EXHIBIT 99.1
NOTICE OF GRANT OF STOCK OPTIONS MARVELL TECHNOLOGY GROUP, LTD.
PURSUANT TO MARVELL SHARE Richmond House, 3rd
SALE AND PURCHASE FORM AGREEMENT 12 Par la Ville Road
Hamilton, HM DX, Bermuda
EMPLOYEE NAME OPTION NUMBER: 00000XXX
[ADDRESS]
Effective 06/__/2002, you have been granted a stock option to buy _____ shares
of Marvell Technology Group, Ltd. (the Company) stock at $_________ per share.
The total option price of the shares granted is $_______. The option price is
payable solely by delivery of your option for shares in SysKonnect GmbH held
pursuant to a Notarial Deed Agreement, as described in the Marvell Share Sale
and Purchase Form Agreement.
The option will become vested and exercisable in accordance with the schedule in
Section 2 of the Marvell Share Sale and Purchase Form Agreement.
The term of the option expires on June __, 2012.
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Marvell Share Sale and Purchase Form Agreement, which is attached and made a
part of this document.
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Marvell Technology Group, Ltd. Date
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Employee Name Date
MARVELL SHARE SALE AND PURCHASE FORM AGREEMENT
1. Grant of Option. Marvel Technology Group Ltd. (the "COMPANY") hereby
grants to the optionee named in the attached Notice of Grant (the "OPTIONEE"),
an Option to purchase the shares of Common Stock of the Company ("SHARES") set
forth in the Notice of Grant, subject to the terms, definitions and provisions
of this Agreement. The exercise price per Share (the "EXERCISE PRICE") shall be
as set forth in the Notice of Grant, which shall be payable solely by delivery
by the Optionee of the option for shares in SysKonnect GmbH held by the Optionee
pursuant to a Notarial Deed Agreement dated June __, 2002 (the "SYSKONNECT
OPTION"), which option shall be deemed to have a fixed value equal to the
Exercise Price. The Optionee acknowledges that the SysKonnect Option may not be
exercised but may only be tendered in payment of the Exercise Price for shares
pursuant to this Agreement.
This Option is granted in consideration of services to be provided by
the Optionee as an employee or consultant to the Company or its direct or
indirect subsidiary ("Service"). The Option is not intended to qualify as an
Incentive Stock Option as defined in Section 422 of the U.S. Internal Revenue
Code of 1986, as amended.
2. Exercise of Option. This Option cannot be exercised until the Option
and the corresponding Shares vest. The Option and Shares vest with respect to
twenty-five percent of the Option on the date of grant, and with respect to 1/48
of the Option on the last day of each month beginning after the one-year
anniversary of the date of grant for 36 months.
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of a Share.
(b) In the event of Optionee's death, disability or other
termination of Optionee's continuous service, the exercisability of this Option
shall be governed by Sections 5, 6 and 7 below.
(c) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant
("EXPIRATION DATE").
(ii) Method of Exercise.
(a) This Option shall be exercisable by written notice (in the form
attached as Exhibit A) which shall state the election to exercise this Option,
the number of Shares in respect of which this Option is being exercised, and
such other representations and agreements as may reasonably be required by the
Company. Such written notice shall be signed by Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The written
notice shall be accompanied by payment of the aggregate Exercise Price for the
number of Shares in respect of which the Option is being exercised. This Option
shall be deemed to be exercised upon receipt by the Company of such written
notice accompanied by the aggregate Exercise Price for the number of Shares in
respect of which the Option is being exercised.
(b) No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of
any stock exchange or interdealer quotation system upon which the Shares may
then be listed or traded.
(c) If this Option is being exercised by the representative of the
Optionee, the exercise notice shall be accompanied by proof (satisfactory to the
Company) of the representative's right to exercise this Option.
3. Payment.
(a) Payment of the Exercise Price for the Shares as to which this
Option is exercised, shall be by delivery of all or a portion of the SysKonnect
Option, which shall be deemed to have an aggregate value equal to the aggregate
Exercise Price of the Shares.
(b) Neither the Optionee nor the Optionee's representative shall have
any rights as a shareholder with respect to any Shares subject to this Option
until the Optionee or the Optionee's representative becomes entitled to receive
such Shares by filing a notice of exercise and paying the aggregate Exercise
Price pursuant to Section 2(ii) and Section 3(a).
4. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation. This
Option may not be exercised prior to the effective date of a registration
statement on Form S-8 filed by the Company with respect to the Shares subject to
the Option.
5. Termination of Relationship. In the event an Optionee's Service
terminates, Optionee may, to the extent this Option was vested at the date of
such termination (the "Termination Date"), exercise this Option at any time
during the 30 day period immediately following the Termination Date. To the
extent that Optionee was not vested in this Option at the date of such
termination, or if Optionee does not exercise this Option within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing, in
no event shall any Option be exercisable later than the Expiration Date.
6. Disability of Optionee. Notwithstanding the provisions of Section 5
above, in the event of termination of an Optionee's Service as a result of his
or her disability, Optionee may, but only within the 180 day period (or such
other period of time in excess of 180 days as is determined by the Administrator
in its absolute discretion) immediately following the date of such termination,
exercise this Option to the extent this Option was vested at the date of such
termination. To the extent that Optionee was not vested in this Option at the
date of termination, or if Optionee does not exercise this Option within the
time specified herein, this Option shall terminate, and the Shares covered by
this Option shall revert to the Plan. Notwithstanding the foregoing, in no event
shall any Option be exercisable later than the Expiration Date.
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7. Death of Optionee. Notwithstanding the provisions of Section 5 above,
in the event of termination of Optionee's Service as a result of the death of
Optionee, this Option may be exercised at any time within the 360 day period
immediately following the date of death, by Optionee's estate or by a person who
acquired the right to exercise this Option by bequest or inheritance, but only
to the extent Optionee could exercise this Option at the date of death.
Notwithstanding the foregoing, in no event shall any Option be exercisable later
than the Expiration Date. To the extent that Optionee is not vested in this
Option at the date of death, or if this Option is not exercised within the time
specified herein, this Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
8. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
9. Term of Option; Termination of SysKonnect Option. This Option may be
exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the terms of this Option
Agreement. All expiration periods set forth in this Agreement shall terminate at
5:00 p.m. California time on the date provided in this Agreement. Upon exercise
or termination of this Option, the SysKonnect Option shall terminate and
thereafter shall have no value.
10. Tax Consequences. Optionee acknowledges that he or she has read the
description of tax consequences in the 10(a) Prospectus and has consulted his or
her personal tax advisor regarding the same to the extent he or she has
determined advisable. Optionee is not relying on the Company, or any of its
officers, directors, employees or advisors, for any tax advice or planning
information whatsoever. Set forth below is a brief summary as of the date of
this Option of some of the German and U.S. Federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE (FOR EXAMPLE, IT DOES NOT INCLUDE STATE INCOME TAXES), AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
For U.S. taxpayers:
(i) Grant of Option. The U.S. Internal Revenue Service may treat the
grant of the Option as a grant of the underlying Shares as a result of the
discounted exercise price. Accordingly, the Optionee will likely be subject to
U.S. Federal income tax when the Option and Shares vest, whether or not the
Optionee exercises the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the Fair
Market Value of the Shares (minus the Exercise Price) on the respective vesting
dates. If Optionee is an employee or a former employee, the Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a percentage
of this compensation income at the time of vesting.
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If the Optionee files an election under Section 83(b) of the Code
within 30 days following the date of grant of the Option, the Optionee will be
treated as having received compensation income on the date of Option grant, in
an amount equal to the Fair Market Value of the Shares (minus the Exercise
Price) on the date of grant. However, if the Optionee forfeits the Option upon
termination of service, the Optionee would not be entitled to an offsetting
deduction for the income recognized pursuant to the Section 83(b) election. The
Optionee should consult with a tax advisor before making a Section 83(b)
election.
(iv) Disposition of Shares. If Shares are held for at least one year
from the date on which they were included in the Optionee's income for Federal
income tax purposes (that is, the date of vesting or, if a Section 83(b)
election was made, the date of Option grant), any gain realized on disposition
of the Shares will be treated as long-term capital gain for Federal income tax
purposes.
For German taxpayers:
The following information is of a general nature only. It is not
designed to provide individual tax advice and should not be relied upon by
individuals for purposes of their own tax planning or compliance. It is
recommended that individuals seek their own tax advice from tax consultants or
other specialists on the tax consequences of this stock option plan.
