EXHIBIT 10.4
RSA COMMUNICATIONS, INC.
1998 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
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This Incentive Stock Option Agreement ("Agreement") is made and
entered into as of the Date of Grant indicated below among Virata Limited, a
corporation organized in the United Kingdom ("Virata"), RSA Communications,
Inc., a Delaware corporation (the "Company") and a wholly-owned subsidiary of
Virata, and the person named below as Employee.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT
ACT AND UNDER APPLICABLE STATE SECURITIES LAW OR VIRATA LIMITED
SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION
OF SUCH SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's 1998 Stock Incentive Plan (as
amended from time to time, the "Plan"), the Compensation Committee of the Board
of Directors of Virata administering the Plan (the "Committee") has approved the
grant to Employee of an option to purchase Ordinary Shares, par value Great
Britain Pounds Sterling 0.01 per share, of Virata or any stock into which such
Ordinary Shares shall have been changed or any stock resulting from any
reclassification of such Ordinary Shares, on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Option; Certain Terms and Conditions. Virata and the
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Company hereby grant to Employee, and Employee hereby accepts, as of the Date of
Grant, an option (the "Option") to purchase the number of Ordinary Shares
indicated below (the "Option Shares") at the Exercise Price per share indicated
below, which option shall expire at 5:00 o'clock p.m., California time, on the
Expiration Date indicated below and shall be subject to all of the terms and
conditions set forth in this Agreement (the "Option"). The Option shall become
exercisable to purchase upon vesting, and shall vest with respect to that number
of Option Shares (rounded to the nearest whole share) equal to the total number
of Option Shares multiplied by the Vesting Rate indicated below (the "Options
Subject to Vesting").
(a) Employee: (EmployeeName)
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(b) Date of Grant: July ____, 1998
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(c) Number of shares purchasable: (Options)
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(d) Exercise Price per share: $0.70
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(e) Expiration Date: The Option shall lapse and expire on the
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seventh anniversary of the Date of Xxxxx. The Period from Date
of Grant to the Expiration Date is referred to as the "Term."
(f) Vesting Rate: 33% of the Option Shares on the first anniversary
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of the date of grant and one-thirty sixth (1/36) of the Option
Shares each month thereafter until 100% vested.
The Option is intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code.
2. Termination of Employment.
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(a) Termination for Any Reason. If Employee ceases to be an
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employee of the Company or any of its subsidiaries (a "Termination of
Employment") for any reason whatsoever including for Cause (as defined in
the Plan), other than death or Permanent Disability (as herein defined),
then (A) the portion of the Option that has not vested on or prior to the
date of such Termination of Employment shall terminate on such date;
provided, however, that if the Termination of Employment occurred as a
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result of a Constructive Discharge (as herein defined) or because the
Company terminated Employee for reasons other than for Cause, then the
portion of the Option that has not vested shall immediately vest as of the
date of such Termination of Employment, and (B) the vested portion of the
Option shall terminate on the date that is three months after the date of
such Termination of Employment or the Expiration Date, whichever is
earlier. "Constructive Discharge" is defined as Employee's termination of
employment within six months of any of the following without Employee's
express written consent (i) a reduction by the Company in Employee's cash
compensation as in effect on the day after the closing of the transactions
contemplated by the Merger Agreement; (ii) a relocation to a place more
than 50 miles from the office regularly occupied by Employee, except for
required travel by Employee on the Company's business to an extent
substantially consistent with Employee's duties; provided, however, this
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provision shall not apply if substantially all of the Company's operations
moves to a different location greater than 50 miles from its old location,
or (iii) a material diminution by the Company in Employee's title at the
Company on the date hereof.
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(b) Death or Permanent Disability. If Employee's Employment is
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terminated by reason of the death or Permanent Disability (as hereinafter
defined), then (A) the portion of the Option that has not vested on or
prior to the date of such Termination of Employment shall immediately vest
as of the date of such Termination of Employment and (B) the Option shall
terminate upon the earlier of the Expiration Date or the date that is six
months after the date of such Termination of Employment. "Permanent
Disability" shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than 12 months.
Employee shall not be deemed to have a Permanent Disability until proof of
the existence thereof shall have been furnished in writing to the Board by
two (2) independent physicians mutually acceptable to the Company and
Employee.
3. Adjustments. In the event that the outstanding securities of the
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class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless the terms of such transaction
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in the number, exercise price and type of shares or other securities
or cash or other property, as applicable, that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
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Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise of Option. The Option shall be exercisable during
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Employee's lifetime only by Employee or by his or her guardian or legal
representative, and after Employee's death only by the person or entity entitled
to do so under Employee's last will and testament or applicable intestate law.
