) days following receipt of the Transfer Notice by
the Company, conclude a transfer of the Common Stock subject to the Transfer
Notice on the terms and conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall require compliance with the
procedure described
<PAGE> 4
in the paragraph above. If the Company exercises its Right of First Refusal, the
parties shall consummate the sale of the Common Stock on the terms set forth in
the Transfer Notice within sixty (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 if the Transfer
Notice provided that payment for the Common Stock was to be made in a form other
than lawful money paid at the time of transfer, the Company shall have the
option of paying for the Common Stock with lawful money equal to the present
value of the consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the benefit of its
successors and assigns, shall be freely assignable in whole or in part and shall
be binding upon any transferee of the Common Stock. The Company's right of First
Refusal shall terminate if the Company's Common Stock is listed on an
established stock exchange or is quoted regularly on the Nasdaq Stock Market.
7. TRANSFER OF OPTION. Prior to your death, only you may exercise your
option. You cannot transfer or assign your option. For instance, you may not
sell your option or use it as security for a loan. If you attempt to do any of
these things, your option will immediately become invalid. You may, however,
dispose of your option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise
from your spouse or former spouse, nor is the Company obligated to recognize
such individual's interest in your option in any other way.
8. NO RETENTION RIGHTS. Your option does not give you the right to be
retained by the Company (or any subsidiaries) in any capacity.
9. STOCKHOLDER RIGHTS. You, or your estate or heirs, have no rights as a
stockholder of the Company until a certificate for your Common Stock has been
issued. No adjustments are made for dividends or other rights if the applicable
record date occurs before your stock certificate is issued, except as described
in the Plan.
10. ADJUSTMENTS TO COMMON STOCK. In the event of a stock split, a stock
dividend or a similar change in the Company's Common Stock, the number of shares
covered by your option and the exercise price per share may be adjusted pursuant
to the Plan. Your option shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the Company is subject to
such corporate activity.
11. LEGENDS. All certificates representing the Common Stock issued upon
exercise of your option shall, where applicable, have endorsed thereon any
legends required by applicable law, including the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND
THE INITIAL HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER
RESTRICTIONS, INCLUDING RIGHTS OF FIRST REFUSAL
<PAGE> 5
UPON AN ATTEMPTED TRANSFER OF THE SECURITIES. THE SECRETARY OF THE
COMPANY WILL WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER WITHOUT CHARGE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE NOT REQUIRED."
12. APPLICABLE LAW. This Agreement will be interpreted and enforced
under the laws of the State of California.
13. INCORPORATION OF PLAN BY REFERENCE. The text of the Plan is
incorporated in this Agreement by reference. Certain capitalized terms used in
this Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire understanding between
you and the Company regarding your option. Any prior agreements, commitments or
negotiations concerning your option are superseded.
<PAGE> 6
NOTICE OF EXERCISE
BlueSteel Networks, Inc.
1111 W. El Camino Real #109-190
Sunnyvale, CA 94087
Attn: Chief Financial Officer
Re: Exercise of Stock Option
Dear Sir or Madam:
Pursuant to the Stock Option Agreement dated __________, 199___ (the
"Stock Option Agreement") and the Company's 1999 Non-Employee Stock Plan (the
"Plan"), I hereby elect to purchase _____________ shares of the Common Stock of
the Company at aggregate exercise price of $__________. I enclose my check in
the amount of $___________;
The Common Stock is to be issued and registered in the name(s) of:
_____________________________
_____________________________
I understand that there may be tax consequences as a result of the
purchase or disposition of the Common Stock, and I have consulted with any tax
consultants I wished to consult and I am not relying on the Company for any tax
advice. I understand that my exercise is governed by my Stock Option Agreement
and the Plan and agree to abide by and be bound by their terms and conditions. I
represent that the Common Stock is being acquired solely for my own account and
not as a nominee for any other party, or for investment, and that I will not
offer, sell or otherwise dispose of any such Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
Dated: __________, 199__
________________________________________
(Signature)
________________________________________
(Please Print Name)
________________________________________
________________________________________
(Address)
<PAGE> 1
EXHIBIT 99.9
DIGITAL FURNACE CORPORATION
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
SECTION 1.
PURPOSE
The purpose of this Plan is to promote the interests of the Company by
providing the opportunity to purchase Shares or to receive compensation which is
based upon appreciation in the value of Shares to Employees and Key Persons in
order to attract and retain Employees and Key Persons by providing an incentive
to work to increase the value of Shares and a stake in the future of the Company
which corresponds to the stake of each of the Company's shareholders. The Plan
provides for the grant of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards and Stock Appreciation Rights to aid the Company in
obtaining these goals.
SECTION 2.
DEFINITIONS
Each term set forth in this Section shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular, and reference to one gender shall include the other gender.
2.1 BOARD means the Board of Directors of the Company.
2.2 CODE means the Internal Revenue Code of 1986, as amended.
2.3 COMMITTEE means the Compensation Committee of the Board.
2.4 COMMON STOCK means the $.01 par value per share of common stock of
the Company.
2.5 COMPANY means Digital Furnace Corporation, a Georgia corporation,
and any successor to such organization.
2.6 DIRECTOR means a member of the Board.
2.7 EMPLOYEE means an employee of the Company, a Subsidiary or a Parent.
2.8 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.9 EXERCISE PRICE means the price which shall be paid to purchase one
(1) Share upon the exercise of an Option granted under this Plan.
2.10 FAIR MARKET VALUE of each Share on any date means the price
determined below on the last business day immediately preceding the date of
valuation:
(a) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value per share shall be the
closing sale price for the Common Stock (or the mean of the closing bid and
asked prices, if no sales were reported), as quoted on such exchange or system
on the date of such determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; or
Digital Furnace Corporation
Amended and Restated Stock Incentive Plan
Page 1 of 10
<PAGE> 2
(b) If the Common Stock is not listed on any established stock
exchange or a national market system, its Fair Market Value per share shall be
the average of the closing dealer "bid" and "ask" prices of a share of the
Common Stock as reflected on the NASDAQ interdealer quotation system of the
National Association of Securities Dealers, Inc. on the date of such
determination; or
(c) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board.
2.11 INSIDER means an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.12 ISO means an option granted under this Plan to purchase Shares
which is intended by the Company to satisfy the requirements of Code Section 422
as an incentive stock option.
2.13 KEY PERSON means (i) a member of the Board who is not an Employee,
(ii) a consultant, distributor or other person who has rendered or committed to
render valuable services to the Company, a Subsidiary or a Parent, (iii) a
person who has incurred, or is willing to incur, financial risk in the form of
guaranteeing or acting as co-obligor with respect to debts or other obligations
of the Company, or (iv) a person who has extended credit to the Company. Key
Persons are not limited to individuals and, subject to the preceding definition,
may include corporations, partnerships, associations and other entities.
2.14 NON-ISO means an option granted under this Plan to purchase Shares
which is not intended by the Company to satisfy the requirements of Code Section
422.
2.15 OPTION means an ISO or a Non-ISO.
2.16 OUTSIDE DIRECTOR means a member of the Board who is not an Employee
and who qualifies as (1) "non-employee director" under Rule 16b-3(b)(3) under
the 1934 Act, as amended from time to time, and (2) an "outside director" under
Code Section 162(m) and the regulations promulgated thereunder.
2.17 PARENT means any corporation which is a parent of the Company
(within the meaning of Code Section 424).
2.18 PARTICIPANT means an individual who receives a Stock Incentive
hereunder.
2.19 PERFORMANCE-BASED EXCEPTION means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.20 PLAN means the Digital Furnace Corporation Stock Incentive Plan, as
amended from time to time.
2.21 SHARE means a share of the Common Stock of the Company.
2.22 STOCK INCENTIVE means an ISO, a Non-ISO, a Restricted Stock Award
or a Stock Appreciation Right.
2.23 STOCK INCENTIVE AGREEMENT means an agreement between the Company
and a Participant evidencing an award of a Stock Incentive.
2.24 SUBSIDIARY means any corporation which is a subsidiary of the
Company (within the meaning of Code Section 424(f)).
Digital Furnace Corporation
Amended and Restated Stock Incentive Plan
Page 2 of 10
<PAGE> 3
2.25 SURRENDERED SHARES means the Shares described in Section 8.2 which
(in lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 8.
2.26 TEN PERCENT SHAREHOLDER means a person who owns (after taking into
account the attribution rules of Code Section 424(d)) more than ten percent
(10%) of the total combined voting power of all classes of shares of either the
Company, a Subsidiary or a Parent.
SECTION 3.
SHARES SUBJECT TO STOCK INCENTIVES
The total number of Shares that may be issued pursuant to Stock
Incentives under this Plan shall not exceed Seven Hundred Thousand (700,000), as
adjusted pursuant to Section 11. Such Shares shall be reserved, to the extent
that the Company deems appropriate, from authorized but unissued Shares, and
from Shares which have been reacquired by the Company. Furthermore, any Shares
subject to a Stock Incentive which remain after the cancellation, expiration or
exchange of such Stock Incentive thereafter shall again become available for use
under this Plan, but any Surrendered Shares which remain after the surrender of
an ISO or a Non-ISO under Section 8 shall not again become available for use
under this Plan. Notwithstanding anything herein to the contrary, no Participant
may be granted Options or Stock Appreciation Rights covering an aggregate number
of Shares in excess of Five Hundred Thousand (500,000) in any calendar year.
SECTION 4.
EFFECTIVE DATE
The effective date of this Plan, as amended and restated herein, shall
be the date it is adopted by the Board, provided the shareholders of the Company
approve this Plan within twelve (12) months after such effective date. If such
effective date comes before such shareholder approval, any Stock Incentives
granted under this Plan before the date of such approval automatically shall be
granted subject to such approval.
SECTION 5.
ADMINISTRATION
5.1 GENERAL ADMINISTRATION. This Plan shall be administered by the
Board. The Board, acting in its absolute discretion, shall exercise such powers
and take such action as expressly called for under this Plan. The Board shall
have the power to interpret this Plan and, subject to Section 13 to take such
other action in the administration and operation of the Plan as it deems
equitable under the circumstances. The Board's actions shall be binding on the
Company, on each affected Employee or Key Person, and on each other person
directly or indirectly affected by such actions.
5.2 DELEGATION OF AUTHORITY. The Board may delegate its authority under
the Plan, in whole or in part, to a Committee appointed by the Board consisting
of not less than two (2) directors. The members of the Committee shall serve at
the discretion of the Board. The Committee (if appointed) shall act according to
the policies and procedures set forth in the Plan and to those policies and
procedures established by the Board, and the Committee shall have such powers
and responsibilities as are set forth by the Board. Reference to the Board in
this Plan shall specifically include reference to the Committee where the Board
has delegated it authority to the Committee, and any action by the Committee
pursuant to a delegation of authority by the Board shall be deemed an action by
the Board under the Plan. Notwithstanding the above, the Board may assume the
powers and responsibilities granted to the Committee at any time, in whole or in
part. With respect to Committee appointments and composition, only a Committee
comprised solely of two(2) or more Outside Directors may grant Stock Incentives
which will meet the Performance-Based Exception, and only a Committee comprised
solely of Outside Directors may grant Stock Incentives to Insiders.
Digital Furnace Corporation
Amended and Restated Stock Incentive Plan
Page 3 of 10
<PAGE> 4
5.3 DECISIONS BINDING. All determinations and decisions made by the
Board (or its delegate) pursuant to the provisions of this Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, Employees, Key
Persons, Participants, and their estates and beneficiaries.
SECTION 6.
ELIGIBILITY
Employees and Key Persons shall be eligible for the grant of Stock
Incentives under this Plan, but no Employee shall have the right to be granted a
Stock Incentive under this Plan merely as a result of his or her status as an
Employee.
SECTION 7
TERMS OF STOCK INCENTIVES
7.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES
(a) The Committee, in its absolute discretion, shall grant Stock
Incentives under this Plan from time to time and shall have the right to grant
new Stock Incentives in exchange for outstanding Stock Incentives. Stock
Incentives shall be granted to Employees or Key Persons selected by the
Committee, and the Committee shall be under no obligation whatsoever to grant
Stock Incentives to all Employees or Key Persons, or to grant all Stock
Incentives subject to the same terms and conditions.
(b) The number of Shares as to which a Stock Incentive shall be
granted shall be determined by the Committee in its sole discretion, subject to
the provisions of Section 3 as to the total number of shares available for
grants under the Plan.
(c) Each Stock Incentive shall be evidenced by a Stock Incentive
Agreement executed by the Company and the Participant, which shall be in such
form and contain such terms and conditions as the Committee in its discretion
may, subject to the provisions of the Plan, from time to time determine.
(d) The date a Stock Incentive is granted shall be the date on
which the Committee has approved the terms and conditions of the Stock Incentive
Agreement and has determined the recipient of the Stock Incentive and the number
of Shares covered by the Stock Incentive and has taken all such other action
necessary to complete the grant of the Stock Incentive.
7.2 TERMS AND CONDITIONS OF OPTIONS. Each grant of an Option shall be
evidenced by a Stock Incentive Agreement which shall:
(I) specify whether the Option is an ISO or Non-ISO; and
(II) incorporate such other terms and conditions as the
Committee, acting in its absolute discretion, deems consistent with the terms of
this Plan, including (without limitation) a restriction on the number of Shares
subject to the Option which first become exercisable or subject to surrender
during any calendar year.
In determining Employee(s) or Key Person(s) to whom an Option
shall be granted and the number of Shares to be covered by such Option, the
Committee may take into account the recommendations of the Chief Executive
Officer and/or President of the Company and its other officers, the duties of
the Employee or Key Person, the present and potential contributions of the
Employee or Key Person to the success of the Company, the anticipated number of
years of service remaining before the attainment by the Employee of retirement
age, and other factors deemed relevant by the Committee, in its sole discretion,
in connection with accomplishing the purpose of this Plan. An Employee or Key
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<PAGE> 5
Person who has been granted an Option to purchase Shares, whether under this
Plan or otherwise, may be granted one or more additional Options.
If the Committee grants an ISO and a Non-ISO to an Employee on
the same date, the right of the Employee to exercise or surrender one such
Option shall not be conditioned on his or her failure to exercise or surrender
the other such Option.
(a) Exercise Price. Subject to adjustment in accordance with
Section 11 and the other provisions of this Section, the Exercise Price shall be
as set forth in the applicable Stock Incentive Agreement. With respect to each
grant of an ISO to a Participant who is not a Ten Percent Shareholder, the
Exercise Price shall not be less than the Fair Market Value on the date the ISO
is granted. With respect to each grant of an ISO to a Participant who is a Ten
Percent Shareholder, a Ten Percent Shareholder shall not be less than one
hundred ten percent (110%) of the Fair Market Value on the date the ISO is
granted. If a Stock Incentive is a Non-ISO, the Exercise Price for each Share
shall be no less than the minimum price required by applicable state law, or by
the Company's governing instrument, or $0.01, whichever price is greater. Any
Stock Incentive intended to meet the Performance-Based Exception must be granted
with an Exercise Price equivalent to or greater than the Fair Market Value of
the Shares subject thereto.
(b) Option Term. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Stock Incentive Agreement, but no Stock Incentive Agreement shall:
(i) make an Option exercisable before the date such Option
is granted; or
(ii) make an Option exercisable after the earlier of:
(A) the date such Option is exercised in full, or
(B) the date which is the tenth (10th) anniversary of
the date such Option is granted, if such Option is a Non-ISO or an ISO granted
to a non-Ten Percent Shareholder, or the date which is the fifth (5th)
anniversary of the date such Option is granted, if such Option is an ISO granted
to a Ten Percent Shareholder.
A Stock Incentive Agreement may provide for the exercise of an
Option after the employment of an Employee has terminated for any reason
whatsoever, including death or disability. The Employee's rights upon
termination of employment will be set forth in the applicable Incentive
Agreement.
(c) Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised accompanied by full payment
for the Shares. Payment for all shares of Stock purchased pursuant to exercise
of an Option shall be made in cash or, if the Stock Incentive Agreement
provides, by delivery to the Company of a number of Shares which have been owned
by the holder for at least six (6) months prior to the date of exercise having
an aggregate Fair Market Value equal to the amount to be tendered, or a
combination thereof. In addition, if the Stock Incentive Agreement so provides,
the Option may be exercised through a brokerage transaction following
registration of the Company's equity securities under Section 12 of the
Securities Exchange Act of 1934 as permitted under the provisions of Regulation
T applicable to cashless exercises promulgated by the Federal Reserve Board.
However, notwithstanding the foregoing, with respect to any Option recipient who
is an Insider, a tender of shares or a cashless exercise must (1) have met the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act, or (2) be a subsequent transaction the terms of which were provided for in
a transaction initially meeting the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act. Except as provided in subparagraph (f)
below, payment shall be
Digital Furnace Corporation
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<PAGE> 6
made at the time that the Option or any part thereof is exercised, and no Shares
shall be issued or delivered upon exercise of an Option until full payment has
been made by the Participant. The holder of an Option, as such, shall have none
of the rights of a stockholder.
Notwithstanding the above, and in the sole discretion of the
Committee, an Option may be exercised as to a portion or all (as determined by
the Committee) of the number of Shares specified in the Stock Incentive
Agreement by delivery to the Company of a promissory note, such promissory note
to be executed by the Participant and which shall include, with such other terms
and conditions as the Committee shall determine, provisions in a form approved
by the Committee under which: (i) the balance of the aggregate purchase price
shall be payable in equal installments over such period and shall bear interest
at such rate (which shall not be less than the prime bank loan rate as
determined by the Committee) as the Committee shall approve, and (ii) the
Participant shall be personally liable for payment of the unpaid principal
balance and all accrued but unpaid interest.
(d) Conditions to Exercise of an Option. Each Option granted
under the Plan shall be exercisable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Committee, at any time before complete termination
of such Option, may accelerate the time or times at which such Option may be
exercised in whole or in part. The Board may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, without limitation, vesting or performance-based restrictions,
restrictions under applicable federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
(e) Nontransferability of Options. Except as provided in
subparagraph (f) below, an Option shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant; provided, however,
that in the event the Participant is incapacitated and unable to exercise his or
her Option, such Option may be exercised by such Participant's legal guardian,
legal representative, or other representative whom the Committee deems
appropriate based on applicable facts and circumstances. The determination of
incapacity of a Participant and the determination of the appropriate
representative of the Participant who shall be able to exercise the Option if
the Participant is incapacitated shall be determine by the Committee in its sole
and absolute discretion.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section, any Option in
substitution for a stock option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued stock option being replaced thereby.
7.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an
Option. A Stock Appreciation Right shall entitle the Participant to receive upon
exercise or payment the excess of: (I) the Fair Market Value of a specified
number of Shares at the time of exercise, over (II) a specified price which
shall be not less than the Exercise Price for that number of Shares in the case
of a Stock Appreciation Right granted in connection with a previously or
contemporaneously granted Option, or in the case of any other Stock Appreciation
Right not less than one hundred percent (100%) of the Fair Market Value of that
number of Shares at the time the Stock Appreciation Right was granted. A Stock
Appreciation Right granted in connection with an Option may
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<PAGE> 7
only be exercised to the extent that the related Option has not been exercised.
The exercise of a Stock Appreciation Right shall result in a pro rata surrender
of the related Option to the extent the Stock Appreciation Right has been
exercised.
(a) Payment. Upon exercise or payment of a Stock Appreciation
Right, the Company shall pay to the Participant the appreciation in cash or
Shares (at the aggregate Fair Market Value on the date of payment or exercise)
as provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted
under the Plan shall be exercisable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of a Stock Appreciation Right, the Committee, at any time before
complete termination of such Stock Appreciation Right, may accelerate the time
or times at which such Stock Appreciation Right may be exercised in whole or in
part.