(i) Grant of Option. The grant of an option under the Agreement does
not give rise to tax consequences for the employee as long as the option is not
marketable. Generally, an option will be considered non-marketable if it may not
be transferred or sold by the employee.
(ii) Exercise of Option. The exercise of an option under the
Agreement gives rise to taxable income equal to the difference between the fair
market value of the shares on the date the option is exercised and the exercise
price paid by the employee (the "spread"). The spread is included as ordinary
income and taxable at the employee's marginal tax rate.
The applicable tax rates in Germany vary depending on a number of
factors, making it difficult to give a general rule. As an example, however, the
maximum income tax rate for 2002 is 48.5% (for 2003, the maximum rate will be
47%). In addition, there will be a church tax for members of the Catholic church
and certain Protestant churches levied at a rate of 8% or 9% on the employee's
tax liability of up to 48.5% income tax (e.g., if the employee is subject to tax
at a rate of 40% on E1,000, he or she will be subject to church tax on his or
her income tax liability of E400). Also, there is a solidarity surcharge, which
is levied at a rate of 5.5% on the employee's tax liability of up to 48.5%
income tax. As a result, there is a 48.5% maximum income tax rate, plus a
maximum 4.37% church tax, plus a maximum 2.67% solidarity surcharge resulting in
a maximum overall tax on income of 55.54%. Under current law, the individual
income tax rate will be reduced to a maximum rate of 42% by 2005.
Under German law, there are no tax benefits if an employee uses
shares owned for twelve months or longer to pay the exercise price for an
option. Specifically, the gain on shares used to satisfy the exercise price is
subject to capital gains tax as described in Section (iii) below.
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(iii) Sale of Shares. The disposal of shares does not give rise to taxable
gains provided: (i) the employee has held the shares for more than 12 months;
(ii) the employee has not, at any time during the last five years, held 1% or
more of the stated capital of a company and (iii) the shares are not held as a
business asset. Consequently, the employee normally will be subject to tax only
on the spread at the time of exercise. If the employee is subject to capital
gains tax (because he or she sells the shares within 12 months of their
acquisition), the employee will pay taxes only on 50% of any gain realized upon
the sale. Furthermore, the employee will be subject to tax only if his or her
total capital gains exceed E512 (US$450 as of 04/02) in the relevant tax year.
The employee will be taxed on the gain at his or her marginal income tax rate.
(iv) Dividends. Dividends are subject to income tax in Germany and
must be declared by the employee on his or her annual tax return. Only 50% of
the value of the dividend distributed is subject to tax. Consequently, only 50%
of the U.S. federal income tax withheld at the source is deductible.
(v) Dividend Reinvestment. Automatic reinvestment of dividends paid
on the shares will not raise any additional legal issues.
(vi) Tax Favored Regime. There are no special tax regimes whereby
employees obtain more favorable tax treatment.
(vii) Foreign Nationals. The tax treatment described above applies to
all employees who are German tax residents. Citizenship is not a distinguishing
factor. Generally, an individual becomes a German tax resident if he or she
resides in or has a habitual abode in Germany.
(viii) Employee Transfer. The discussion below is general in nature.
The tax treatment of an employee transferring into or out of Germany depends
upon the particular employee's circumstances.
Employees transferring out of or into Germany are taxed in Germany if
they are German tax residents at the time of the taxable event (i.e., when the
option is exercised). If that is the case, a prorated amount of the benefit is
subject to withholding tax in Germany even if the employee becomes a
nonresident. The prorated amount reflects the time the employee has spent in
Germany after the option has been granted to him or her.
11. Tax Withholding; Company Loan. If the Company determines that it is
required to withhold any tax as a result of the exercise of this Option, the
Optionee, as a condition to the exercise of this Option, shall make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to timely satisfy any withholding requirements that may
arise in connection with the vesting or disposition of Shares subject to this
Option. If the grant of the Option results in an income tax liability to the
Optionee prior to the exercise of the Option, the Company will arrange to loan
the Optionee the amount of the Optionee's incremental tax liability resulting
from the recognition of such income no later than the date such amount is
required to be withheld or paid. The loan will become due on the earliest of (i)
the exercise, termination or expiration of the Option
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for which the loan was made, (ii) the termination of the Optionee's Service, and
(iii) the sale or other disposition of the acquired Shares. The loan will be
secured solely by the Option and acquired Shares, and will bear interest at the
lowest rate necessary to avoid the imputation of income to the Optionee for tax
purposes.