The Option may be exercised in whole or in part on not more than three occasions
during the Term and only by the delivery to the Company of a written notice of
such exercise, which notice shall specify the number of Option Shares to be
purchased and the aggregate Exercise Price for such shares (the "Exercise
Notice"), together with payment in full of such aggregate Exercise Price in cash
or by check payable to the Company; provided, however, that payment of such
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aggregate Exercise Price may instead be made, in whole or in part, by (i) the
delivery to the Company of a certificate or certificates representing shares of
Ordinary Shares or other securities of the Company, duly endorsed or accompanied
by a duly executed stock power, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any pledge,
commitment, lien, claim or other encumbrance (such shares to be valued on the
basis of the aggregate Fair Market Value (as defined in the Plan) thereof on the
date of such exercise), or (ii) by a reduction in the amount of Ordinary Shares
or other property otherwise issuable pursuant to such Option (such reduction to
be valued on the basis of the aggregate Fair Market Value, on
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the date of exercise, of the additional Ordinary Shares that would have been
delivered to the Employee upon exercise of the Option), provided that the
Company is not then prohibited from purchasing or acquiring Ordinary Shares.
5. Payment of Withholding Taxes. If the Company becomes obligated to
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withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax, then Employee shall, as a condition to exercising the option, pay such
amount to the Company in cash or by check payable to the Company; provided,
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however, that payment of such tax withholding obligations may instead be made,
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in whole or in part, by (i) the delivery to the Company of a certificate or
certificates representing Ordinary Shares or other securities of the Company,
duly endorsed or accompanied by a duly executed stock power, which delivery
effectively transfers to the Company good and valid title to such shares, free
and clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as defined
in the Plan) thereof on the date of the Exercise giving rise to the tax
withholding obligation), or (ii) by a reduction in the amount of Ordinary Shares
or other property otherwise issuable pursuant to the Exercise of the Option
giving rise to the tax withholding obligation (such reduction to be valued on
the basis of the aggregate Fair Market Value, on the date of such Exercise, of
the additional Ordinary Shares that would have been delivered to the Employee
upon such Exercise of the Option), provided that the Company is not then
prohibited from purchasing or acquiring such Ordinary Shares.
6. Notices. All notices and other communications required or
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permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxxx 00000, telephone
number: (000) 000-0000, or to Employee at the address set forth beneath his or
her signature on the signature page hereto, or at such other addresses as they
may designate by written notice in the manner aforesaid.
7. Stock Exchange Requirements; Applicable Laws. Notwithstanding
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anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.
8. Nontransferability. Neither the Option nor any interest therein
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may be Transferred in any manner, including any sale, exchange, assignment,
transfer, pledge, mortgage, hypothecation, gift, grant, encumbrance or other
disposition of any kind, whether
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voluntary, involuntary or by operation of law and whether direct or indirect,
other than by will or the laws of descent and distribution.
9. Plan. The Option is granted pursuant to the Plan, as in effect on
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the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
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amendment shall deprive Employee, without his or her consent, of the Option or
of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
10. Stockholder Rights. No person or entity shall be entitled to
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vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement and the certificate
of such shares shall have been issued.
11. Employment Rights. No provision of this Agreement or of the
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Option granted hereunder shall (a) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and any of its subsidiaries to terminate the employment of Employee,
with or without cause, or (c) confer upon Employee any right to participate in
any employee welfare or benefit plan or other program of the Company or any of
its subsidiaries other than the Plan. Employee hereby acknowledges and agrees
that the Company and each of its subsidiaries may terminate the employment of
Employee at any time and for any reason, or for no reason, unless employee and
the Company or such subsidiary are parties to a written employment agreement
that expressly provides otherwise.
12. Governing Law. This Agreement and the Option granted hereunder
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shall be governed by and construed and enforced in accordance with the laws of
the State of California without reference to choice or conflict of law
principles.
13. Financial Information. The Company shall provide summary
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financial statements to Employee on an annual basis.
14. Options and Shares Issuable Upon Exercise Not Registered.
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Employee, by accepting the Options, acknowledges that the Options are not, and
Ordinary Shares and other securities issuable upon exercise of the Options may
not be, registered under the Securities Act, and represents that he or she has
acquired the Options for his or her own account and not with a present view to,
or in connection with, any distribution thereof in violation of the Securities
Act. Unless and until registered under the Securities Act, each stock
certificate representing Ordinary Shares and other securities purchased upon
exercise of one or more Options shall be stamped or otherwise imprinted with the
following legend:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT
ACT AND UNDER APPLICABLE STATE SECURITIES LAW OR VIRATA LIMITED
SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION
OF SUCH SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
15. Shareholder Approval. Any Option granted pursuant to his
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Agreement shall not be effective until the Plan has been approved by the
affirmative votes of the holders of a majority of the securities of Virata and
the Company.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Xxxxx.
RSA Communications, Inc., a Delaware corporation
By________________________________
Title:
__________________________________
Signature
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
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