(c) Nontransferability of Stock Appreciation Right. Except as
otherwise provided in a Participant's Stock Incentive Agreement, no Stock
Appreciation Right granted under the plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Stock Incentive Agreement, all Stock Appreciation Rights granted
to a Participant under the Plan shall be exercisable, during the Participant's
lifetime, only by the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Stock
Appreciation Right, such Stock Appreciation Right may be exercised by such
Participant's legal guardian, legal representative, or other representative whom
the Committee deems appropriate based on applicable facts and circumstances. The
determination of incapacity of a Participant and the determination of the
appropriate representative of the Participant who shall be able to exercise the
Stock Appreciation Right if the Participant is incapacitated shall be determine
by the Committee in its sole and absolute discretion.
7.4 TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. Shares awarded
pursuant to Restricted Stock Awards shall be subject to such restrictions as
determined by the Committee for periods determined by the Committee. Unless the
applicable Stock Incentive Agreement provides otherwise, holders of Restricted
Stock Awards shall be entitled to vote and receive dividends during the periods
of restriction to the same extent as holders of unrestricted Common Stock. The
Committee shall have the power to permit, in its discretion, an acceleration of
the expiration of the applicable restriction period with respect to any part or
all of the Shares awarded to a Participant. The Committee may require a cash
payment from the Participant in an amount no greater than the aggregate Fair
Market Value of the Shares awarded determined at the date of grant in exchange
for the grant of a Restricted Stock Award or may grant a Restricted Stock Award
without the requirement of a cash payment.
SECTION 8.
SURRENDER OF OPTIONS
8.1 GENERAL RULE. The Committee, acting in its absolute discretion, may
incorporate a provision in a Stock Incentive Agreement to allow an Employee or
Key Person to surrender his or Option in whole or in part in lieu of the
exercise in whole or in part of that Option on any date that:
(a) the Fair Market Value of the Shares subject to such Option
exceeds Exercise Price for such Shares, and
(b) the Option to purchase such Shares is otherwise exercisable.
8.2 PROCEDURE. The surrender of an Option in whole or in part shall be
effected by the delivery of the Stock Incentive Agreement to the Committee,
together with a statement signed by the
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<PAGE> 8
Participant which specifies the number of Shares ("Surrendered Shares") as to
which the Participant surrenders his or her Option and how he or she desires
payment be made for such Surrendered Shares.
8.3 PAYMENT. A Participant in exchange for his or her Surrendered Shares
shall receive a payment in cash or in Shares, or in a combination of cash and
Shares, equal in amount on the date such surrender is effected to the excess of
the Fair Market Value of the Surrendered Shares on such date over the Exercise
Price for the Surrendered Shares. The Committee, acting in its absolute
discretion, can approve or disapprove a Participant's request for payment in
whole or in part in cash and can make that payment in cash or in such
combination of cash and Shares as the Committee deems appropriate. A request for
payment only in Shares shall be approved and made in Shares to the extent
payment can be made in whole shares of Shares and (at the Committee's
discretion) in cash in lieu of any fractional Shares.
8.4 RESTRICTIONS. Any Stock Incentive Agreement which incorporates a
provision to allow a Participant to surrender his or her Option in whole or in
part also shall incorporate such additional restrictions on the exercise or
surrender of such Option as the Committee deems necessary to satisfy the
conditions to the exemption under Rule 16b-3 (or any successor exemption) to
Section 16(b) of the Exchange Act.
SECTION 9.
SECURITIES REGULATION
Each Stock Incentive Agreement may provide that, upon the receipt of
Shares as a result of the surrender or exercise of a Stock Incentive, the
Participant shall, if so requested by the Company, hold such Shares for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. Each Stock Incentive Agreement may
also provide that, if so requested by the Company, the Participant shall make a
written representation to the Company that he or she will not sell or offer to
sell any of such Shares unless a registration statement shall be in effect with
respect to such Shares under the Securities Act of 1933, as amended ("1933
Act"), and any applicable state securities law or, unless he or she shall have
furnished to the Company an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required. Certificates representing the Shares transferred upon the exercise
or surrender of a Stock Incentive granted under this Plan may at the discretion
of the Company bear a legend to the effect that such Shares have not been
registered under the 1933 Act or any applicable state securities law and that
such Shares may not be sold or offered for sale in the absence of an effective
registration statement as to such Shares under the 1933 Act and any applicable
state securities law or an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required.
SECTION 10.
LIFE OF PLAN
No Stock Incentive shall be granted under this Plan on or after the
earlier of:
(a) the tenth (10th) anniversary of the effective date of this Plan (as
determined under Section 4 of this Plan), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Stock Incentives have
been surrendered or exercised in full or no longer are exercisable, or
(b) the date on which all of the Shares reserved under Section 3 of this
Plan have (as a result of the surrender or exercise of Stock Incentives granted
under this Plan) been issued or no longer are available for use under this Plan,
in which event this Plan also shall terminate on such date.
SECTION 11.
ADJUSTMENT
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The number of Shares reserved under Section 3 of this Plan, and the
number of Shares subject to Stock Incentives granted under this Plan, and the
Exercise Price of any Options, shall be adjusted by the Committee in an
equitable manner to reflect any change in the capitalization of the Company,
including, but not limited to, such changes as stock dividends or stock splits.
Furthermore, the Committee shall have the right to adjust (in a manner which
satisfies the requirements of Code Section 424(a)) the number of Shares reserved
under Section 3, and the number of Shares subject to Stock Incentives granted
under this Plan, and the Exercise Price of any Options in the event of any
corporate transaction described in Code Section 424(a) which provides for the
substitution or assumption of such Stock Incentives. If any adjustment under
this Section creates a fractional Share or a right to acquire a fractional
Share, such fractional Share shall be disregarded, and the number of Shares
reserved under this Plan and the number subject to any Stock Incentives granted
under this Plan shall be the next lower number of Shares, rounding all fractions
downward. An adjustment made under this Section by the Committee shall be
conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3.
SECTION 12.
SALE OR MERGER OF THE COMPANY
If the Company agrees to sell substantially all of its assets for cash
or property, or for a combination of cash and property, or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares are
converted into another security or into the right to receive securities or
property, and such agreement does not provide for the assumption or substitution
of the Stock Incentives granted under this Plan, each Stock at the direction and
discretion of the Committee or the Board, or as is otherwise provided in the
Stock Incentive Agreements (i) may be deemed to be fully vested and/or
exercisable, or (ii) may be canceled unilaterally by the Company in exchange for
(a) whole Shares (or, subject to satisfying the conditions of an exemption under
Rule 16b-3 or any successor exemption to Section 16(b) of the Exchange Act, for
the whole Shares and cash in lieu of any fractional Share) which each
Participant would otherwise receive if he or she had the right to exercise his
or her outstanding Stock Incentive in full and he or she exercised that right
exclusively for Shares on a date fixed by the Committee which comes before such
sale or other corporate transaction, or (b) cash or other property equivalent in
value, as determined by the Board in its sole discretion, to the Shares
described in (a). Any such Stock Incentive which is not assumed or substituted
as provided above and which the Company does not elect to cancel prior to a sale
or other corporate transaction as described in this Section shall become fully
vested and immediately exercisable just prior to the closing of such
transaction.
SECTION 13.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, no such
amendment shall be made absent the approval of the shareholders of the Company:
(a) to increase the number of Shares reserved under Section 3, except as set
forth in Section 11, (b) to extend the maximum life of the Plan under Section 10
or the maximum exercise period under Section 7, (c) to decrease the minimum
Exercise Price under Section 7, or (d) to change the designation of Employees or
Key Persons eligible for Stock Incentives under Section 6. The Board also may
suspend the granting of Stock Incentives under this Plan at any time and may
terminate this Plan at any time; provided, however, the Company shall not have
the right to modify, amend or cancel any Stock Incentive granted before such
suspension or termination unless: (I) the Participant consents in writing to
such modification, amendment or cancellation, or (II) there is a dissolution or
liquidation of the Company or a transaction described in Section 11 or Section
12.
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Amended and Restated Stock Incentive Plan
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SECTION 14.
MISCELLANEOUS
14.1 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder of the Company as a result of the grant of a Stock Incentive to him
or to her under this Plan or his or her exercise or surrender of such Stock
Incentive pending the actual delivery of Shares subject to such Stock Incentive
to such Participant.
14.2 NO GUARANTEE OF CONTINUED RELATIONSHIP. The grant of a Stock
Incentive to a Participant under this Plan shall not constitute a contract of
employment and shall not confer on a Participant any rights upon his or her
termination of employment or relationship with the Company in addition to those
rights, if any, expressly set forth in the Stock Incentive Agreement which
evidences his or her Stock Incentive.
14.3 WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company as a
condition precedent for the fulfillment of any Stock Incentive, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan Whenever Shares are to be issued or cash paid
to a Participant upon exercise of an Option, the Company shall have the right to
require the Participant to remit to the Company, as a condition of exercise of
the Option, an amount sufficient to satisfy federal, state and local withholding
tax requirements at the time of exercise. However, notwithstanding the
foregoing, to the extent that a Participant is an Insider, satisfaction of
withholding requirements by having the Company withhold Shares may only be made
to the extent that such withholding of Shares (1) has met the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3 promulgated
under the Exchange Act.
14.4 TRANSFER. The transfer of an Employee between or among the Company,
a Subsidiary or a Parent shall not be treated as a termination of his or her
employment under this Plan.
14.5 CONSTRUCTION. This Plan shall be construed under the laws of the
State of Georgia.
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<PAGE> 1
EXHIBIT 99.10
DIGITAL FURNACE CORPORATION
AMENDED & RESTATED STOCK INCENTIVE PLAN
STOCK OPTION GRANT CERTIFICATE
Digital Furnace Corporation, a Georgia corporation (the "Company"), hereby
grants to the optionee named below ("Optionee") an option (this "Option") to
purchase the total number of shares shown below of Common Stock of the Company
(the "Shares") at the exercise price per share set forth below (the "Exercise
Price"), subject to all of the terms and conditions on the reverse side of this
Stock Option Grant Certificate and the Digital Furnace Corporation Amended &
Restated Stock Incentive Plan (the "Plan"). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Plan. The terms and conditions set forth on the reverse side hereof and the
terms and conditions of the Plan are incorporated herein by reference.
<TABLE>
<S> <C> <C>
In witness whereof, this Stock Shares Subject to Option: Optionee hereby acknowledges receipt of a copy of the Plan,
Option Grant has been executed represents that Optionee has read and understands the terms
by the Company by a duly and provisions of the Plan, and accepts this Option subject
authorized officer as of the to all the terms and conditions of the Plan and this Stock
date specified hereon. Exercise Price Per Share: Option Grant Certificate. Optionee acknowledges that there
may be adverse tax consequences upon exercise of this Option
or disposition of the Shares and that Optionee should consult
a tax adviser prior to such exercise of disposition.
DIGITAL FURNACE CORPORATION Term of Option: Ten (10) Years
By: _______________________ Shares subject to issuance under
this Option shall vest according
to a vesting schedule set forth
in the Exercise and Shareholder
Agreement (herein the "Exercise -----------------------------
Date of Grant: Agreement"). Signature of Optionee
Type of Stock Option:
-----------------------------
Name of Optionee
</TABLE>
<PAGE> 2
1. EXERCISE PERIOD OF OPTION. Subject to the terms and conditions of
this Option and the Plan, and unless otherwise modified by a written
modification signed by the Company and Optionee, this Option may be exercised
with respect to the Shares immediately upon grant, but in no event after the
date which is the last day of the Term set forth on the face hereof following
the date of grant (hereinafter "Expiration Date").
2. RESTRICTIONS ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act of 1933 and all
applicable state securities laws, as they are in effect on the date of exercise,
and the requirements of any stock exchange or national market system on which
the Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the Securities and Exchange Commission ("SEC"), any state
securities commission or any stock exchange to effect such compliance.
3. TERMINATION OF OPTION. Except as provided below in this Section,
this Option may not be exercised after the date which is thirty (30) days after
Optionee ceases to perform services for the Company, or any Parent or
Subsidiary. Optionee shall be considered to perform services for the Company, or
any Parent or Subsidiary, for all purposes under this Section, if Optionee is an
officer or full-time employee of the Company, or any Parent or Subsidiary, or if
the Board determines that Optionee is rendering substantial services as a
part-time employee, consultant, contractor or advisor to the Company, or any
Parent or Subsidiary. The Board shall have discretion to determine whether
Optionee has ceased to perform services for the Company, or any Parent or
Subsidiary, and the effective date on which such services cease (the
"Termination Date"). Notwithstanding anything contained herein to the contrary,
if the Optionee is terminated for Cause, all options otherwise exercisable shall
be forfeited. For this purpose, "Cause" means termination of the Optionee's
employment under any one or more of the following events: (a) Optionee's knowing
and willful misconduct with respect to the business and affairs of the Company;
(b) any material violation by Optionee of any policy of the Company relating to
ethical conduct or practices or fiduciary duties of a similarly situated
executive; (c) knowing and willful material breach of any provision his
Employment Agreement (if any) which is not remedied within thirty (30) days
after Optionee's receipt of notice thereof; (d) Optionee's commission of a
felony or any illegal act involving moral turpitude or fraud or Optionee's
dishonesty which may reasonably be expected to have a material adverse effect on
the Company; or (e) failure to comply with reasonable directives of the Board
which are consistent with the Optionee's duties, if not remedied within thirty
(30) days after the Optionee's receipt of notice thereof.
(a) Termination Generally. If Optionee ceases to perform services
for the Company, or any Parent or Subsidiary, for any reason, except death or
disability (within the meaning of Code Section 22(e)(3)), this Option shall
immediately be forfeited, along with any and all rights or subsequent rights
attached thereto, thirty (30) days following the Termination Date, but in no
event later than the Expiration Date.
(b) Death or Disability. If Optionee ceases to perform services for
the Company, or any Parent or Subsidiary, as a result of the death or disability
of Optionee (as determined by the Board in its sole discretion), this Option, to
the extent (and only to the extent) that it would have been exercisable by
Optionee on the Termination Date, may be exercised by Optionee (or, in the event
of Optionee's death, by Optionee's legal representative) within ninety (90) days
after the Termination Date, but in no event later than the Expiration Date.
(c) No Right to Employment. Nothing in the Plan or this Stock Option
Grant Certificate shall confer on Optionee any right to continue in the employ
of, or other relationship with, the Company, or any Parent or Subsidiary, or
limit in any way the right of the Company, or any Parent or Subsidiary, to
terminate Optionee's employment or other relationship at any time, with or
without cause.
4. MANNER OF EXERCISE.
(a) Exercise Agreement. This Option shall be exercisable by delivery
to the Company of an executed Exercise and Shareholder Agreement ("Exercise
Agreement") in the form of the Exercise Agreement delivered to Optionee, if
applicable, or in such other form as may be approved or accepted by the Company,
which shall set forth Optionee's election to exercise this Option with respect
to some or all of the Shares, the number of Shares being purchased, any
restrictions imposed on the Shares, and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
<PAGE> 3
(b) Exercise Price. Such notice shall be accompanied by full payment
of the Exercise Price for the Shares being purchased. Payment for the Shares may
be made in U.S. dollars in cash (by check) or, where permitted by law and
approved by the Board in its sole discretion: (i) by cancellation of
indebtedness of the Company to Optionee; (ii) by surrender of shares of Common
Stock of the Company that have been owned by Optionee for more than six (6)
months (and which have been paid for within the meaning of SEC Rule 144, and, if
such Shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such Shares), or were obtained by
Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Shares being purchased; (iii) by instructing the Company
to withhold Shares otherwise issuable pursuant to the exercise of the Option
having a Fair Market Value equal to the exercise price of the Shares being
purchased (including the withheld Shares); (iv) by waiver of compensation
accrued by Optionee for services rendered; or (v) a combination of the
foregoing. However, certain restrictions apply to Insiders, as set forth in the
Plan.
(c) Withholding Taxes. Prior to the issuance of Shares upon exercise
of this Option, Optionee must pay, or make adequate provision for, any
applicable federal or state withholding obligations of the Company. Where
approved by the Board, Optionee may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be withheld.
In such case, the Company shall issue the net number of Shares to Optionee by
deducting the Shares retained from the Shares exercised. However, certain
restrictions apply to Insiders, as set forth in the Plan.
(d) Issuance of Shares. Provided that such notice and payment are in
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If this Option is
an ISO, and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of: (a) the date two (2)
years after the Date of Grant, or (b) the date one (1) year after exercise of
the ISO, with respect to the Shares to be sold or disposed, Optionee shall
immediately notify the Company in writing of such sale or disposition. Optionee
acknowledges and agrees that Optionee may be subject to income tax withholding
by the Company on the compensation income recognized by Optionee from any such
early disposition by payment in cash or out of the current wages or earnings
payable to Optionee. See Section 4(c) above.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner, other than by will or by the laws of descent and distribution, and
may be exercised during Optionee's lifetime only by Optionee unless the Optionee
is determined by the Company to be incapacitated and unable to exercise the
Option. The terms of this Option shall be binding upon the executor,
administrators, successors and assigns of Optionee.
7. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT THE GRANT AND EXERCISE
OF THIS OPTION, AND THE SALE OF SHARES OBTAINED THROUGH THE EXERCISE OF THIS
OPTION, MAY HAVE TAX IMPLICATIONS THAT COULD RESULT IN ADVERSE TAX CONSEQUENCES
TO OPTIONEE. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH, OR WILL
CONSULT WITH, HIS OR HER TAX ADVISOR AND OPTIONEE FURTHER ACKNOWLEDGES THAT
OPTIONEE IS NOT RELYING OF THE COMPANY FOR ANY TAX, FINANCIAL OR LEGAL ADVICE.
8. INTERPRETATION. Any dispute regarding the interpretation of this
Stock Option Grant Certificate shall be submitted by Optionee or the Company to
the Board or the Committee, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Board or Committee shall be
final and binding on the Company and Optionee.
9. ENTIRE AGREEMENT. The Plan and the Exercise Agreement are
incorporated herein by this reference. Optionee acknowledges and agrees that the
granting of this Option constitutes a full accord, satisfaction and release of
all obligations or commitments made to Optionee by the Company or any of its
officers, directors, shareholders or affiliates with respect to the issuance of
any securities, or rights to acquire securities, of the Company or any of its
affiliates. This Stock Option Grant Certificate, the Plan and the Exercise
Agreement constitute the entire agreement of the parties hereto, and supersede
all prior undertakings and agreements with respect to the subject matter hereof,
and that the provisions of the Plan are controlling over this Stock Option Grant
Certificate.
10. VESTING OF OPTIONS. Subject to the terms of the Plan, this Option
and the Exercise Agreement, the Option shall be 100% vested in this Option as of
the date of grant. However, Shares purchased upon exercise of this Option shall
be subject to a vesting schedule as set forth in the Exercise at its next
regular meeting.
<PAGE> 1
EXHIBIT 99.11
DIGITAL FURNACE CORPORATION
AMENDED & RESTATED STOCK INCENTIVE PLAN
EXERCISE AND SHAREHOLDER AGREEMENT
This Exercise and Shareholder Agreement (the "Exercise Agreement") is
made this day of , 199___ by and between Digital Furnace Corporation (the
"Company") and the optionee named below ("Optionee") pursuant to that certain
Stock Option Grant described below which was granted to Optionee under the
Digital Furnace Corporation Amended & Restated Stock Incentive Plan (the
"Plan").
Optionee: ____________________________
Social Security Number: ____________________________
Address: ____________________________
____________________________
____________________________
Number of Shares Purchased: ____________________________
Price Per Share $____________________________
Aggregate Purchase Price: $____________________________
Date of Stock Option Grant: ____________________________
Optionee hereby delivers to the Company the Aggregate Purchase Price in
a form permitted in the Option (provided, that payment other than by cash or
check is subject to approval by the Board of Directors of the Company (the
"Board"), in its sole discretion and in writing) as follows (check as applicable
and complete):
[___] in cash or check in the amount of $___________, receipt of which is
acknowledged by the Company.
[___] by hereby instructing the Company to withhold ___________ Shares of
Common Stock otherwise issuable pursuant to this exercise of the Option,
valued at the current fair market value of $____________ per Share (as
determined by the Board in good faith).
[___] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $____________.
[___] by the execution of a promissory note in favor of the Company in a form
acceptable to the Company.
The Company and Optionee hereby agree as follows:
1. PURCHASE OF SHARES. On this date and subject to the terms and
conditions of this Exercise Agreement and the Plan, Optionee hereby exercises,
subject to the contingencies below, the Stock Option Grant between the Company
and Optionee dated as of the "Date of Stock Option Grant" set forth above (the
"Option") with respect to the "Number of Shares Purchased" set forth
Page 1 Of 7
<PAGE> 2
above of the Company's Common Stock at the "Aggregate Purchase Price" set forth
above (the "Purchase Price") and the "Price per Share" set forth above (the
"Purchase Price Per Share"). The term "Shares" refers to the shares of the
Company's $0.01 par value common stock purchased under this Exercise Agreement
and includes all securities received (a) in replacement of the Shares and (b) as
a result of stock dividends or stock splits in respect of the Shares.
Capitalized terms used in this Exercise Agreement that are not defined herein
have the definitions ascribed to them in the Plan and the Option.
2. REPRESENTATIONS OF PURCHASER. Optionee represents and warrants to the
Company that:
(a) Optionee acknowledges that Optionee has received, read and
understood the Plan and the Option and agrees to abide by and be bound by their
terms and conditions;
(b) Optionee is purchasing the Shares for Optionee's own account
for investment purposes only and not with a view to, or for sale in connection
with, a distribution of the Shares within the meaning of the Securities Act of
1933, as amended (the "1933 Act");
(c) Optionee has no present intention of selling or otherwise
disposing of all or any portion of the Shares;
(d) Optionee is fully aware of (i) the highly speculative nature
of the investment in the Shares; (ii) the financial hazards involved in the
investment of the Shares; and (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that Optionee may not be
able to sell or dispose of the Shares or use them as collateral for loans); and
(e) Optionee is capable of evaluating the merits and risks of
this investment, has the ability to protect Optionee's own interests in this
transaction and is financially capable of bearing a total loss of this
investment.
3. VESTING AND OWNERSHIP RIGHTS IN SHARES. Optionee understands, agrees
and acknowledges that ownership of the Shares shall vest in Optionee as set
forth below depending upon the "Continuous Service" of the Optionee:
<TABLE>
<CAPTION>
CONTINUOUS SERVICE OF OPTIONEE FOLLOWING DATE
OF GRANT OF UNDERLYING OPTION PERCENTAGE OF VESTING IN SHARES
----------------------------- -------------------------------
<S> <C>
Less than 12 months 0%
Greater than or equal to 12 months but less 25%
than 24 months
Greater than or equal to 24 months but less 50%
than 36 months
Greater than or equal to 36 months but less 75%
than 48 months
Greater than or equal to 48 months 100%
</TABLE>
For purposes of the above vesting chart, "Continuous Service" means a period of
continuous performance of services by Optionee for the Company, a Parent, or a
Subsidiary, as determined by the Board. Only with respect to vested Shares shall
an Optionee have full rights of ownership, be able to vote and receive
dividends. To the extent that Shares have not vested, Optionee hereby agrees and
acknowledges that he shall not have a right to receive dividends or to vote as a
shareholder with respect to such Shares. Further, Optionee shall not have the
right to transfer or assign in any manner any Shares, or any interest therein,
that have not vested.
Page 2 Of 7
<PAGE> 3
4. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company shall have an assignable right of first refusal
to purchase such Shares on the terms and conditions set forth in this Section 4
(the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares, (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"), (iii) the
number of Shares to be transferred to each Proposed Transferee, and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the "Offered Price"); in addition, by providing the Notice,
the Holder is deemed to be offering to sell the Shares at the Offered Price to
the Company.
(b) Exercise of Right of First Refusal. At any time within thirty
(30) days after receipt of the Notice, the Company or its assignee may, by
giving written notice to the Holder, elect to purchase any or all of the Shares
proposed to be transferred to any one or more of the Proposed Transferees, at
the purchase price determined in accordance with Subsection (c) below.
(c) Purchase Price. The purchase price for the Shares purchased
under this Section 4 shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board in good faith.
(d) Payment. Payment of the purchase price shall be made, at the
option of the Company or its assignee, either (i) in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company or such assignee, or by any combination thereof within thirty
(30) days after receipt of the Notice or (ii) in the manner and at the time(s)
set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee as provided in this Section 4, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within one hundred and twenty (120) days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 4 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
a new Notice shall be given to the Company, and the Company shall again be
offered the Right of First Refusal, before any Shares held by the Holder may be
sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section 4 notwithstanding, the transfer of any or all
of the Shares, during Optionee's lifetime or on Optionee's death by will or
intestacy, to Optionee's immediate family or to a trust for the benefit of
Optionee or Optionee's immediate family shall be exempt from the provisions of
this Section; provided, that as a condition to receiving the Shares, the
transferee or other recipient shall agree in writing to receive and hold the
Shares so transferred subject to the provisions of this Agreement, and to
transfer such Shares no further except in accordance with the terms of this
Agreement. As used herein, "immediate family" shall mean the Optionee's spouse,
lineal descendant or antecedent, father, mother, brother or sister.
Page 3 Of 7
<PAGE> 4
(g) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares ninety (90) days after the first sale
of common stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission (other than a registration statement solely covering an employee
benefit plan or corporate reorganization).
(h) Optionee Subject to Vesting Restrictions. Notwithstanding
anything in this Section 4 to the contrary, no unvested Shares may be
transferred by Optionee.
5. COMPANY'S REPURCHASE OPTION. The Company shall have the option to
repurchase all or a portion of the Shares on the terms and conditions set forth
in this Section 5 (the "Repurchase Option") if Optionee should cease to be
employed by the Company or cease to perform services for the Company, a Parent
or a Subsidiary for any reason, or no reason, including without limitation
Optionee's death, disability, voluntary resignation or termination by the
Company with or without cause.
(a) Right of Termination Unaffected. Nothing in this Agreement
shall be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company to terminate Optionee's employment or association
with the Company at any time, for any reason or no reason, with or without
cause. For purposes of this Agreement, Optionee shall be considered to be
employed by the Company or associated with the Company if Optionee is an
officer, director or full-time employee of the Company or any Parent or
Subsidiary of the Company or if the Board determines that Optionee is rendering
substantial services as a part-time employee, consultant, contractor or advisor
to the Company or any Parent or Subsidiary of the Company. The Board shall have
discretion to determine whether Optionee has ceased to be employed by or
associated with the Company or any Parent or Subsidiary and the effective date
on which such employment or association is terminated (the "Termination Date").
(b) Exercise of Repurchase Option. At any time within sixty (60)
days after the Termination Date, the Company may elect to repurchase any or all
of the Shares by giving Optionee written notice of exercise of the Repurchase
Option.
(c) Calculation of Repurchase Price for Vested Shares.
(i) In the event Optionee's employment with the Company
terminates as a result of (1) the death or disability of Optionee or (2)
the termination of Optionee's employment by the Company other than "with
cause" (as defined below), the Company or its assignee shall have the
option to repurchase from Optionee (or from Optionee's personal
representative as the case may be) any or all of the vested Shares at a
price equal to the "fair market value" of such Shares on the Termination
Date. For purposes of this Section 5, "fair market value" of the Shares
shall be determined in the sole discretion of the Board.
(ii) In the event Optionee's employment with the Company
terminates as result of (1) Optionee's resignation from employment or
voluntary termination of association with the Company or (2) termination
of Optionee's employment or association by the Company "with cause", the
Company or its assignee shall have the option to repurchase from
Optionee (or from Optionee's personal representative as the case may be)
any or all of the vested Shares at a price equal to the lower of (1) the
"fair market value" of such Shares on the Termination Date and (2) the
"book value", as defined below, of such Shares on the Termination Date.
For purposes of this Section 5, "with cause" shall mean termination by
the Company of Optionee's employment or association with the Company as
a result of termination of the Optionee's employment under any one or
more of the following events: (a) Optionee's knowing and wilful
misconduct with respect to the
Page 4 Of 7
<PAGE> 5
business and affairs of the Company; (b) any material violation by
Optionee of any policy of the Company relating to ethical conduct or
practices or fiduciary duties of a similarly situated executive; (c)
knowing and wilful material breach of any provision his Employment
Agreement (if any) which is not remedied within thirty (30) days after
Optionee's receipt of notice thereof; (d) Optionee's commission of a
felony or any illegal act involving moral turpitude or fraud or
Optionee's dishonesty which may reasonably be expected to have a
material adverse effect on the Company; or (e) failure to comply with
reasonable directives of the Board which are consistent with the
Optionee's duties, if not remedied within thirty (30) days after the
Optionee's receipt of notice thereof. For purposes of this Section 5,
"book value" of the Shares shall be determined in the sole discretion of
the Board.
(d) Calculation of Repurchase Price for Unvested Shares. In the
event Optionee's employment with the Company terminates for any reason
whatsoever, the Company or its assignee shall have the option to repurchase from
Optionee (or from Optionee's personal representative as the case may be) any or
all of the unvested Shares at a price equal to the price paid by Optionee for
such unvested Shares.
(e) Payment of Repurchase Price. The repurchase price shall be
payable, at the option of the Company or its assignee, by (i) check, (ii) by
cancellation of all or a portion of any outstanding indebtedness of Optionee to
the Company or such assignee, (iii) by delivery of a promissory note of the
Company payable in equal annual installments over a four (4) year period from
the date of repurchase at per annum interest rate equal to the prime rate as
announced by the Company's principal bank as of the Termination Date or, if the
Company has no principal bank, that rate announced as of the Termination Date by
the Wall Street Journal as the prevailing "prime rate" of interest per annum, or
(iv) any combination of the above.
(f) Termination of Repurchase Rights. The Right of Repurchase
shall terminate as to any Shares ninety (90) days after the first sale of common
stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
(other than a registration statement solely covering an employee benefit plan or
corporate reorganization).
6. COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. Optionee
understands and acknowledges that, in reliance upon the representations and
warranties made by Optionee herein, the Shares have not been registered with the
Securities and Exchange Commission ("SEC") under the 1933 Act, but have been
issued under an exemption or exemptions from the registration requirements of
the 1933 Act which impose certain restrictions on Optionee's ability to transfer
the Shares and have not been registered under any Georgia securities laws or the
securities laws of any other state. Optionee understands that Optionee may not
transfer any Shares unless such Shares are registered under the 1933 Act and the
securities laws of Georgia (or the securities laws of any other state, if
applicable) or unless, in the opinion of counsel to the Company, an exemption
from such registration is available. Optionee understands that only the Company
may file a registration statement with the SEC or Georgia (or other applicable
states), and that the Company is under no obligation to do so with respect to
the Shares. Optionee has also been advised that an exemption from registration
may not be available or may not permit Optionee to transfer all or any of the
Shares in the amounts or at the times proposed by Optionee.
7. LOCKUP AGREEMENT. Optionee agrees, in connection with any public
offering of the Company's securities, upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Shares without the prior written consent of the Company
or such underwriters, as the case may be, from the effective date of such
registration for so long as the Company or the underwriters may specify, but in
any event not to
Page 5 Of 7
<PAGE> 6
exceed 365 days. Optionee agrees to execute and deliver such other documents and
agreements as the Company or such underwriters may reasonably request to further
evidence these commitments.
8. ESCROW. As security for the faithful performance of this Exercise
Agreement, Optionee agrees, immediately upon receipt of the certificate(s)
evidencing the Shares, to deliver such certificate(s), to the Secretary of the
Company or its designee ("Escrow Holder"), who is hereby appointed to hold such
certificate(s) in escrow and to take all such actions and to effectuate all such
transfers and/or releases of such Shares as are in accordance with the terms of
this Exercise Agreement. Optionee and the Company agree that Escrow Holder shall
not be liable to any party to this Exercise Agreement (or to any other party)
for any actions or omissions unless Escrow Holder is grossly negligent relative
thereto. The Escrow Holder may rely upon any letter, notice or other document
executed by any signature reported to be genuine and may rely upon advice of
counsel and obey any order of any court with respect to the transactions
contemplated herein. The Shares shall be released from escrow upon termination
of both the Right of First Refusal set forth in Section 4 and the Repurchase
Option set forth in Section 5; provided, however, that such release shall not
affect the rights of the Company with respect to any pledge of Shares to the
Company. Optionee hereby irrevocably constitutes and appoints Escrow Holder as
Optionee's agent and attorney-in-fact for the purpose of executing and
delivering any and all documents necessary to transfer any Shares purchased
hereunder to the Company pursuant to the terms of this Exercise Agreement and to
record such transfer on the books of the Company, such appointment being made
with full power of substitution in the premises.
9. LEGENDS. Optionee understands and agrees that the certificate(s)
representing the Shares will bear legends in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE GEORGIA SECURITIES ACT OF 1973, AS AMENDED ("GEORGIA
ACT"), UNDER ANY OTHER STATE SECURITIES LAW, OR UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("FEDERAL ACT"). THESE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
HYPOTHECATED, SOLD OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR
TRANSFEREE THEREOF BE RECOGNIZED BY THE CORPORATION AS HAVING AN
INTEREST IN SUCH SHARES, IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES UNDER THE FEDERAL
ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED, AND (II) AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES UNDER THE GEORGIA
ACT AND UNDER ANY OTHER APPLICABLE STATE LAW, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH SHARES WILL BE
OFFERED FOR SALE, HYPOTHECATED, SOLD OR TRANSFERRED ONLY IN A
TRANSACTION WHICH IS EXEMPT UNDER, OR WHICH IS OTHERWISE IN
COMPLIANCE WITH, THE GEORGIA ACT AND ANY OTHER APPLICABLE STATE
SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT
CERTAIN EXERCISE AGREEMENT AND EMPLOYEE SHAREHOLDER AGREEMENT DATED
THE _____ DAY OF _______________, 19___, A COPY OF WHICH IS ON FILE
WITH THE CORPORATION," AND WHICH CONTAINS CERTAIN VESTING
RESTRICTIONS THEREIN.
10. STOP-TRANSFER NOTICES. Optionee understands and agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
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<PAGE> 7
11. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY FINANCIAL, TAX OR OTHER ADVICE. OPTIONEE ALSO WARRANTS AND REPRESENTS THAT
OPTIONEE HAS CONSULTED WITH A TAX ADVISOR CONCERNING THE POSSIBILITY OF MAKING
AN ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, WITH RESPECT TO THE SHARES.
12. ENTIRE AGREEMENT. The Plan and the Option are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and are governed by Georgia law except for that body of
law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: DIGITAL FURNACE CORPORATION
_______________________________
By:____________________________________
Title:_________________________________
_______________________________
(signature) Dated:_________________________________
Dated:_________________
Page 7 Of 7
<PAGE> 1
EXHIBIT 99.12
STELLAR SEMICONDUCTOR, INC.
1999 EQUITY INCENTIVE PLAN
ADOPTED JUNE 7, 1999
APPROVED BY SHAREHOLDERS JUNE 7, 1999
TERMINATION DATE: JUNE 6, 2009
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means Stellar Semiconductor, Inc., a California
corporation.
(g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.
1
<PAGE> 2
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company, to
perform the major duties of that person's position with the Company or an
Affiliate of the Company because of the sickness or injury of the person and
(ii) after the Listing Date, the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(iii) Prior to the Listing Date, the value of the Common Stock shall
be determined in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations.
2
<PAGE> 3
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(s) "OFFICER" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
(t) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
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(x) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(y) "PLAN" means this Stellar Semiconductor, Inc. 1999 Equity Incentive
Plan.
(z) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(dd) "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 12.
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(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate thirteen million
(13,000,000) shares of Common Stock; provided, however, that such aggregate
number of shares shall be reduced by the number of shares of Common Stock that
have been sold pursuant to, or that may be sold pursuant to outstanding options
granted under, the Company's 1997 Stock Option/Stock Issuance Plan to the same
extent as if such sales had been made or options had been granted pursuant to
this Plan.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
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(d) SHARE RESERVE LIMITATION. Prior to the Listing Date and to the
extent then required by Section 260.140.45 of Title 10 of the California Code of
Regulations, the total number of shares of Common Stock issuable upon exercise
of all outstanding Options and the total number of shares of Common Stock
provided for under any stock bonus or similar plan of the Company shall not
exceed the applicable percentage as calculated in accordance with the conditions
and exclusions of Section 260.140.45 of Title 10 of the California Code of
Regulations, based on the shares of Common Stock of the Company that are
outstanding at the time the calculation is made.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
(b) TEN PERCENT SHAREHOLDERS.
(i) A Ten Percent Shareholder shall not be granted an Incentive
Stock Option unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of the Common Stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.
(ii) Prior to the Listing Date, a Ten Percent Shareholder shall not
be granted a Nonstatutory Stock Option unless the exercise price of such Option
is at least (i) one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock at the date of grant as is permitted by Section
260.140.41 of Title 10 of the California Code of Regulations at the time of the
grant of the Option.
(iii) Prior to the Listing Date, a Ten Percent Shareholder shall not
be granted a restricted stock award unless the purchase price of the restricted
stock is at least (i) one hundred percent (100%) of the Fair Market Value of the
Common Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock at the date of grant as is permitted by Section
260.140.41 of Title 10 of the California Code of Regulations at the time of the
grant of the Option.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than 1,0000,000 shares of
Common Stock during any calendar year. This subsection 5(c) shall not apply
prior to the Listing Date and, following the Listing Date, this subsection 5(c)
shall not apply until (i) the earliest of: (1) the first material modification
of the Plan (including any increase in the number of shares of Common Stock
reserved for issuance under the Plan in accordance with Section 4); (2) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (3) the expiration of the Plan; or (4) the first meeting of shareholders
at which Directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
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registration of an equity security under Section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.
(d) CONSULTANTS.
(i) Prior to the Listing Date, a Consultant shall not be eligible
for the grant of a Stock Award if, at the time of grant, either the offer or the
sale of the Company's securities to such Consultant is not exempt under Rule 701
of the Securities Act ("Rule 701") because of the nature of the services that
the Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701 and
will satisfy another exemption under the Securities Act as well as comply with
the securities laws of all other relevant jurisdictions.
(ii) From and after the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or
(B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such
grant complies with the securities laws of all other relevant jurisdictions.
(iii) Rule 701 and Form S-8 generally are available to consultants
and advisors only if (i) they are natural persons; (ii) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer's parent; and (iii) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Shareholders, no Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the
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Common Stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Incentive Stock Option may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the Option
on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at
any time that the Company is incorporated in Delaware, payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be paid
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option granted prior to the Listing Date shall not be transferable except by
will or by the laws of descent and distribution and, to the extent provided in
the Option Agreement, to such further extent as permitted by Section
260.140.41(d) of Title 10 of the California Code of Regulations at the time of
the grant of the Option, and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. A Nonstatutory Stock Option granted on or
after the Listing Date shall be transferable to the extent provided in the
Option Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the
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Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the
foregoing subsection 6(g), to the extent that the following restrictions on
vesting are required by Section 260.140.41(f) of Title 10 of the California Code
of Regulations at the time of the grant of the Option, then:
(i) Options granted prior to the Listing Date to an Employee who is
not an Officer, Director or Consultant shall provide for vesting of the total
number of shares of Common Stock at a rate of at least twenty percent (20%) per
year over five (5) years from the date the Option was granted, subject to
reasonable conditions such as continued employment; and
(ii) Options granted prior to the Listing Date to Officers,
Directors or Consultants may vest and become exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Board.
(i) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than thirty (30) days for Options
granted prior to the Listing Date unless such termination is for cause), or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate.
(j) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
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(k) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date) or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.
(l) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date) or (2) the expiration of the term of
such Option as set forth in the Option Agreement. If, after death, the Option is
not exercised within the time specified herein, the Option shall terminate.
(m) EARLY EXERCISE. Notwithstanding subsection 6(g), the Option may, but
need not, include a provision whereby the Optionholder may elect at any time
before the Optionholder's Continuous Service terminates to exercise the Option
as to any part or all of the unvested shares of Common Stock subject to the
Option prior to the vesting of the Option with respect to such shares. Subject
to the "Repurchase Limitation" in subsection 10(h), any unvested shares of
Common Stock so purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate.
(n) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in
subsection 10(h), the Option may, but need not, include a provision whereby the
Company may elect, prior to the Listing Date, to repurchase all or any part of
the vested shares of Common Stock acquired by the Optionholder pursuant to the
exercise of the Option.
(o) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares of Common Stock received
upon the exercise of the Option. Except as expressly provided in this subsection
6(o), such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.
(p) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to
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a further Option (a "Re-Load Option") in the event the Optionholder exercises
the Option evidenced by the Option Agreement, in whole or in part, by
surrendering other shares of Common Stock in accordance with this Plan and the
terms and conditions of the Option Agreement. Any such Re-Load Option shall (i)
provide for the purchase of a number of shares of Common Stock equal to the
number of shares of Common Stock surrendered as part or all of the exercise
price of such Option; (ii) have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) have an exercise price which is equal to one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Re-Load
Option on the date of exercise of the original Option. Notwithstanding the
foregoing, a Re-Load Option shall be subject to the same exercise price and term
provisions heretofore described for Options under the Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on the exercisability of Incentive Stock
Options described in subsection 10(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in consideration for
past services actually rendered to the Company or an Affiliate for its benefit.
(ii) VESTING. Subject to the "Repurchase Limitation" in subsection
10(h), shares of Common Stock awarded under the stock bonus agreement may, but
need not, be subject to a share repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in subsection 10(h), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the stock bonus agreement.
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(iv) TRANSFERABILITY. For a stock bonus award made before the
Listing Date, rights to acquire shares of Common Stock under the stock bonus
agreement shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. For a stock bonus award made on or after the Listing
Date, rights to acquire shares of Common Stock under the stock bonus agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the stock bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the stock bonus agreement
remains subject to the terms of the stock bonus agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) PURCHASE PRICE. Subject to the provisions of subsection 5(b)
regarding Ten Percent Shareholders, the purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. For restricted stock
awards made prior to the Listing Date, the purchase price shall not be less than
eighty-five percent (85%) of the Common Stock's Fair Market Value on the date
such award is made or at the time the purchase is consummated. For restricted
stock awards made on or after the Listing Date, the purchase price shall not be
less than eighty-five percent (85%) of the Common Stock's Fair Market Value on
the date such award is made or at the time the purchase is consummated.
(ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.
(iii) VESTING. Subject to the "Repurchase Limitation" in subsection
10(h), shares of Common Stock acquired under the restricted stock purchase
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to the
"Repurchase Limitation" in subsection 10(h), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.
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(v) TRANSFERABILITY. For a restricted stock award made before the
Listing Date, rights to acquire shares of Common Stock under the restricted
stock purchase agreement shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant. For a restricted stock award made on or
after the Listing Date, rights to acquire shares of Common Stock under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock
13
<PAGE> 14
Award was granted or shall affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without notice and with or
without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (iii) the issuance of the shares
of Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; or (iii) delivering to the
Company owned and unencumbered shares of Common Stock.
(g) INFORMATION OBLIGATION. Prior to the Listing Date, to the extent
required by Section 260.140.46 of Title 10 of the California Code of
Regulations, the Company shall deliver financial statements to Participants at
least annually. This subsection 10(g) shall not apply to key
14
<PAGE> 15
Employees whose duties in connection with the Company assure them access to
equivalent information.
(h) REPURCHASE LIMITATION. The terms of any repurchase option shall be
specified in the Stock Award and may be either at Fair Market Value at the time
of repurchase or at not less than the original purchase price. To the extent
required by Section 260.140.41 and Section 260.140.42 of Title 10 of the
California Code of Regulations at the time a Stock Award is made, any repurchase
option contained in a Stock Award granted prior to the Listing Date to a person
who is not an Officer, Director or Consultant shall be upon the terms described
below:
(i) FAIR MARKET VALUE. If the repurchase option gives the Company
the right to repurchase the shares of Common Stock upon termination of
employment at not less than the Fair Market Value of the shares of Common Stock
to be purchased on the date of termination of Continuous Service, then (i) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Stock Awards after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock") and (ii) the right terminates when the shares
of Common Stock become publicly traded.
(ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives the
Company the right to repurchase the shares of Common Stock upon termination of
Continuous Service at the original purchase price, then (i) the right to
repurchase at the original purchase price shall lapse at the rate of at least
twenty percent (20%) of the shares of Common Stock per year over five (5) years
from the date the Stock Award is granted (without respect to the date the Stock
Award was exercised or became exercisable) and (ii) the right to repurchase
shall be exercised for cash or cancellation of purchase money indebtedness for
the shares of Common Stock within ninety (90) days of termination of Continuous
Service (or in the case of shares of Common Stock issued upon exercise of
Options after such date of termination, within ninety (90) days after the date
of the exercise) or such longer period as may be agreed to by the Company and
the Participant (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code regarding "qualified small business stock").
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The
15
<PAGE> 16
Board shall make such adjustments, and its determination shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration" by the
Company.)
(b) CERTAIN CORPORATE TRANSACTIONS. Unless otherwise specified in the
applicable Stock Award Agreement, in the event of (i) a dissolution or
liquidation of the Company that is approved by shareholders of the Company, (ii)
a sale, lease or other disposition of all or substantially all of the assets of
the Company, (iii) a merger or consolidation in which the Company is not the
surviving corporation or (iv) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (collectively, a "Corporate
Transaction"), then any surviving corporation or acquiring corporation may
assume or continue any Stock Awards outstanding under the Plan or may substitute
similar stock awards (including an award to acquire the same consideration paid
to the shareholders in the Corporate Transaction) for those outstanding under
the Plan. In the event any surviving corporation or acquiring corporation does
not assume or continue such Stock Awards or substitute similar stock awards for
those outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated at the time of the
Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the
time during which such Stock Awards may be exercised) shall be accelerated in
full, and the Stock Awards shall terminate if not exercised (if applicable) by a
time established by the Board at or following the occurrence of such Corporate
Transaction. With respect to any other Stock Awards outstanding under the Plan,
such Stock Awards shall terminate if not exercised (if applicable) at or prior
to such Corporate Transaction.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the shareholders of the Company to the extent shareholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) SHAREHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for shareholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
16
<PAGE> 17
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the shareholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the shareholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.
15. CHOICE OF LAW.
The law of the State of California shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.
17
<PAGE> 1
EXHIBIT 99.13
STELLAR SEMICONDUCTOR, INC.
STOCK OPTION GRANT NOTICE
(1999 EQUITY INCENTIVE PLAN)
Stellar Semiconductor, Inc. (the "Company"), pursuant to its 1999 Equity
Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase
the number of shares of the Company's Common Stock set forth below. This option
is subject to all of the terms and conditions as set forth herein and in the
Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.
Optionholder:
----------------------------------------
Date of Grant:
----------------------------------------
Vesting Commencement Date:
----------------------------------------
Number of Shares Subject to Option:
----------------------------------------
Exercise Price (Per Share):
----------------------------------------
Total Exercise Price:
----------------------------------------
Expiration Date:
----------------------------------------
<TABLE>
<S> <C> <C>
TYPE OF GRANT: [ ] Incentive Stock Option 1 [ ] Nonstatutory Stock Option
EXERCISE SCHEDULE: [ ] Same as Vesting Schedule [ ] Early Exercise Permitted
VESTING SCHEDULE: [25%of the shares vest one year after the Vesting Commencement Date.
Remaining 75% of the shares vest monthly thereafter over the next three
years.]
PAYMENT: By one or a combination of the following items (described in the Stock
Option Agreement):
</TABLE>
By cash or check
Pursuant to a Regulation T Program if the Shares are
publicly traded
By delivery of already-owned shares if the Shares are
publicly traded
[By deferred payment]
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date of
Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the
entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted
and delivered to Optionholder under the Plan, and (ii) the following agreements
only:
OTHER AGREEMENTS:
----------------------------------------
----------------------------------------
STELLAR SEMICONDUCTOR, INC. OPTIONHOLDER:
By:
-------------------------------- ----------------------------------
Signature Signature
Title: Date:
-------------------------------- ----------------------------------
Date:
--------------------------------
ATTACHMENTS: Stock Option Agreement, 1999 Equity Incentive Plan, Notice of
Exercise [and Early Exercise Stock Purchase Agreement].
- --------
1 If this is an incentive stock option, it (plus your other outstanding
incentive stock options) cannot be first exercisable for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonstatutory stock option.
<PAGE> 2
STELLAR SEMICONDUCTOR, INC.
1999 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your STOCK OPTION GRANT NOTICE ("Grant Notice") and this
STOCK OPTION AGREEMENT, STELLAR SEMICONDUCTOR, INC. (the "Company") has granted
you an option under its 1999 EQUITY INCENTIVE PLAN (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. NORMAL VESTING. Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.
2. ACCELERATION OF VESTING FOLLOWING A CHANGE IN CONTROL.
(a) In the event of the occurrence of a Change in Control (as
defined below), and provided that your option remains in effect following such
Change in Control or is assumed, continued or substituted for any similar stock
award in connection with the Change in Control, then, if your Continuous Service
ceases by reason of an Involuntary Termination (as defined below) within
eighteen (18) months following the effective date of the Change in Control, your
option (or any substituted option) shall, as of the date of such termination of
Continuous Service, vest in full and become fully exercisable (if applicable) to
the extent not previously vested or exercisable, and shall expire as provided
below.
(b) For purposes of this Section 2, and notwithstanding Section 9 of
this Stock Option Agreement to the contrary, your option shall remain
exercisable until the earlier of (a) the Expiration Date indicated in your Grant
Notice or (b) twelve (12) months after the termination of your Continuous
Service due to your Involuntary Termination.
(c) For purposes of this Stock Option Agreement, a "Change in
Control" shall mean a Corporate Transaction (as defined in Section 11(b) of the
Plan) after which less than fifty percent (50%) of the voting securities of the
continuing, surviving or acquiring entity are owned by persons who held the
voting securities of the Company immediately prior to such Corporate Transaction
in substantially the same proportion as their ownership of the Company's voting
securities prior to the Corporation Transaction.
(d) "Involuntary Termination" shall mean the termination of your
Continuous Service by reason of:
1.
<PAGE> 3
(i) your involuntary dismissal or discharge by the Company for
reasons other than any act of fraud, embezzlement or dishonesty by you, any
unauthorized use or disclosure by you of confidential information or trade
secrets of the Company (or any Affiliate), or any other intentional misconduct
by you adversely affecting the business or affairs of the Company (or any
Affiliate) in a material manner. The foregoing definition shall not be deemed to
be inclusive of all the acts or omissions which the Company (or any Affiliate)
may consider as grounds for your dismissal or discharge.
(ii) your voluntary resignation following (1) a change in your
position with the Company (or Affiliate) which materially reduces your level of
responsibility, (2) a reduction in your level of compensation (including base
salary, fringe benefits and target bonuses under any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (3) a
relocation of your place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected without your
consent.
3. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for capitalization
adjustments, as provided in the Plan.
4. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted), you may elect at any time that is both (i) during the
period of your Continuous Service and (ii) during the term of your option, to
exercise all or part of your option, including the nonvested portion of your
option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred; and
5. ISO EXERCISE LIMITATION.
(a) If your option is designated as an Incentive Stock Option, the
aggregate Fair Market Value of the shares of Common Stock with respect to which
you may exercise your option for the first time during any calendar year, when
added to the aggregate Fair Market Value of the shares of Common Stock subject
to any other options designated as Incentive Stock Options and granted to you
under any stock option plan of the Company or an Affiliate prior to the date of
grant with respect to which such options are exercisable for the first time
during the
2.
<PAGE> 4
same calendar year, shall not exceed $100,000 (the "ISO Exercise Limitation")
unless applicable law requires that your option be exercisable sooner.
(b) The ISO Exercise Limitation shall terminate, and you may fully
exercise your option, as to all shares of Common Stock subject to your option
for which your option would have been exercisable in the absence of the ISO
Exercise Limitation upon the earlier of the following events:
(i) the date of termination of your Continuous Service,
(ii) the day immediately prior to the effective date of a
Corporate Transaction (as defined in the Plan) in which your option is not
assumed or substituted for as provided in the Plan, or
(iii) the day that is ten (10) days prior to the Expiration Date
of your option.
Upon such termination of the ISO Exercise Limitation, your option shall
be deemed a Nonstatutory Stock Option to the extent of the number of shares of
Common Stock subject to your option that would otherwise then exceed the ISO
Exercise Limitation.
6. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
3.
<PAGE> 5
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the aggregate
exercise price, plus accrued interest, shall be due four (4) years from date of
exercise or, at the Company's election, upon termination of your Continuous
Service.
(ii) Interest shall be paid at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any portion of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
(iii) At any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall be made in cash and not by deferred payment.
(iv) In order to elect the deferred payment alternative, you
must, as a part of your written notice of exercise, give notice of the election
of this payment alternative and, in order to secure the payment of the deferred
exercise price to the Company hereunder, if the Company so requests, you must
tender to the Company a promissory note and a security agreement covering the
purchased shares of Common Stock, both in form and substance satisfactory to the
Company, or such other or additional documentation as the Company may request.
7. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
8. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
9. TERM. The term of your option commences on the Date of Grant and
expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your Continuous
Service for any reason other than your Disability or death, provided that if
during any part of such three- (3-) month period your option is not exercisable
solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;
4.
<PAGE> 6
(b) twelve (12) months after the termination of your Continuous
Service due to your Disability;
(c) twelve (12) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.
10. EXERCISE.
(a) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
(d) By exercising your option you agree that the Company (or a
representative of the underwriter(s)) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
5.
<PAGE> 7
or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by you, for a period of
time specified by the underwriter(s) (not to exceed one hundred eighty (180)
days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period.
11. TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
12. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you acquire upon
exercise of your option are subject to any right of first refusal that may be
described in the Company's bylaws in effect at such time the Company elects to
exercise its right. The Company's right of first refusal shall expire on the
Listing Date.
13. RIGHT OF REPURCHASE. To the extent provided in the Company's bylaws
as amended from time to time, the Company shall have the right to repurchase all
or any part of the shares of Common Stock you acquire pursuant to the exercise
of your option.
14. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
15. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.
(b) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or restrictions
of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value,
6.
<PAGE> 8
determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law. If the date of
determination of any tax withholding obligation is deferred to a date later than
the date of exercise of your option, share withholding pursuant to the preceding
sentence shall not be permitted unless you make a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein.
16. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
17. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.
7.
<PAGE> 1
EXHIBIT 99.14
STELLAR SEMICONDUCTOR, INC.
EARLY EXERCISE STOCK PURCHASE AGREEMENT
UNDER THE 1999 EQUITY INCENTIVE PLAN
THIS AGREEMENT is made by and between STELLAR SEMICONDUCTOR, INC., a
California corporation (the "Company"), and _______________ ("Purchaser").
WITNESSETH:
WHEREAS, Purchaser holds a stock option dated _______________ to
purchase shares of common stock ("Common Stock") of the Company (the "Option")
pursuant to the Company's 1999 Equity Incentive Plan (the "Plan"); and
WHEREAS, the Option consists of a Stock Option Grant Notice and a Stock
Option Agreement; and
WHEREAS, Purchaser desires to exercise the Option on the terms and
conditions contained herein; and
WHEREAS, Purchaser wishes to take advantage of the early exercise
provision of the Purchaser's Option and therefore to enter into this Agreement;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. INCORPORATION OF PLAN AND OPTION BY REFERENCE. This Agreement is
subject to all of the terms and conditions as set forth in the Plan and the
Option. If there is a conflict between the terms of this Agreement and/or the
Option and the terms of the Plan, the terms of the Plan shall control. If there
is a conflict between the terms of this Agreement and the terms of the Option,
the terms of the Option shall control. Defined terms not explicitly defined in
this Agreement but defined in the Plan shall have the same definitions as in the
Plan. Defined terms not explicitly defined in this Agreement or the Plan but
defined in the Option shall have the same definitions as in the Option.
2. PURCHASE AND SALE OF COMMON STOCK.
(a) AGREEMENT TO PURCHASE AND SELL COMMON STOCK. Purchaser hereby
agrees to purchase from the Company, and the Company hereby agrees to sell to
Purchaser, shares of the Common Stock of the Company in accordance with the
Notice of Exercise duly executed by Purchaser and attached hereto as an exhibit.
(b) CLOSING. The closing hereunder, including payment for and
delivery of the Common Stock, shall occur at the offices of the Company
immediately following the execution of this Agreement, or at such other time and
place as the parties may mutually agree; provided, however, that if shareholder
approval of the Plan is required before the Option may be exercised, then the
Option may not be exercised, and the closing shall be delayed, until such
1.
<PAGE> 2
shareholder approval is obtained. If such shareholder approval is not obtained
within the time limit specified in the Plan, then this Agreement shall be null
and void.
3. UNVESTED SHARE REPURCHASE OPTION
(a) REPURCHASE OPTION. In the event Purchaser's Continuous Service
terminates, then the Company shall have an irrevocable option (the "Repurchase
Option") for a period of ninety (90) days after said termination (or in the case
of shares issued upon exercise of the Option after such date of termination,
within ninety (90) days after the date of the exercise), or such longer period
as may be agreed to by the Company and the Purchaser, to repurchase from
Purchaser or Purchaser's personal representative, as the case may be, those
shares that Purchaser received pursuant to the exercise of the Option that have
not as yet vested as of such termination date in accordance with the Vesting
Schedule indicated on Purchaser's Stock Option Grant Notice (the "Unvested
Shares).
(b) SHARES REPURCHASABLE AT PURCHASER'S ORIGINAL EXERCISE PRICE. The
Company may repurchase all or any of the Unvested Shares at a price ("Option
Price") equal to the Purchaser's Exercise Price for such shares as indicated on
Purchaser's Stock Option Grant Notice.
4. EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be
exercised by written notice signed by an Officer of the Company and delivered or
mailed as provided herein. Such notice shall identify the number of shares of
Common Stock to be purchased and shall notify Purchaser of the time, place and
date for settlement of such purchase, which shall be scheduled by the Company
within the term of the Repurchase Option set forth above. The Company shall be
entitled to pay for any shares of Common Stock purchased pursuant to its
Repurchase Option at the Company's option in cash or by offset against any
indebtedness owing to the Company by Purchaser (including without limitation any
Note given in payment for the Common Stock), or by a combination of both. Upon
delivery of such notice and payment of the purchase price in any of the ways
described above, the Company shall become the legal and beneficial owner of the
Common Stock being repurchased and all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the
Common Stock being repurchased by the Company, without further action by
Purchaser.
5. CAPITALIZATION ADJUSTMENTS TO COMMON STOCK. In the event of a
"Capitalization Adjustment" affecting the Company's outstanding Common Stock as
a class as designated in the Plan, then any and all new, substituted or
additional securities or other property to which Purchaser is entitled by reason
of Purchaser's ownership of Common Stock shall be immediately subject to the
Repurchase Option and be included in the word "Common Stock" for all purposes of
the Repurchase Option with the same force and effect as the shares of the Common
Stock presently subject to the Repurchase Option, but only to the extent the
Common Stock is, at the time, covered by such Repurchase Option. While the total
Option Price shall remain the same after each such event, the Option Price per
share of Common Stock upon exercise of the Repurchase Option shall be
appropriately adjusted.
6. CORPORATE TRANSACTION. In the event of a "Corporate Transaction" as
designated in the Plan, then the Repurchase Option may be assigned by the
Company to the
2.
<PAGE> 3
successor of the Company (or such successor's parent company), if any, in
connection with such Corporate Transaction. To the extent the Repurchase Option
remains in effect following such Corporate Transaction, it shall apply to the
new capital stock or other property received in exchange for the Common Stock in
consummation of the Corporate Transaction, but only to the extent the Common
Stock was at the time covered by such right. Appropriate adjustments shall be
made to the price per share payable upon exercise of the Repurchase Option to
reflect the Corporate Transaction upon the Company's capital structure;
provided, however, that the aggregate Option Price shall remain the same.
7. ESCROW OF UNVESTED COMMON STOCK. As security for Purchaser's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of Purchaser's Common Stock upon exercise of the Repurchase Option
herein provided for, Purchaser agrees, at the closing hereunder, to deliver to
and deposit with the Secretary of the Company or the Secretary's designee
("Escrow Agent"), as Escrow Agent in this transaction, three (3) stock
assignments duly endorsed (with date and number of shares blank) in the form
attached hereto as an exhibit, together with a certificate or certificates
evidencing all of the Common Stock subject to the Repurchase Option; said
documents are to be held by the Escrow Agent and delivered by said Escrow Agent
pursuant to the Joint Escrow Instructions of the Company and Purchaser set forth
in an exhibit , attached hereto and incorporated by this reference, which
instructions shall also be delivered to the Escrow Agent at the closing
hereunder.
8. RIGHTS OF PURCHASER. Subject to the provisions of the Option,
Purchaser shall exercise all rights and privileges of a shareholder of the
Company with respect to the shares deposited in escrow. Purchaser shall be
deemed to be the holder of the shares for purposes of receiving any dividends
that may be paid with respect to such shares and for purposes of exercising any
voting rights relating to such shares, even if some or all of such shares have
not yet vested and been released from the Company's Repurchase Option.
9. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not sell,
assign, hypothecate, donate, encumber or otherwise dispose of any interest in
the Common Stock while the Common Stock is subject to the Repurchase Option.
After any Common Stock has been released from the Repurchase Option, Purchaser
shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of
any interest in the Common Stock except in compliance with the provisions herein
and applicable securities laws. Furthermore, the Common Stock shall be subject
to any right of first refusal in favor of the Company or its assignees that may
be contained in the Company's Bylaws.
10. RESTRICTIVE LEGENDS. All certificates representing the Common Stock
shall have endorsed thereon legends in substantially the following forms (in
addition to any other legend which may be required by other agreements between
the parties hereto):
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER,
OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS COMPANY.
3.
<PAGE> 4
ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID
WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS
PROVIDED IN THE BYLAWS OF THE COMPANY."
(d) Any legend required by appropriate blue sky officials.
11. INVESTMENT REPRESENTATIONS. In connection with the purchase of the
Common Stock, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Common Stock.
Purchaser is acquiring the Common Stock for investment for Purchaser's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act.
(b) Purchaser understands that the Common Stock has not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the Common
Stock must be held indefinitely unless the Common Stock is subsequently
registered under the Securities Act or an exemption from such registration is
available. Purchaser further acknowledges and understands that the Company is
under no obligation to register the Common Stock. Purchaser understands that the
certificate evidencing the Common Stock will be imprinted with a legend that
prohibits the transfer of the Common Stock unless the Common Stock is registered
or such registration is not required in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and 701,
under the Securities Act, as in effect from time to time, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of issuance of
the securities, such issuance will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
securities exempt under Rule 701 may be sold by Purchaser ninety
4.
<PAGE> 5
(90) days thereafter, subject to the satisfaction of certain of the conditions
specified by Rule 144 and the market stand-off provision described in
Purchaser's Stock Option Agreement.
In the event that the sale of the Common Stock does not qualify under
Rule 701 at the time of purchase, then the Common Stock may be resold by
Purchaser in certain limited circumstances subject to the provisions of Rule
144, which requires, among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the
required holding period under Rule 144 after the Purchaser has purchased, and
made full payment of (within the meaning of Rule 144), the securities to be
sold.
(e) Purchaser further understands that at the time Purchaser wishes
to sell the Common Stock there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public current information requirements of Rule 144 or
701, and that, in such event, Purchaser would be precluded from selling the
Common Stock under Rule 144 or 701 even if the minimum holding period
requirement had been satisfied.
12. MARKET STAND-OFF AGREEMENT. By exercising the Option Purchaser
agrees that the Company (or a representative of the underwriters) may, in
connection with any underwritten registration of the offering of any securities
of the Company under the Securities Act, require that the Purchaser not sell,
dispose of, transfer, make any short sale of, grant any option for the purchase
of, or enter into any hedging or similar transaction with the same economic
effect as a sale, any shares of Common Stock or other securities of the Company
held by Purchaser, for a period of time specified by the underwriter(s) (not to
exceed one hundred eighty (180) days) following the effective date of the
registration statement of the Company filed under the Securities Act. Purchaser
further agrees to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) that are consistent with the
foregoing or that are necessary to give further effect thereto. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to Purchaser's Common Stock until the end of such
period.
13. SECTION 83(b) ELECTION. Purchaser understands that Section 83(a) of
the Code, taxes as ordinary income the difference between the amount paid for
the Common Stock and the fair market value of the Common Stock as of the date
any restrictions on the Common Stock lapse. In this context, "restriction"
includes the right of the Company to buy back the Common Stock pursuant to the
Repurchase Option set forth above. Purchaser understands that Purchaser may
elect to be taxed at the time the Common Stock is purchased, rather than when
and as the Repurchase Option expires, by filing an election under Section 83(b)
(an "83(b) Election") of the Code with the Internal Revenue Service within
thirty (30) days from the date of purchase. Even if the fair market value of the
Common Stock at the time of the execution of this Agreement equals the amount
paid for the Common Stock, the 83(b) Election must be made to avoid income under
Section 83(a) in the future. Purchaser understands that failure to file such an
83(b) Election in a timely manner may result in adverse tax consequences for
Purchaser. Purchaser further understands that Purchaser must file an additional
copy of such 83(b) Election with his or her federal income tax return for the
calendar year in which the date of this Agreement falls. Purchaser acknowledges
that the foregoing is only a summary of the effect of United States federal
income taxation with respect to purchase of the Common Stock hereunder,
5.
<PAGE> 6
and does not purport to be complete. Purchaser further acknowledges that the
Company has directed Purchaser to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, and the tax consequences
of Purchaser's death. Purchaser assumes all responsibility for filing an 83(b)
Election and paying all taxes resulting from such election or the lapse of the
restrictions on the Common Stock.
14. REFUSAL TO TRANSFER. The Company shall not be required (a) to
transfer on its books any shares of Common Stock of the Company which shall have
been transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such shares or to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares shall
have been so transferred.
15. NO EMPLOYMENT RIGHTS. This Agreement is not an employment contract
and nothing in this Agreement shall affect in any manner whatsoever the right or
power of the Company (or a parent or subsidiary of the Company) to terminate
Purchaser's employment for any reason at any time, with or without cause and
with or without notice.
16. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
sent by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at such party's address hereinafter shown below its signature
or at such other address as such party may designate by ten (10) days' advance
written notice to the other party hereto.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Purchaser,
Purchaser's successors, and assigns. The Company may assign the Repurchase
Option hereunder at any time or from time to time, in whole or in part.
(c) ATTORNEYS' FEES; SPECIFIC PERFORMANCE. Purchaser shall reimburse
the Company for all costs incurred by the Company in enforcing the performance
of, or protecting its rights under, any part of this Agreement, including
reasonable costs of investigation and attorneys' fees. It is the intention of
the parties that the Company, upon exercise of the Repurchase Option and payment
of the Option Price, pursuant to the terms of this Agreement, shall be entitled
to receive the Common Stock, in specie, in order to have such Common Stock
available for future issuance without dilution of the holdings of other
shareholders. Furthermore, it is expressly agreed between the parties that money
damages are inadequate to compensate the Company for the Common Stock and that
the Company shall, upon proper exercise of the Repurchase Option, be entitled to
specific enforcement of its rights to purchase and receive said Common Stock.
(d) GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. The parties
agree that any action brought by either party to interpret or enforce any
provision of this Agreement shall be
6.
<PAGE> 7
brought in, and each party agrees to, and does hereby, submit to the
jurisdiction and venue of, the appropriate state or federal court for the
district encompassing the Company's principal place of business.
(e) FURTHER EXECUTION. The parties agree to take all such further
action(s) as may reasonably be necessary to carry out and consummate this
Agreement as soon as practicable, and to take whatever steps may be necessary to
obtain any governmental approval in connection with or otherwise qualify the
issuance of the securities that are the subject of this Agreement.
(f) INDEPENDENT COUNSEL. Purchaser acknowledges that this Agreement
has been prepared on behalf of the Company by Cooley Godward LLP, counsel to the
Company and that Cooley Godward LLP does not represent, and is not acting on
behalf of, Purchaser. Purchaser has been provided with an opportunity to consult
with Purchaser's own counsel with respect to this Agreement.
(g) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes and merges all prior agreements or understandings, whether
written or oral. This Agreement may not be amended, modified or revoked, in
whole or in part, except by an agreement in writing signed by each of the
parties hereto.
(h) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of _______________.
STELLAR SEMICONDUCTOR, INC.
By
------------------------------------------
Title
---------------------------------------
Address: 2355 Oakland Road, Suite #1
San Jose, CA 95131
7.
<PAGE> 8
---------------------------------------
Purchaser
Address:
---------------------------------------
---------------------------------------
ATTACHMENTS:
Exhibit A Notice of Exercise
Exhibit B Assignment Separate from Certificate
Exhibit C Joint Escrow Instructions
[Exhibit D Promissory Note ]
[Exhibit E Stock Pledge Agreement]
8.
<PAGE> 9
EXHIBIT A
NOTICE OF EXERCISE
<PAGE> 10
NOTICE OF EXERCISE
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131 Date of Exercise: _______________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
<TABLE>
<CAPTION>
<S> <C> <C>
Type of option (check one): Incentive |_| Nonstatutory |_|
Stock option dated: _______________
Number of shares as
to which option is
exercised: _______________
Certificates to be
issued in name of: _______________
Total exercise price: $______________
Cash payment delivered
herewith: $______________
[Promissory note delivered
herewith: $______________]
</TABLE>
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Stellar Semiconductor, Inc. 1999
Equity Incentive Plan, (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option, and (iii) if this exercise relates to an incentive
stock option, to notify you in writing within fifteen (15) days after the date
of any disposition of any of the shares of Common Stock issued upon exercise of
this option that occurs within two (2) years after the date of grant of this
option or within one (1) year after such shares of Common Stock are issued upon
exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and "control securities" under
Rule 144 promulgated under the Securities Act. I
1.
<PAGE> 11
warrant and represent to the Company that I have no present intention of
distributing or selling said Shares, except as permitted under the Securities
Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety days (90) after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.
I further agree that, if required by the Company (or a
representative of the underwriters) in connection with the first underwritten
registration of the offering of any securities of the Company under the
Securities Act, I will not sell, dispose of, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any Shares or other
securities of the Company held by me, for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the
Securities Act. I further agree to execute and deliver such other agreements as
may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to my Shares until the end of such
period.
Very truly yours,
------------------------------------
2.
<PAGE> 12
EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
<PAGE> 13
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _______________________ hereby sells, assigns and
transfers unto Stellar Semiconductor, Inc., a California corporation (the
"Company"), pursuant to the Repurchase Option under that certain Early Exercise
Stock Purchase Agreement, dated _______________ by and between the undersigned
and the Company (the "Agreement"), _______________ (_______________) shares of
Common Stock of the Company standing in the undersigned's name on the books of
the Company represented by Certificate No(s). _______________ and does hereby
irrevocably constitute and appoint the Company's Secretary attorney to transfer
said Common Stock on the books of the Company with full power of substitution in
the premises. This Assignment may be used only in accordance with and subject to
the terms and conditions of the Agreement, in connection with the repurchase of
shares of Common Stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company's Repurchase
Option under the Agreement.
Dated: _______________
---------------------------------------------
(Signature)
---------------------------------------------
(Print Name)
INSTRUCTION: Please do not fill in any blanks other than the signature line. The
purpose of this Assignment is to enable the Company to exercise its repurchase
option set forth in the Agreement without requiring additional signatures on the
part of Purchaser.
<PAGE> 14
EXHIBIT C
JOINT ESCROW INSTRUCTIONS
<PAGE> 15
JOINT ESCROW INSTRUCTIONS
Secretary
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
Dear Sir or Madam:
As Escrow Agent for both STELLAR SEMICONDUCTOR, INC., a California
corporation ("Company"), and the undersigned purchaser of Common Stock of the
Company ("Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Early Exercise
Stock Purchase Agreement ("Agreement"), dated _______________ to which a copy of
these Joint Escrow Instructions is attached as Exhibit C, in accordance with the
following instructions:
1. In the event the Company or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement, the Company or its assignee will
give to Purchaser and you a written notice specifying the number of shares of
Common Stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Company. Purchaser and the Company
hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of Common Stock to be transferred, to the Company against
the simultaneous delivery to you of the purchase price (which may include
suitable acknowledgment of cancellation of indebtedness) of the number of shares
of Common Stock being purchased pursuant to the exercise of the Repurchase
Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of Common Stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as the Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
4. This escrow shall terminate upon expiration or exercise in full of
the Repurchase Option, whichever occurs first.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same
1.
<PAGE> 16
to Purchaser and shall be discharged of all further obligations hereunder;
provided, however, that if at the time of termination of this escrow you are
advised by the Company that the property subject to this escrow is the subject
of a pledge or other security agreement, you shall deliver all such property to
the pledgeholder or other person designated by the Company.
6. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company may
appoint any officer or assistant officer of the Company as successor Escrow
Agent and Purchaser hereby confirms the appointment of such successor or
successors as the Purchaser's attorney-in-fact and agent to the full extent of
your appointment.
12. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you are authorized and
2.
<PAGE> 17
directed to retain in your possession without liability to anyone all or any
part of said securities until such dispute shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, including delivery
by express courier or five days after deposit in the United States Post Office,
by registered or certified mail with postage and fees prepaid, addressed to each
of the other parties hereunto entitled at the following addresses, or at such
other addresses as a party may designate by ten days' advance written notice to
each of the other parties hereto:
COMPANY: Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
PURCHASER:
------------------------------------------
------------------------------------------
------------------------------------------
ESCROW AGENT: Secretary
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
15. By signing these Joint Escrow Instructions you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
16. You shall be entitled to employ such legal counsel and other experts
(including without limitation the firm of Cooley Godward LLP) as you may deem
necessary properly to advise you in connection with your obligations hereunder.
You may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor. The Company shall be responsible for all fees
generated by such legal counsel in connection with your obligations hereunder.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
18. This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of California, as such laws are applied
by California courts to contracts made and to be performed entirely in
California by residents of that state.
3.
<PAGE> 18
Very truly yours,
STELLAR SEMICONDUCTOR, INC.
By
---------------------------------
Title
------------------------------
PURCHASER:
------------------------------------
ESCROW AGENT:
- -------------------------------------
4.
<PAGE> 19
EXHIBIT D
PROMISSORY NOTE
<PAGE> 20
PROMISSORY NOTE
$______________ San Jose, CA
[Date]
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to
pay to the order of STELLAR SEMICONDUCTOR, INC., a California corporation (the
"Company"), at 2355 Oakland Road, Suite #1, San Jose, CA 95131, or at such other
place as the holder hereof may designate in writing, in lawful money of the
United States of America and in immediately available funds, the principal sum
of _______________ Dollars ($_______________) together with interest accrued
from the date hereof on the unpaid principal at the rate of _____% per annum, or
the maximum rate permissible by law (which under the laws of the State of
California shall be deemed to be the laws relating to permissible rates of
interest on commercial loans), whichever is less, as follows:
PRINCIPAL REPAYMENT. The outstanding principal amount hereunder shall be
[due and payable in full on _______________] [subject to scheduled
amortized repayments on the dates and in the amounts listed below.
PRINCIPAL REPAYMENT DATE REPAYMENT AMOUNT]; and
INTEREST PAYMENTS. Interest shall be payable [monthly / quarterly /
annually in arrears] and shall be calculated on the basis of a
360-day year for the actual number of days elapsed;
provided, however, that in the event that the undersigned's employment by or
association with the Company or its Affiliate is terminated for any reason prior
to payment in full of this Note, this Note shall be accelerated and all
remaining unpaid principal and interest shall become due and payable immediately
after such termination.
If the undersigned fails to pay any of the principal and accrued
interest when due, the Company, at its sole option, shall have the right to
accelerate this Note, in which event the entire principal balance and all
accrued interest shall become immediately due and payable, and immediately
collectible by the Company pursuant to applicable law.
This Note may be prepaid at any time without penalty. All money paid
toward the satisfaction of this Note shall be applied first to the payment of
interest as required hereunder and then to the retirement of the principal.
The full amount of this Note is secured by a pledge of shares of Common
Stock of the Company, and is subject to all of the terms and provisions of the
Early Exercise Stock Purchase Agreement and Stock Pledge Agreement of even date
herewith between the undersigned and the Company.
1.
<PAGE> 21
The undersigned hereby represents and agrees that the amounts due under
this Note are not consumer debt, and are not incurred primarily for personal,
family or household purposes, but are for business and commercial purposes only.
The undersigned hereby waives presentment, protest and notice of
protest, demand for payment, notice of dishonor and all other notices or demands
in connection with the delivery, acceptance, performance, default or endorsement
of this Note.
The holder hereof shall be entitled to recover, and the undersigned
agrees to pay when incurred, all costs and expenses of collection of this Note,
including without limitation, reasonable attorneys' fees.
This Note shall be governed by, and construed, enforced and interpreted
in accordance with, the laws of the State of California, excluding conflict of
laws principles that would cause the application of laws of any other
jurisdiction.
Signed
-----------------------------
2.
<PAGE> 22
EXHIBIT E
PLEDGE AGREEMENT
<PAGE> 23
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement") is made by
______________________________ ("Pledgor"), in favor of STELLAR SEMICONDUCTOR,
INC., a California corporation with its principal place of business at 2355
Oakland Road, Suite #1, San Jose, CA 95131 ("Pledgee").
WHEREAS, Pledgor has concurrently herewith executed that certain
Promissory Note (the "Note") in favor of Pledgee in the amount of
_______________ Dollars ($_______________) in payment of the purchase price of
_______________ (_______________) shares of the Common Stock of Pledgee; and
WHEREAS, Pledgee is willing to accept the Note from Pledgor, but only
upon the condition, among others, that Pledgor shall have executed and delivered
to Pledgee this Pledge Agreement and the Collateral (as defined below):
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, Pledgor hereby agrees as
follows:
1. As security for the full, prompt and complete payment and performance
when due (whether by stated maturity, by acceleration or otherwise) of all
indebtedness of Pledgor to Pledgee created under the Note (all such indebtedness
being the "Liabilities"), together with, without limitation, the prompt payment
of all expenses, including, without limitation, reasonable attorneys' fees and
legal expenses, incidental to the collection of the Liabilities and the
enforcement or protection of Pledgee's lien in and to the collateral pledged
hereunder, Pledgor hereby pledges to Pledgee, and grants to Pledgee, a first
priority security interest in all of the following (collectively, the "Pledged
Collateral"):
(a) _______________ (_______________) shares of Common Stock of
Pledgee represented by Certificates numbered _______________ (the "Pledged
Shares"), and all dividends, cash, instruments, and other property or proceeds
from time to time received, receivable, or otherwise distributed in respect of
or in exchange for any or all of the Pledged Shares;
(b) all voting trust certificates held by Pledgor evidencing the
right to vote any Pledged Shares subject to any voting trust; and
(c) all additional shares and voting trust certificates from time to
time acquired by Pledgor in any manner (which additional shares shall be deemed
to be part of the Pledged Shares), and the certificates representing such
additional shares, and all dividends, cash, instruments, and other property or
proceeds from time to time received, receivable, or otherwise distributed in
respect of or in exchange for any or all of such shares.
1.
<PAGE> 24
The term "indebtedness" is used herein in its most comprehensive sense
and includes any and all advances, debts, obligations and Liabilities
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether recovery upon such
indebtedness may be or hereafter becomes unenforceable.
2. At any time, without notice, and at the expense of Pledgor, Pledgee
in its name or in the name of its nominee or of Pledgor may, but shall not be
obligated to: (1) collect by legal proceedings or otherwise all dividends
(except cash dividends other than liquidating dividends), interest, principal
payments and other sums now or hereafter payable upon or on account of said
Pledged Collateral; (2) enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any agreement in any wise relating to or
affecting the Pledged Collateral, and in connection therewith may deposit or
surrender control of such Pledged Collateral thereunder, accept other property
in exchange for such Pledged Collateral and do and perform such acts and things
as it may deem proper, and any money or property received in exchange for such
Pledged Collateral shall be applied to the indebtedness or thereafter held by it
pursuant to the provisions hereof; (3) insure, process and preserve the Pledged
Collateral; (4) cause the Pledged Collateral to be transferred to its name or to
the name of its nominee; (5) exercise as to such Pledged Collateral all the
rights, powers and remedies of an owner, except that so long as no default
exists under the Note or hereunder Pledgor shall retain all voting rights as to
the Pledged Shares.
3. Pledgor agrees to pay prior to delinquency all taxes, charges, liens
and assessments against the Pledged Collateral, and upon the failure of Pledgor
to do so, Pledgee at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same.
4. At the option of Pledgee and without necessity of demand or notice,
all or any part of the indebtedness of Pledgor shall immediately become due and
payable irrespective of any agreed maturity, upon the happening of any of the
following events: (1) failure to keep or perform any of the terms or provisions
of this Pledge Agreement; (2) failure to pay any installment of principal or
interest on the Note when due; (3) the levy of any attachment, execution or
other process against the Pledged Collateral; or (4) the insolvency, commission
of an act of bankruptcy, general assignment for the benefit of creditors, filing
of any petition in bankruptcy or for relief under the provisions of Title 11 of
the United States Code of, by, or against Pledgor.
5. In the event of the nonpayment of any indebtedness when due, whether
by acceleration or otherwise, or upon the happening of any of the events
specified in the last preceding section, Pledgee may then, or at any time
thereafter, at its election, apply, set off, collect or sell in one or more
sales, or take such steps as may be necessary to liquidate and reduce to cash in
the hands of Pledgee in whole or in part, with or without any previous demands
or demand of performance or notice or advertisement, the whole or any part of
the Pledged Collateral in such order as Pledgee may elect, and any such sale may
be made either at public or private sale at its place of business or elsewhere,
or at any broker's board or securities exchange, either for cash or upon credit
or for future delivery; provided, however, that if such disposition is
2.
<PAGE> 25
at private sale, then the purchase price of the Pledged Collateral shall be
equal to the public market price then in effect, or, if at the time of sale no
public market for the Pledged Collateral exists, then, in recognition of the
fact that the sale of the Pledged Collateral would have to be registered under
the Securities Act of 1933 and that the expenses of such registration are
commercially unreasonable for the type and amount of collateral pledged
hereunder, Pledgee and Pledgor hereby agree that such private sale shall be at a
purchase price mutually agreed to by Pledgee and Pledgor or, if the parties
cannot agree upon a purchase price, then at a purchase price established by a
majority of three independent appraisers knowledgeable of the value of such
collateral, one named by Pledgor within ten (10) days after written request by
the Pledgee to do so, one named by Pledgee within such 10-day period, and the
third named by the two appraisers so selected, with the appraisal to be rendered
by such body within thirty (30) days of the appointment of the third appraiser.
The cost of such appraisal, including all appraiser's fees, shall be charged
against the proceeds of sale as an expense of such sale. Pledgee may be the
purchaser of any or all Pledged Collateral so sold and hold the same thereafter
in its own right free from any claim of Pledgor or right of redemption. Demands
of performance, notices of sale, advertisements and presence of property at sale
are hereby waived, and Pledgee is hereby authorized to sell hereunder any
evidence of debt pledged to it. Any officer or agent of Pledgee may conduct any
sale hereunder.
6. The proceeds of the sale of any of the Pledged Collateral and all
sums received or collected by Pledgee from or on account of such Pledged
Collateral shall be applied by Pledgee to the payment of expenses incurred or
paid by Pledgee in connection with any sale, transfer or delivery of the Pledged
Collateral, to the payment of any other costs, charges, attorneys' fees or
expenses mentioned herein, and to the payment of the indebtedness or any part
hereof, all in such order and manner as Pledgee in its discretion may determine.
Pledgee shall then pay any balance to Pledgor.
7. Upon the transfer of all or any part of the indebtedness Pledgee may
transfer all or any part of the Pledged Collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such Pledged
Collateral so transferred, and the transferee shall be vested with all the
rights and powers of Pledgee hereunder with respect to such Pledged Collateral
so transferred; but with respect to any Pledged Collateral not so transferred
Pledgee shall retain all rights and powers hereby given.
8. Until all indebtedness shall have been paid in full the power of
sale and all other rights, powers and remedies granted to Pledgee hereunder
shall continue to exist and may be exercised by Pledgee at any time and from
time to time irrespective of the fact that the indebtedness or any part thereof
may have become barred by any statute of limitations, or that the personal
liability of Pledgor may have ceased.
9. Pledgee agrees that so long as no default exists under the Note or
hereunder, the Pledged Shares shall, upon the request of Pledgor, be released
from pledge as the indebtedness is paid. Such releases shall be at the rate of
one share for each _______________ ($_______________) of principal amount of
indebtedness paid. Release from pledge, however, shall not result in release
from the provisions of those certain Joint Escrow Instructions, if any, of
3.
<PAGE> 26
even date herewith among the parties to this Pledge Agreement and the Escrow
Agent named therein.
10. Pledgee may at any time deliver the Pledged Collateral or any part
thereof to Pledgor and the receipt of Pledgor shall be a complete and full
acquittance for the Pledged Collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefor.
11. The rights, powers and remedies given to Pledgee by this Pledge
Agreement shall be in addition to all rights, powers and remedies given to
Pledgee by virtue of any statute or rule of law. Any forbearance or failure or
delay by Pledgee in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of Pledgee shall continue in
full force and effect until such right, power or remedy is specifically waived
by an instrument in writing executed by Pledgee.
12. If any provision of this Pledge Agreement is held to be
unenforceable for any reason, it shall be adjusted, if possible, rather than
voided in order to achieve the intent of the parties to the extent possible. In
any event, all other provisions of this Pledge Agreement shall be deemed valid
and enforceable to the full extent possible.
13. This Pledge Agreement shall be governed by, and construed in
accordance with, the laws of the State of California as applied to contracts
made and performed entirely within the State of California by residents of such
State.
Dated: PLEDGOR
----------------------
------------------------------------
Printed Name:
-----------------------
4.
<PAGE> 1
EXHIBIT 99.15
STELLAR SEMICONDUCTOR, INC.
1997 STOCK OPTION/STOCK ISSUANCE PLAN
(AMENDED AND RESTATED AS OF DECEMBER 17, 1997)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1997 Stock Option/Stock Issuance Plan is intended to promote
the interests of Stellar Semiconductor, Inc., a California corporation, by
providing eligible persons with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which eligible persons may, at
the discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock, and
(ii) the Stock Issuance Program under which eligible persons may,
at the discretion of the Plan Administrator, be issued shares of Common
Stock directly, either through the immediate purchase of such shares or
as a bonus for services rendered the Corporation (or any Parent or
Subsidiary).
B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.
B. The Plan Administrator shall have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper
<PAGE> 2
administration of the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any option or stock issuance thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine, (i)
with respect to the option grants under the Option Grant Program, which eligible
persons are to receive option grants, the time or times when such option grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory
Option, the time or times at which each option is to become exercisable, the
vesting schedule (if any) applicable to the option shares and the maximum term
for which the option is to remain outstanding, and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to
receive such stock issuances, the time or times when those issuances are to be
made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration to be
paid by the Participant for such shares.
C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 5,000,000
shares.
B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.
2.
<PAGE> 3
C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive. In no event shall any such
adjustments be made in connection with the conversion of one or more outstanding
shares of the Corporation's preferred stock into shares of Common Stock.
3.
<PAGE> 4
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
(i) The exercise price per share shall not be less than
eighty-five percent (85%) of the Fair Market Value per share of Common
Stock on the option grant date.
(ii) If the person to whom the option is granted is a 10%
Shareholder, then the exercise price per share shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in cash or check made payable to
the Corporation. Should the Common Stock be registered under Section 12(g) of
the 1934 Act at the time the option is exercised, then the exercise price may
also be paid as follows:
(i) in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date,
or
(ii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required
to be withheld by the Corporation by reason of such exercise and (B) to
the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
4.
<PAGE> 5
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.
C. EFFECT OF TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in Service for any reason
other than death, Disability or Misconduct, then the Optionee shall have
a period of three (3) months following the date of such cessation of
Service during which to exercise each outstanding option held by such
Optionee.
(ii) Should Optionee's Service terminate by reason of Disability,
then the Optionee shall have a period of twelve (12) months following
the date of such cessation of Service during which to exercise each
outstanding option held by such Optionee.
(iii) If the Optionee dies while holding an outstanding option,
then the personal representative of his or her estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or the laws of inheritance shall have a twelve (12)-month period
following the date of the Optionee's death to exercise such option.
(iv) Under no circumstances, however, shall any such option be
exercisable after the specified expiration of the option term.
(v) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding with respect to any and all option shares
for which the option is not otherwise at the time exercisable or in
which the Optionee is not otherwise at that time vested.
5.
<PAGE> 6
(vi) Should Optionee's Service be terminated for Misconduct, then
all outstanding options held by the Optionee shall terminate immediately
and cease to remain outstanding.
2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:
(i) extend the period of time for which the option is to remain
exercisable following Optionee's cessation of Service or death from the
limited period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in
no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to
one or more additional installments in which the Optionee would have
vested under the option had the Optionee continued in Service.
D. SHAREHOLDER RIGHTS. The holder of an option shall have no shareholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. UNVESTED SHARES. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, all or
(at the discretion of the Corporation and with the consent of the Optionee) any
of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.
The Plan Administrator may not impose a vesting schedule upon any option grant
or any shares of Common Stock subject to the option which is more restrictive
than twenty percent (20%) per year vesting, with the initial vesting to occur
not later than one (1) year after the option grant date. However, such
limitation shall not be applicable to any option grants made to individuals who
are officers of the Corporation, non-employee Board members or independent
consultants.
F. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Plan. Such right of first refusal shall be exercisable in accordance with the
terms established by the Plan Administrator and set forth in the document
evidencing such right.
6.
<PAGE> 7
G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.
H. WITHHOLDING. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of any options granted under the Plan shall be subject
to the satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
the Plan shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options shall not be subject to the
terms of this Section II.
A. ELIGIBILITY. Incentive Options may only be granted to Employees.
B. EXERCISE PRICE. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% SHAREHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.
7.
<PAGE> 8
III. CORPORATE TRANSACTION
A. The shares subject to each option outstanding under the Plan at the
time of a Corporate Transaction shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall NOT vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and the Corporation's repurchase rights
with respect to the unvested option shares are concurrently assigned to such
successor corporation (or parent thereof) or (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.
E. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration (in whole or in part) of
one or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights, with the immediate vesting of the shares of
Common Stock subject to those terminated rights) upon the occurrence of a
Corporate Transaction, whether or not those options are to be assumed or
replaced in the Corporate Transaction.
8.
<PAGE> 9
F. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed and the
repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee at the time of such Involuntary Termination shall
immediately terminate on an accelerated basis, and the shares subject to those
terminated rights shall accordingly vest at that time.
G. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
H. The grant of options under the Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.
9.
<PAGE> 10
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.
A. Purchase Price.
1. The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Shareholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.
2. Subject to the provisions of Section I of Article Four,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.
10.
<PAGE> 11
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further shareholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
C. First Refusal Rights. Until such time as the Common Stock is first
registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.
11.
<PAGE> 12
II. CORPORATE TRANSACTION
A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
12.
<PAGE> 13
ARTICLE FOUR
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price or the purchase price for shares issued to such person
under the Plan by delivering a full-recourse, interest-bearing promissory note
payable in one or more installments and secured by the purchased shares.
However, any promissory note delivered by a consultant must be secured by
collateral in addition to the purchased shares of Common Stock. In no event
shall the maximum credit available to the Optionee or Participant exceed the sum
of (i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's shareholders. If
such shareholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.
B. The Plan shall terminate upon the earliest of (i) the expiration of
the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. All options and unvested stock
issuances outstanding at that time under the Plan shall continue to have full
force and effect in accordance with the provisions of the documents evidencing
such options or issuances.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require shareholder approval
pursuant to applicable laws and regulations.
13.
<PAGE> 14
B. The Plan was amended and restated by the Board on Dec 17, 1997 to
effect the following changes: (i) increase the maximum number of shares of
Common Stock authorized for issuance over the term of the Plan from 3,500,000
shares to 5,000,000 shares, which share increase was approved by the
shareholders on October 23, 1997, and (ii) change the name of the Plan from the
RSSI Acquisition Corporation 1997 Stock Option/Stock Issuance Plan to the
Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance Plan.
C. Options may be granted under the Option Grant Program and shares may
be issued under the Stock Issuance Program which are in each instance in excess
of the number of shares of Common Stock then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be
held in escrow until there is obtained shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such shareholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
V. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of any options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under
the Plan and the issuance of any shares of Common Stock (i) upon the exercise of
any option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
14.
<PAGE> 15
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant 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 Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income
statement at least annually to each individual holding an outstanding option
under the Plan, unless such individual is a key Employee whose duties in
connection with the Corporation (or any Parent or Subsidiary) assure such
individual access to equivalent information.
15.
<PAGE> 16
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CODE shall mean the Internal Revenue Code of 1986, as amended.
C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean Stellar Semiconductor, Inc., a California
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Stellar Semiconductor, Inc. which shall by appropriate
action adopt the Plan.
G. DISABILITY shall mean the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.
J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per
A-1.
<PAGE> 17
share of Common Stock on the date in question, as such price is reported
by the National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate.
K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
L. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
target bonuses under any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of such
individual's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected without the
individual's consent.
M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
A-2.
<PAGE> 18
N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
O. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
P. OPTION GRANT PROGRAM shall mean the option grant program in effect
under the Plan.
Q. OPTIONEE shall mean any person to whom an option is granted under the
Plan.
R. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.
T. PLAN shall mean the Corporation's 1997 Stock Option/Stock Issuance
Plan, as set forth in this document.
U. PLAN ADMINISTRATOR shall mean either the Board or the Committee
acting in its capacity as administrator of the Plan.
V. SERVICE shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
W. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.
X. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
Y. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.
Z. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3.
<PAGE> 19
AA. 10% SHAREHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
A-4.
<PAGE> 1
Exhibit 99.16
STELLAR SEMICONDUCTOR, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Stellar Semiconductor, Inc.
(the "Corporation"):
Optionee:
Grant Date:
Vesting Commencement Date:
Exercise Price: $ per share
Number of Option Shares: shares
Expiration Date:
Type of Option:
Date Exercisable: Immediately Exercisable
Vesting Schedule: The Option Shares shall be unvested and subject
to repurchase by the Corporation at the Exercise Price paid per
share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with
respect to, (i) twenty-five percent (25%) of the Option Shares
upon Optionee's completion of one (1) year of Service measured
from the Vesting Commencement Date and (ii) the balance of the
Option Shares in a series of thirty-six (36) successive equal
monthly installments upon Optionee's completion of each
additional month of Service over the thirty-six (36)-month period
measured from the first anniversary of the Vesting Commencement
Date. In no event shall any additional Option Shares vest after
Optionee's cessation of Service.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the Stellar Semiconductor, Inc.
1997 Stock Option/Stock Issuance Plan (the "Plan"). Optionee further agrees to
be bound by the terms of the Plan and the terms of the Option as set forth in
the Stock Option Agreement attached hereto as Exhibit A.
Optionee understands that any Option Shares purchased under the
Option will be subject to the terms set forth in the Stock Purchase Agreement
attached hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of
the Plan in the form attached hereto as Exhibit C.
<PAGE> 2
REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS
ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE
AGREEMENT.
No Employment or Service Contract. Nothing in this Notice or in
the attached Stock Option Agreement or Plan shall confer upon 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 Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED:_____________________, 199
STELLAR SEMICONDUCTOR, INC.
By:___________________________________
Title:________________________________
________________________________
OPTIONEE
Address:______________________________
______________________________
ATTACHMENTS
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - STOCK PURCHASE AGREEMENT
EXHIBIT C - 1997 STOCK OPTION/STOCK ISSUANCE PLAN
2.
<PAGE> 3
EXHIBIT A
STOCK OPTION AGREEMENT
<PAGE> 4
EXHIBIT B
STOCK PURCHASE AGREEMENT
<PAGE> 5
EXHIBIT C
1997 STOCK OPTION/STOCK ISSUANCE PLAN
<PAGE> 6
STELLAR SEMICONDUCTOR, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. During Optionee's lifetime, this option
shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death.
4. DATES OF EXERCISE. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason
(other than death, Disability or Misconduct) while this option is outstanding,
then Optionee shall have a
<PAGE> 7
period of three (3) months (commencing with the date of such cessation of
Service) during which to exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.
(b) Should Optionee die while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons to
whom the option is transferred pursuant to Optionee's will or in accordance with
the laws of inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during which to
exercise this option. In no event shall this option be exercisable at any time
after the Expiration Date.
Note: Exercise of this option on a date later than three (3) months
following cessation of Service due to Disability will result in loss of
favorable Incentive Option treatment, unless such Disability constitutes
Permanent Disability. In the event that Incentive Option treatment is
not available, this option will be taxed as a Non-Statutory Option upon
exercise.
(d) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares in which Optionee is, at the time of Optionee's cessation of
Service, vested pursuant to the Vesting Schedule specified in the Grant Notice
or the special vesting acceleration provisions of Paragraph 6. Upon the
expiration of such limited exercise period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding for any vested
Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in the Option Shares at the time of Optionee's cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.
(e) Should Optionee's Service be terminated for Misconduct, then
this option shall terminate immediately and cease to remain outstanding.
6. ACCELERATED VESTING.
(a) In the event of any Corporate Transaction, the Option Shares
at the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall, immediately prior to the effective date
of the Corporate Transaction, become fully exercisable for all of those Option
Shares and may be exercised for any or all of those Option Shares as
fully-vested shares of Common Stock. However, the Option Shares shall NOT vest
on such an accelerated basis if and to the extent: (i) this option is assumed by
the successor corporation (or parent thereof) in the Corporate Transaction and
the Corporation's repurchase rights with respect to the unvested Option Shares
are assigned to such successor corporation (or parent
2.
<PAGE> 8
thereof) or (ii) this option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
Option Shares at the time of the Corporate Transaction (the excess of the Fair
Market Value of those Option Shares over the Exercise Price payable for such
shares) and provides for subsequent payout in accordance with the same Vesting
Schedule applicable to those unvested Option Shares as set forth in the Grant
Notice.
(b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
(d) The Option Shares may also vest upon an accelerated basis in
accordance with the terms and conditions of any special addendum attached to
this Agreement.
(e) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. SHAREHOLDER RIGHTS. The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Purchase
Agreement for the Option Shares for which the option is exercised.
3.
<PAGE> 9
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation; or
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in
accordance with Paragraph 14.
Should the Common Stock be registered under Section 12(g) of the
1934 Act at the time the option is exercised, then the Exercise Price
may also be paid as follows:
(C) in shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) to the extent the option is exercised for vested
Option Shares, through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable Federal, state and
local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Purchase Agreement delivered to
the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than
Optionee) have the right to exercise this option.
(iv) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it
to comply with the applicable requirements of Federal and state
securities laws.
4.
<PAGE> 10
(v) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the
satisfaction of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE
OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
13. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option
5.
<PAGE> 11
Shares by delivering a full-recourse, interest-bearing promissory note secured
by those Option Shares. The payment schedule in effect for any such promissory
note shall be established by the Plan Administrator in its sole discretion.
15. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
16. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
17. SHAREHOLDER APPROVAL. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the shareholders, then
this option shall be void with respect to such excess shares, unless shareholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
18. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is exercised
for one or more Option Shares: (i) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability.
(b) This option shall not become exercisable in the calendar
year in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which this option would
otherwise first become exercisable in such calendar year would, when added to
the aggregate value (determined as of the respective date or dates of grant) of
the Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.
6.
<PAGE> 12
(c) Should Optionee hold, in addition to this option, one or
more other options to purchase Common Stock which become exercisable for the
first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
7.
<PAGE> 13
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean Stellar Semiconductor, Inc., a California
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Stellar Semiconductor, Inc. which shall by appropriate
action adopt the Plan.
G. DISABILITY shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.
H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price payable per Option Share
as specified in the Grant Notice.
A-1.
<PAGE> 14
K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate.
M. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.
N. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
P. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
A-2.
<PAGE> 15
Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
S. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option.
T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. PLAN shall mean the Corporation's 1997 Stock Option/Stock Issuance
Plan.
W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
X. PURCHASE AGREEMENT shall mean the stock purchase agreement in
substantially the form of Exhibit B to the Grant Notice.
Y. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.
Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.
AA. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
BB. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.
A-3.
<PAGE> 1
EXHIBIT 99.17
STELLAR SEMICONDUCTOR, INC.
STOCK PURCHASE AGREEMENT
AGREEMENT made this ____ day of ___________, _______, by and between
Stellar Semiconductor, Inc., a California corporation, and _________("Optionee")
under the Corporation's 1997 Stock Option/Stock Issuance Plan.
All references to quantities of shares and exercise price per share
reflect an adjustment under the Plan for the 2-for-1 split of the Company's
common stock effective May 28, 1998.
A. EXERCISE OF OPTION
1. EXERCISE. Optionee hereby purchases __________ (_________) shares
of Common Stock (the "Purchased Shares") pursuant to that certain option (the
"Option") granted Optionee on __________ (the "Grant Date") to purchase up to
__________shares of Common Stock (the "Option Shares") under the Plan at the
exercise price of $_____ per share (the "Exercise Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.
3. SHAREHOLDER RIGHTS. Until such time as the Corporation exercises
the Repurchase Right or the First Refusal Right, Optionee (or any successor in
interest) shall have all the rights of a shareholder (including voting, dividend
and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
B. SECURITIES LAW COMPLIANCE
1. RESTRICTED SECURITIES. The Purchased Shares have not been
registered under the 1933 Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for stock
issuances under compensatory benefit plans such as the Plan. Optionee hereby
confirms that Optionee has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased Shares are first registered under the Federal securities
laws or unless an exemption from such registration is available. Accordingly,
Optionee hereby acknowledges that Optionee is prepared to hold the Purchased
Shares for an indefinite period and that Optionee is aware that SEC Rule 144
issued under the 1933 Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the Purchased
Shares from the registration requirements of the 1933 Act.
<PAGE> 2
2. RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES. Optionee shall make
no disposition of the Purchased Shares (other than a Permitted Transfer) unless
and until there is compliance with all of the following requirements:
(i) Optionee shall have provided the Corporation with a written
summary of the terms and conditions of the proposed disposition.
(ii) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.
(iii) Optionee shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation, that
(a) the proposed disposition does not require registration of the
Purchased Shares under the 1933 Act or (b) all appropriate action
necessary for compliance with the registration requirements of the 1933
Act or any exemption from registration available under the 1933 Act
(including Rule 144) has been taken.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.
3. RESTRICTIVE LEGENDS. The stock certificates for the Purchased Shares
shall be endorsed with one or more of the following restrictive legends:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares may not be sold or offered
for sale in the absence of (a) an effective registration statement for
the shares under such Act, (b) a "no action" letter of the Securities
and Exchange Commission with respect to such sale or offer or (c)
satisfactory assurances to the Corporation that registration under such
Act is not required with respect to such sale or offer."
"The shares represented by this certificate are subject to certain
repurchase rights and rights of first refusal granted to the
Corporation and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the
terms of a written agreement dated January 11, 2000 between the
Corporation and the registered holder of the shares (or the predecessor
in interest to the shares). A copy of such agreement is maintained at
the Corporation's principal corporate offices."
C. TRANSFER RESTRICTIONS
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right. In addition,
Purchased Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise disposed of in contravention of
the First Refusal Right or the Market Stand-Off.
2
<PAGE> 3
2. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to (i) the Repurchase
Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same
extent such shares would be so subject if retained by Optionee.
3. MARKET STAND-OFF.
a. In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such restriction (the "Market Stand-Off") shall
be in effect for such period of time from and after the effective date of the
final prospectus for the offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period exceed one hundred eighty
(180) days and the Market Stand-Off shall in all events terminate two (2) years
after the effective date of the Corporation's initial public offering.
b. Owner shall be subject to the Market Stand-Off provided and
only if the officers and directors of the Corporation are also subject to
similar restrictions.
c. Any new, substituted or additional securities which are by
reason of any Recapitalization or Reorganization distributed with respect to the
Purchased Shares shall be immediately subject to the Market Stand-Off, to the
same extent the Purchased Shares are at such time covered by such provisions.
d. In order to enforce the Market Stand-Off, the Corporation may
impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. REPURCHASE RIGHT
1. GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date Optionee ceases for any reason to remain in Service or (if
later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Exercise Price any or all of the Purchased
Shares in which Optionee is not, at the time of his or her cessation of Service,
vested in accordance with the Vesting Schedule applicable to those shares or the
special acceleration provisions of Paragraph D.6 of this Agreement (such shares
to be hereinafter referred to as the "Unvested Shares").
3
<PAGE> 4
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Exercise Price previously paid for the
Unvested Shares which are to be repurchased from Owner.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall, however, remain subject to
(i) the First Refusal Right and (ii) the Market Stand-Off.
4. AGGREGATE VESTING LIMITATION. If the Option is exercised in more
than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number of Purchased Shares as to
which Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which Optionee would otherwise at the time be
vested, in accordance with the Vesting Schedule, had all the Purchased Shares
(including those acquired under the Prior Purchase Agreements) been acquired
exclusively under this Agreement.
5. RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the Repurchase Right and any
escrow requirements hereunder, but only to the extent the Purchased Shares are
at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of Purchased Shares subject to this Agreement and to the price per share
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the same.
6. CORPORATE TRANSACTION.
a. The Repurchase Right shall automatically terminate in its
entirety, and all the Purchased Shares shall vest in full, immediately prior to
the consummation of any Corporate Transaction, except to the extent the
Repurchase Right is to be assigned to the successor entity in such Corporate
Transaction.
b. To the extent the Repurchase Right remains in effect following
a Corporate Transaction, such right shall apply to any new securities or other
property (including
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<PAGE> 5
any cash payments) received in exchange for the Purchased Shares in consummation
of the Corporate Transaction, but only to the extent the Purchased Shares are at
the time covered by such right. Appropriate adjustments shall be made to the
price per share payable upon exercise of the Repurchase Right to reflect the
effect of the Corporate Transaction upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the same. The
new securities or other property (including any cash payments) issued or
distributed with respect to the Purchased Shares in consummation of the
Corporate Transaction shall be immediately deposited in escrow with the
Corporation (or the successor entity) and shall not be released from escrow
until Optionee vests in such securities or other property in accordance with the
same Vesting Schedule in effect for the Purchased Shares.
c. The Repurchase Right may also terminate on an accelerated
basis, and the Purchased Shares shall immediately vest in full, in accordance
with the terms and conditions of any special addendum attached to this
Agreement.
E. RIGHT OF FIRST REFUSAL
1. GRANT. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which Optionee has vested in accordance with
the provisions of Article D. For purposes of this Article E, the term "transfer"
shall include any sale, assignment, pledge, encumbrance or other disposition of
the Purchased Shares intended to be made by Owner, but shall not include any
Permitted Transfer.
2. NOTICE OF INTENDED DISPOSITION. In the event any Owner of
Purchased Shares in which Optionee has vested desires to accept a bona fide
third-party offer for the transfer of any or all of such shares (the Purchased
Shares subject to such offer to be hereinafter referred to as the "Target
Shares"), Owner shall promptly (i) deliver to the Corporation written notice
(the "Disposition Notice") of the terms of the offer, including the purchase
price and the identity of the third-party offeror, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party offeror
would not be in contravention of the provisions set forth in Articles B and C.
3. EXERCISE OF THE FIRST REFUSAL RIGHT. The Corporation shall, for
a period of twenty-five (25) days following receipt of the Disposition Notice,
have the right to repurchase any or all of the Target Shares subject to the
Disposition Notice upon the same terms as those specified therein or upon such
other terms (not materially different from those specified in the Disposition
Notice) to which Owner consents. Such right shall be exercisable by delivery of
written notice (the "Exercise Notice") to Owner prior to the expiration of the
twenty-five (25)-day exercise period. If such right is exercised with respect to
all the Target Shares, then the Corporation shall effect the repurchase of such
shares, including payment of the purchase price, not more than five (5) business
days after delivery of the Exercise Notice; and at such time the certificates
representing the Target Shares shall be delivered to the Corporation.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If Owner
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<PAGE> 6
and the Corporation cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by Owner and the Corporation or,
if they cannot agree on an appraiser within twenty (20) days after the
Corporation's receipt of the Disposition Notice, each shall select an appraiser
of recognized standing and the two (2) appraisers shall designate a third
appraiser of recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by Owner and the
Corporation. The closing shall then be held on the later of (i) the fifth (5th)
business day following delivery of the Exercise Notice or (ii) the fifth (5th)
business day after such valuation shall have been made.
4. NON-EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Exercise Notice is not given to Owner prior to the expiration of the twenty-five
(25)-day exercise period, Owner shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms (including
the purchase price) no more favorable to such third-party offeror than those
specified in the Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the provisions of Articles
B and C. The third-party offeror shall acquire the Target Shares free and clear
of the First Refusal Right, but the acquired shares shall remain subject to the
provisions of Article B and Paragraph C.3. In the event Owner does not effect
such sale or disposition of the Target Shares within the specified thirty
(30)-day period, the First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Owner until such right lapses.
5. PARTIAL EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
Corporation makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within five (5) business days after Owner's receipt of the Exercise
Notice, to effect the sale of the Target Shares pursuant to either of the
following alternatives:
(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of Paragraph E.4, as if the
Corporation did not exercise the First Refusal Right; or
(ii) sale to the Corporation of the portion of the Target Shares
which the Corporation has elected to purchase, such sale to be effected
in substantial conformity with the provisions of Paragraph E.3. The
First Refusal Right shall continue to be applicable to any subsequent
disposition of the remaining Target Shares until such right lapses.
Owner's failure to deliver timely notification to the Corporation shall
be deemed to be an election by Owner to sell the Target Shares pursuant to
alternative (i) above.
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<PAGE> 7
6. RECAPITALIZATION/REORGANIZATION.
a. Any new, substituted or additional securities or other
property which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the First Refusal Right,
but only to the extent the Purchased Shares are at the time covered by such
right.
b. In the event of a Reorganization, the First Refusal Right
shall remain in full force and effect and shall apply to the new capital stock
or other property received in exchange for the Purchased Shares in consummation
of the Reorganization, but only to the extent the Purchased Shares are at the
time covered by such right.
7. LAPSE. The First Refusal Right shall lapse upon the earliest to
occur of (i) the first date on which shares of the Common Stock are held of
record by more than five hundred (500) persons, (ii) a determination is made by
the Board that a public market exists for the outstanding shares of Common Stock
or (iii) a firm commitment underwritten public offering, pursuant to an
effective registration statement under the 1933 Act, covering the offer and sale
of the Common Stock in the aggregate amount of at least ten million dollars
($10,000,000). However, the Market Stand-Off shall continue to remain in full
force and effect following the lapse of the First Refusal Right.
F. SPECIAL TAX ELECTION
The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax consequences applicable to the
acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit II. OPTIONEE 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. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.
G. GENERAL PROVISIONS
1. ASSIGNMENT. The Corporation may assign the Repurchase Right
and/or the First Refusal Right to any person or entity selected by the Board,
including (without limitation) one or more shareholders of the Corporation. If
the assignee of the Repurchase Right is other than (i) a wholly owned subsidiary
of the Corporation or (ii) the parent corporation owning one hundred percent
(100%) of the Corporation's outstanding capital stock, then such assignee must
make a cash payment to the Corporation, upon the assignment of the Repurchase
Right, in an amount equal to the excess (if any) of (i) the Fair Market Value of
the Purchased Shares at the time subject to the assigned Repurchase Right over
(ii) the aggregate repurchase price payable for the Purchased Shares.
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<PAGE> 8
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or
in the Plan shall confer upon 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 Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
3. NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4. NO WAIVER. The failure of the Corporation in any instance to
exercise the Repurchase Right or the First Refusal Right shall not constitute a
waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and Optionee. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature.
5. CANCELLATION OF SHARES. If the Corporation shall make available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased 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
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
H. MISCELLANEOUS PROVISIONS
1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.
2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.
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<PAGE> 9
3. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
STELLAR SEMICONDUCTOR, INC.
By:
---------------------------------
Title:
------------------------------
Address:
----------------------------
----------------------------
-------------------------------------
OPTIONEE
Address:
-----------------------------
-----------------------------
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<PAGE> 10
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right of the Corporation (or its assigns) to purchase any Purchased Shares in
which Optionee is not vested at time of his or her cessation of Service.
----------------------------------
OPTIONEE'S SPOUSE
Address:
-------------------------
----------------------------------
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EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED (NAME) hereby sell(s), assign(s) and transfer(s)
unto Stellar Semiconductor, Inc. (the "Corporation"), _________ (____) shares of
the Common Stock of the Corporation standing in his or her name on the books of
the Corporation represented by Certificate No. __________ herewith and do(es)
hereby irrevocably constitute and appoint _______________ Attorney to transfer
the said stock on the books of the Corporation with full power of substitution
in the premises.
Dated:
---------------------------
Signature
----------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.
<PAGE> 12
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Purchase Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. CORPORATION shall mean Stellar Semiconductor, Inc., a California
corporation, any successor corporation to all or substantially all of the assets
or voting stock of Stellar Semiconductor, Inc. which shall by appropriate action
adopt the Plan.
G. DISPOSITION NOTICE shall have the meaning assigned to such term in
Paragraph E.2.
H. EXERCISE NOTICE shall have the meaning assigned to such term in
Paragraph E.3.
I. EXERCISE PRICE shall have the meaning assigned to such term in
Paragraph A.1.
J. FAIR MARKET VALUE of a share of Common Stock on any relevant date,
prior to the initial public offering of the Common Stock, shall be determined by
the Plan Administrator after taking into account such factors as it shall deem
appropriate.
K. FIRST REFUSAL RIGHT shall mean the right granted to the Corporation
in accordance with Article E.
L. GRANT DATE shall have the meaning assigned to such term in Paragraph
A.1.
M. GRANT NOTICE shall mean the Notice of Grant of Stock Option pursuant
to which Optionee has been informed of the basic terms of the Option.
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N. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
O. MARKET STAND-OFF shall mean the market stand-off restriction
specified in Paragraph C.3.
P. 1933 ACT shall mean the Securities Act of 1933, as amended.
Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
S. OPTION shall have the meaning assigned to such term in Paragraph
A.1.
T. OPTION AGREEMENT shall mean all agreements and other documents
evidencing the Option.
U. OPTIONEE shall mean the person to whom the Option is granted under
the Plan.
V. OWNER shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.
W. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
X. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.
Y. PLAN shall mean the Corporation's 1997 Stock Option/Stock Issuance
Plan.
Z. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.
AA. PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such
term in Paragraph D.4.
BB. PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.
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<PAGE> 14
CC. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
DD. REORGANIZATION shall mean any of the following transactions:
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to a person or persons
different from the persons holding those securities immediately prior
to the merger, or
(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.
EE. REPURCHASE RIGHT shall mean the right granted to the Corporation in
accordance with Article D.
FF. SEC shall mean the Securities and Exchange Commission.
GG. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non--employee member
of the board of directors or an independent consultant.
HH. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. TARGET SHARES shall have the meaning assigned to such term in
Paragraph E.2.
JJ. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.
KK. UNVESTED SHARES shall have the meaning assigned to such term in
Paragraph D.1.
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<PAGE> 15
ADDENDUM
TO
STOCK PURCHASE AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Purchase Agreement dated ___________,
______(the "Purchase Agreement") by and between Stellar Semiconductor, Inc. (the
"Corporation") and ("Optionee") evidencing the shares of Common Stock purchased
on such date by Optionee pursuant to the option granted to him or her under the
Corporation's 1997 Stock Option/Stock Issuance Plan, and such provisions shall
be effective immediately. All capitalized terms in this Addendum, to the extent
not otherwise defined herein, shall have the meanings assigned to such terms in
the Purchase Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION
1. To the extent the Repurchase Right is assigned to the successor
corporation (or parent thereof) in connection with a Corporate Transaction, no
accelerated vesting of the Purchased Shares shall occur upon such Corporate
Transaction, and the Repurchase Right shall continue to remain in full force and
effect in accordance with the provisions of the Purchase Agreement. Optionee
shall, over his or her period of Service following the Corporate Transaction.
continue to vest in the Purchased Shares in one or more installments in
accordance with the provisions 6f the Purchase Agreement. However, upon an
Involuntary Termination of Optionee's Service within eighteen (18) months
following the Corporate Transaction, the Repurchase Right shall terminate
automatically and all the Purchased Shares shall immediately vest in full.
2. For purposes of this Addendum, the following definitions shall be in
effect:
An INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than for Misconduct, or
(ii) Optionee's voluntary resignation following (A) a change in
his or her position with the Corporation (or Parent or Subsidiary
employing Participant) which materially reduces his or her level of
responsibility, (B) a reduction in Optionee's level of compensation
(including base salary, fringe benefits and target bonuses under any
corporate-performance based incentive programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment by
more than fifty (50) miles, provided and only if such change, reduction
or relocation is effected by the Corporation without Optionee's
consent.
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MISCONDUCT shall mean the termination of Optionee's Service by reason
of Optionee's commission of any act of fraud, embezzlement or dishonesty, any
unauthorized use or disclosure by Optionee Of confidential information or trade
secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of Optionee or any other individual in
the Service of the Corporation (or any Parent or Subsidiary).
IN WITNESS WHEREOF, Stellar Semiconductor, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
STELLAR SEMICONDUCTOR, INC.
By:
--------------------------------
Title:
-----------------------------
EFFECTIVE DATE: , 200
----------- --
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<PAGE> 17
JOINT ESCROW INSTRUCTIONS
Secretary
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
Dear Sir or Madam:
As Escrow Agent for both STELLAR SEMICONDUCTOR, INC., a California
corporation ("Company"), and the undersigned purchaser of Common Stock of the
Company ("Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Stock Purchase
Agreement ("Agreement"), dated __________, _____ to which a copy of these Joint
Escrow Instructions is attached, in accordance with the following instructions:
In the event the Company or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement, the Company or its assignee will
give to Purchaser and you a written notice specifying the number of shares of
Common Stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Company. Purchaser and the Company
hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
1. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of Common Stock to be transferred, to the Company against
the simultaneous delivery to you of the purchase price (which may include
suitable acknowledgment of cancellation of indebtedness) of the number of shares
of Common Stock being purchased pursuant to the exercise of the Repurchase
Option.
2. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of Common Stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as the Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
3. This escrow shall terminate upon expiration or exercise in full of
the Repurchase Option, whichever occurs first.
4. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that
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<PAGE> 18
if at the time of termination of this escrow you are advised by the Company that
the property subject to this escrow is the subject of a pledge or other security
agreement, you shall deliver all such property to the pledgeholder or other
person designated by the Company.
5. Except as otherwise provided in these Joint Escrow Instructions,
your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.
6. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
7. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
8. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
9. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
10. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company may
appoint any officer or assistant officer of the Company as successor Escrow
Agent and Purchaser hereby confirms the appointment of such successor or
successors as the Purchaser's attorney-in-fact and agent to the full extent of
your appointment.
11. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
12. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you are authorized and directed to retain in your possession without
liability to anyone all or any part of said securities
A-7
<PAGE> 19
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
13. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, including
delivery by express courier or five days after deposit in the United States Post
Office, by registered or certified mail with postage and fees prepaid, addressed
to each of the other parties hereunto entitled at the following addresses, or at
such other addresses as a party may designate by ten days' advance written
notice to each of the other parties hereto:
COMPANY: Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
PURCHASER:
-------------------------------------
-------------------------------------
-------------------------------------
ESCROW AGENT: Secretary
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131
14. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
15. You shall be entitled to employ such legal counsel and other
experts (including without limitation the firm of Cooley Godward LLP) as you may
deem necessary properly to advise you in connection with your obligations
hereunder. You may rely upon the advice of such counsel, and may pay such
counsel reasonable compensation therefor. The Company shall be responsible for
all fees generated by such legal counsel in connection with your obligations
hereunder.
16. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
A-8
<PAGE> 20
17. This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of California, as such laws are applied
by California courts to contracts made and to be performed entirely in
California by residents of that state.
Very truly yours,
STELLAR SEMICONDUCTOR, INC.
By:
-----------------------------------
Title:
--------------------------------
OPTIONEE:
---------------------------------------
ESCROW AGENT:
- ----------------------------------------
A-9
<PAGE> 21
NOTICE OF EXERCISE
Stellar Semiconductor, Inc.
2355 Oakland Road, Suite #1
San Jose, CA 95131 Date of Exercise: _________, ____
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated: ______________
Number of shares as
to which option is
exercised: ______________
Certificates to be
issued in name of: ______________
Total exercise price: $_____________
Cash payment delivered
herewith: $_____________
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Stellar Semiconductor, Inc. 1997
Stock Option/Stock Issuance Plan, (ii) to provide for the payment by me to you
(in the manner designated by you) of your withholding obligation, if any,
relating to the exercise of this option, and (iii) if this exercise relates to
an incentive stock option, to notify you in writing within fifteen (15) days
after the date of any disposition of any of the shares of Common Stock issued
upon exercise of this option that occurs within two (2) years after the date of
grant of this option or within one (1) year after such shares of Common Stock
are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and "control securities" under
Rule 144 promulgated under the Securities Act. I
A-10
<PAGE> 22
warrant and represent to the Company that I have no present intention of
distributing or selling said Shares, except as permitted under the Securities
Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety days (90) after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.
(a) I further agree that, if required by the Company (or a
representative of the underwriters) in connection with the first underwritten
registration of the offering of any securities of the Company under the
Securities Act, I will not sell, dispose of, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any Shares or other
securities of the Company held by me, for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the
Securities Act. I further agree to execute and deliver such other agreements as
may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to my Shares until the end of such
period.
Very truly yours,
------------------------------------
A-11
<PAGE> 1
EXHIBIT 99.18
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
BLUESTEEL NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 1st day
of March, 2000 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 BlueSteel
Networks, Inc., a Delaware corporation ("BlueSteel"), which were granted to
Optionee under the BlueSteel Networks, Inc. 1999 Stock Incentive Plan (the
"Plan") and are each evidenced by the following agreement between BlueSteel and
Optionee: a Stock Option Agreement (the "Option Agreement").
WHEREAS, BlueSteel has been acquired by Broadcom through the
merger (the "Merger") of BlueSteel with and into Broadcom, pursuant to the
Merger Agreement and Plan of Reorganization dated as of January 16, 2000 by and
between Broadcom and BlueSteel (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of BlueSteel 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
.04331554 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of BlueSteel Common Stock ("BlueSteel 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 BlueSteel Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "BlueSteel 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 BlueSteel under each
<PAGE> 2
of the BlueSteel Options. In connection with such assumption, the number of
shares of Broadcom Stock purchasable under each BlueSteel 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 BlueSteel 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 BlueSteel Option shall also be as indicated for
that option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed
BlueSteel 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 BlueSteel Stock subject to the BlueSteel
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 BlueSteel 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 BlueSteel Options under Section 422 of the Internal
Revenue Code of 1986, as amended.
3. The following provisions shall govern each BlueSteel Option
hereby assumed by Broadcom:
(a) Unless the context otherwise requires,
all references in each Option Agreement and in the Plan (as
incorporated into such Option Agreement) (i) to the "Company"
shall mean Broadcom, (ii) to "Common Stock" shall mean
Broadcom Stock, (iii) to the "Board" shall mean the Board of
Directors of Broadcom and (iv) to the "Committee" shall mean
the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date
of each assumed BlueSteel Option and all other provisions
which govern either the exercise or the termination of the
assumed BlueSteel Option shall remain the same as set forth in
the Option Agreement applicable to that option, and the
provisions of the Option Agreement shall accordingly govern
and control Optionee's rights under this Stock Option
Assumption Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option
Agreement, none of your options assumed by Broadcom in
connection with the transaction will terminate and cease to be
outstanding upon the consummation of the Merger. Each
BlueSteel Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed BlueSteel 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
BlueSteel, 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 BlueSteel Options upon Optionee's cessation of
service as an employee of or a consultant to BlueSteel shall
hereafter be applied on the basis of Optionee's cessation of
employee or consultant status with Broadcom and its
subsidiaries, and each assumed BlueSteel 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 BlueSteel 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 BlueSteel Stock
prior to the Merger shall be included.
(f) In order to exercise each assumed
BlueSteel 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 8 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 1st day of March, 2000.
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 BlueSteel Options hereby assumed
by Broadcom are as set forth in the Option Agreement, the Plan and this Stock
Option Assumption Agreement.
DATED: __________________, 2000
_____________________________________
SIGNATURE OF OPTIONEE
_____________________________________
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.19
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
BLUESTEEL NETWORKS, INC.
1999 NON-EMPLOYEE STOCK PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 1st day
of March, 2000 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 BlueSteel
Networks, Inc., a Delaware corporation ("BlueSteel"), which were granted to
Optionee under the BlueSteel Networks, Inc. 1999 Non-Employee Stock Plan (the
"Plan") and are each evidenced by the following agreement between BlueSteel and
Optionee: a Non-statutory Stock Option Agreement (the "Option Agreement").
WHEREAS, BlueSteel has been acquired by Broadcom through the
merger (the "Merger") of BlueSteel with and into Broadcom, pursuant to the
Merger Agreement and Plan of Reorganization dated as of January 16, 2000 by and
between Broadcom and BlueSteel (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of BlueSteel 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
.04331554 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of BlueSteel Common Stock ("BlueSteel 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 BlueSteel Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "BlueSteel 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 BlueSteel under each
<PAGE> 2
of the BlueSteel Options. In connection with such assumption, the number of
shares of Broadcom Stock purchasable under each BlueSteel 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 BlueSteel 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 BlueSteel Option shall also be as indicated for
that option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed BlueSteel 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 BlueSteel Stock subject to the BlueSteel
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 BlueSteel 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 BlueSteel Options under Section 422 of the Internal
Revenue Code of 1986, as amended.
3. The following provisions shall govern each BlueSteel Option hereby assumed by
Broadcom:
(a) Unless the context otherwise requires, all
references in each Option Agreement and in the Plan (as
incorporated into such Option Agreement) (i) to the "Company"
shall mean Broadcom, (ii) to "Common Stock" shall mean
Broadcom Stock, (iii) to the "Board" shall mean the Board of
Directors of Broadcom and (iv) to the "Committee" shall mean
the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date of each
assumed BlueSteel Option and all other provisions which govern
either the exercise or the termination of the assumed
BlueSteel 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 and
the Plan, none of your options assumed by Broadcom in
connection with the transaction will terminate and cease to be
outstanding upon the consummation of the Merger. Each
BlueSteel Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed BlueSteel 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
2.
<PAGE> 3
effect under the applicable Option Agreement immediately prior
to the Effective Time; provided, however, that the number of
shares of Broadcom Stock subject to each such installment
shall be adjusted to reflect the Exchange Ratio.
(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 BlueSteel,
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 BlueSteel Options upon Optionee's cessation of
service as an employee of or a consultant to BlueSteel shall
hereafter be applied on the basis of Optionee's cessation of
employee or consultant status with Broadcom and its
subsidiaries, and each assumed BlueSteel 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 BlueSteel 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 BlueSteel Stock
prior to the Merger shall be included.
(f) In order to exercise each assumed BlueSteel
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 8 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 1st day of March, 2000.
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 BlueSteel Options hereby assumed
by Broadcom are as set forth in the Option Agreement, the Plan and this Stock
Option Assumption Agreement.
DATED: __________________, 2000
---------------------------------------------
SIGNATURE OF OPTIONEE
---------------------------------------------
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.20
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
DIGITAL FURNACE CORPORATION
AMENDED AND RESTATED STOCK INCENTIVE PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 29th day
of February, 2000 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 Digital
Furnace Corporation, a Georgia corporation ("Digital Furnace"), which were
granted to Optionee under the Digital Furnace Corporation Amended and Restated
Stock Incentive Plan (the "Plan") and are each evidenced by the following
agreement between Digital Furnace and Optionee: a Stock Option Grant Certificate
(the "Option Agreement").
WHEREAS, Digital Furnace has been acquired by Broadcom through
the merger (the "Merger") of Digital Furnace with and into Broadcom, pursuant to
the Agreement and Plan of Reorganization dated as of February 16, 2000 by and
between Broadcom and Digital Furnace (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of Digital Furnace 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
.24501789 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of Digital Furnace Common Stock ("Digital Furnace
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 Digital Furnace Stock subject to
the options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "Digital Furnace 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
<PAGE> 2
Digital Furnace under each of the Digital Furnace Options. In connection with
such assumption, the number of shares of Broadcom Stock purchasable under each
Digital Furnace 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 Digital Furnace 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 Digital
Furnace Option shall also be as indicated for that option in attached Exhibit(s)
A.
2. The intent of the foregoing adjustments to each assumed
Digital Furnace 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 Digital Furnace Stock subject to the
Digital Furnace 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 Digital Furnace 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 Digital Furnace Options under
Section 422 of the Internal Revenue Code of 1986, as amended.
3. The following provisions shall govern each Digital Furnace
Option hereby assumed by Broadcom:
(a) Unless the context otherwise requires,
all references in each Option Agreement and in the Plan (as
incorporated into such Option Agreement) (i) to the "Company"
shall mean Broadcom, (ii) to "Common Stock" shall mean
Broadcom Stock, (iii) to the "Board" shall mean the Board of
Directors of Broadcom and (iv) to the "Committee" shall mean
the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date
of each assumed Digital Furnace Option and all other
provisions which govern either the exercise or the termination
of the assumed Digital Furnace Option shall remain the same as
set forth in the Option Agreement applicable to that option,
and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Stock Option
Assumption Agreement to purchase Broadcom Stock.
(c) Pursuant to the terms of the Option
Agreement, none of your options assumed by Broadcom in
connection with the transaction will terminate and cease to be
outstanding upon the consummation of the Merger. Each Digital
Furnace Option shall be assumed by Broadcom as of the
Effective Time. Each such assumed Digital Furnace Option shall
thereafter continue to vest for any remaining unvested shares
of Broadcom Stock subject to that option on the same
2.
<PAGE> 3
terms and in accordance with the same installment vesting
schedule as those in effect under the applicable Option
Agreement immediately prior to the Effective Time; provided,
however, that the number of shares of Broadcom Stock subject
to each such installment shall be adjusted to reflect the
Exchange Ratio.
(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 Digital
Furnace, 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 Digital Furnace Options upon Optionee's
cessation of service as an employee of or a consultant to
Digital Furnace shall hereafter be applied on the basis of
Optionee's cessation of employee or consultant status with
Broadcom and its subsidiaries, and each assumed Digital
Furnace 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 Digital Furnace
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 Digital Furnace
Stock prior to the Merger shall be included.
(f) In order to exercise each assumed
Digital Furnace 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 7.2(c) 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 29th day of February, 2000.
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 Digital Furnace Options hereby
assumed by Broadcom are as set forth in the Option Agreement, the Plan and this
Stock Option Assumption Agreement.
DATED: __________________, 2000
______________________________________
SIGNATURE OF OPTIONEE
______________________________________
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.21
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
STELLAR SEMICONDUCTOR, INC.
1999 EQUITY INCENTIVE PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 1st day
of March, 2000 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 Stellar
Semiconductor, Inc., a California corporation ("Stellar"), which were granted to
Optionee under the Stellar Semiconductor, Inc. 1999 Equity Incentive Plan (the
"Plan") and are each evidenced by the following agreement between Stellar and
Optionee: a Stock Option Agreement (the "Option Agreement").
WHEREAS, Stellar has been acquired by Broadcom through the
merger (the "Merger") of Stellar with and into Broadcom, pursuant to the Merger
Agreement and Plan of Reorganization dated as of January 16, 2000 by and between
Broadcom and Stellar (as amended, the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of Stellar 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
.02337952 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of Stellar Common Stock ("Stellar 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 Stellar Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "Stellar 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 Stellar under each of the
<PAGE> 2
Stellar Options. In connection with such assumption, the number of shares of
Broadcom Stock purchasable under each Stellar 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
Stellar 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 Stellar Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed
Stellar 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 Stellar Stock subject to the Stellar
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 Stellar 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 Stellar Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each Stellar Option
hereby assumed by Broadcom:
(a) Unless the context otherwise requires, all
references in each Option Agreement and in the Plan (as
incorporated into such Option Agreement) (i) to the "Company"
shall mean Broadcom, (ii) to "Common Stock" shall mean
Broadcom Stock, (iii) to the "Board" shall mean the Board of
Directors of Broadcom and (iv) to the "Committee" shall mean
the Option Committee of the Board of Directors of Broadcom.
(b) The grant date and the expiration date of each
assumed Stellar Option and all other provisions which govern
either the exercise or the termination of the assumed Stellar
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 Plan and the Option
Agreement, none of your options assumed by Broadcom in
connection with the transaction will terminate and cease to be
outstanding upon the consummation of the Merger. Each Stellar
Option shall be assumed by Broadcom as of the Effective Time.
Each such assumed Stellar 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
2.
<PAGE> 3
effect under the applicable Option Agreement immediately prior
to the Effective Time; provided, however, that the number of
shares of Broadcom Stock subject to each such installment
shall be adjusted to reflect the Exchange Ratio.
(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 Stellar, 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
Stellar Options upon Optionee's cessation of service as an
employee of or a consultant to Stellar shall hereafter be
applied on the basis of Optionee's cessation of employee or
consultant status with Broadcom and its subsidiaries, and each
assumed Stellar 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 Stellar 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 Stellar Stock prior
to the Merger shall be included.
(f) In order to exercise each assumed Stellar 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 6(d) 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.
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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 1st day of March, 2000.
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 Stellar Options hereby assumed by
Broadcom are as set forth in the Option Agreement, the Plan and this Stock
Option Assumption Agreement.
DATED: __________________, 2000
_________________________________________
SIGNATURE OF OPTIONEE
_________________________________________
PRINT NAME
4.
<PAGE> 1
EXHIBIT 99.22
BROADCOM CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
STELLAR SEMICONDUCTOR, INC.
1997 STOCK OPTION/STOCK ISSUANCE PLAN
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 1st day
of March, 2000 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 Stellar
Semiconductor, Inc., a California corporation ("Stellar"), which were granted to
Optionee under the Stellar Semiconductor, Inc. 1997 Stock Option/Stock Issuance
Plan (the "Plan") and are each evidenced by the following agreement between
Stellar and Optionee: a Stock Option Agreement (the "Option Agreement").
WHEREAS, Stellar has been acquired by Broadcom through the
merger (the "Merger") of Stellar with and into Broadcom, pursuant to the Merger
Agreement and Plan of Reorganization dated as of January 16, 2000 by and between
Broadcom and Stellar (as amended, the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement
require Broadcom to assume all obligations of Stellar 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
.02337952 of a share of Broadcom Class B Common Stock ("Broadcom Stock") for
each outstanding share of Stellar Common Stock ("Stellar 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 Stellar Stock subject to the
options outstanding under the Plan held by Optionee immediately prior to the
Effective Time (the "Stellar 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 Stellar under each of the
<PAGE> 2
Stellar Options. In connection with such assumption, the number of shares of
Broadcom Stock purchasable under each Stellar 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
Stellar 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 Stellar Option shall also be as indicated for that
option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed
Stellar 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 Stellar Stock subject to the Stellar
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 Stellar 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 Stellar Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
3. The following provisions shall govern each Stellar 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
"Corporation" shall mean Broadcom, (ii) to "Common Stock"
shall mean Broadcom Stock, (iii) to the "Board" shall mean the
Board of Directors of Broadcom and (iv) to the "Committee"
shall mean the Option Committee of the Board of Directors of
Broadcom.
(b) The grant date and the expiration date of each
assumed Stellar Option and all other provisions which govern
either the exercise or the termination of the assumed Stellar
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 Plan and Option
Agreement, none of your options assumed by Broadcom in
connection with the transaction will terminate and cease to be
outstanding upon the consummation of the Merger. Each Stellar
Option shall be assumed by Broadcom as of the Effective Time.
Each such assumed Stellar 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
2.
<PAGE> 3
effect under the applicable Option Agreement immediately prior
to the Effective Time; provided, however, that the number of
shares of Broadcom Stock subject to each such installment
shall be adjusted to reflect the Exchange Ratio.
(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 Stellar, 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
Stellar Options upon Optionee's cessation of service as an
employee of or a consultant to Stellar shall hereafter be
applied on the basis of Optionee's cessation of employee or
consultant status with Broadcom and its subsidiaries, and each
assumed Stellar 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 Stellar 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 Stellar Stock prior
to the Merger shall be included.
(f) In order to exercise each assumed Stellar 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 Article Two, Section I.A.2 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 1st day of March, 2000.
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 Stellar Options hereby assumed by
Broadcom are as set forth in the Option Agreement, the Plan and this Stock
Option Assumption Agreement.
DATED: __________________, 2000
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SIGNATURE OF OPTIONEE
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PRINT NAME
4.