12. Administration.
(i) In General. This Agreement shall be administered by the Board of
Directors of the Company (the "BOARD") or a Committee appointed by the Board
(the "ADMINISTRATOR"). Once appointed, a Committee shall serve until otherwise
directed by the Board. From time to time, the Board may increase the size of the
Committee and appoint additional members, remove members (with or without cause)
and appoint new members in their stead, fill vacancies however caused, and
terminate the Committee and thereafter directly administer this Plan.
(ii) Powers of the Administrator. Subject to the provisions of this
Option Agreement and in the case of a Committee, the specific duties delegated
by the Board, the Administrator shall have the authority, in its discretion:
(a) to determine the fair market value of the Common Stock ("FAIR
MARKET VALUE");
(b) to determine whether and under what circumstances to offer to
buy out an Option for cash or Shares under Section 13;
(c) to approve forms of exercise for use under this Agreement; and
(d) to construe and interpret the terms of this Agreement.
(iii) Administrator's Decisions Binding. All decisions, determinations,
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options, and no member of the
Administrator shall be liable for any such determination, decision, or
interpretation made in good faith.
13. Changes in Capitalization or Control; Buy Out Offers.
(i) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares and the Exercise Price may be
proportionately adjusted for any change in the number of issued shares of Common
Stock of the Company resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
change in the number of issued shares effected without receipt of consideration
by the Company (not counting shares issued upon conversion of convertible
securities of the Company as "effected without receipt of consideration"). Such
adjustment shall be made by the Board and shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no consequent adjustment shall be made with respect
to, the number of Shares or the Exercise Price of Shares under this Agreement.
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(ii) Change in Control. The Administrator may, in its discretion,
determine at any time the effect that a Change in Control (as defined below)
shall have upon the Option; provided however, that a Change in Control shall not
have the effect of impairing the rights of any Optionee under this Agreement
without his or her prior written consent. Without limiting the foregoing
sentence, the Administrator may determine that upon a Change in Control, the
Option:
(a) shall become fully vested and exercisable either for a limited
period following the Change in Control or for the remainder of the
Option's term;
(b) shall terminate upon or after a specified period following the
Change in Control;
(c) shall be cancelled in exchange for cash in the amount of the
excess of the Fair Market Value of the Shares over the Exercise Price
upon termination; or
(d) shall be treated as provided under a combination of clauses (a)
through (c), or shall be so treated only if not adequately assumed (or
substituted for) by a surviving or successor person or entity in the
transactions or events that give rise to the Change in Control.
For purposes of this Section 13(ii), (x) the occurrence of any of the
foregoing clauses (a), (b), (c) or (d) shall not constitute an impairment of the
rights of any Optionee and (y) the "Administrator" shall be the Administrator as
constituted before the Change in Control occurs.
(iii) "Change in Control" means a change in ownership or control of the
Company by any of:
(a) a merger or consolidation in which the holders of stock
possessing a majority of the voting power in the surviving entity (or a
parent of the surviving entity) did not own a majority of the Common
Stock of the Company immediately before the transaction;
(b) the sale of all or substantially all of the Company's assets to
any other person or entity (other than a subsidiary of the Company);
(c) the liquidation or dissolution of the Company;
(d) the direct or indirect acquisition by any person or related
group of persons of beneficial ownership (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended) of securities
possessing more than 50% of the total combined voting power of the
Company's outstanding securities pursuant to a tender or exchange offer
made directly to the Company's shareholders that the Board does not
recommend that the shareholders accept, or
(e) a change in composition of the Board over a period of 36
consecutive months such that a majority of the Board ceases, by reason
of one or more contested elections for Board membership, to be composed
of individuals who either (A) have been Board members continuously since
the beginning of that period or (B) have been
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elected or nominated for election as Board members during that period by
at least a majority of the Board members described in clause (A) who
were in office when the Board approved the election or nomination.
(iii) Buyout of Options. The Administrator may at any time offer to buy
out the Option for a payment in cash or shares, based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee
at the time of the offer.
14. Entire Agreement; Governing Law. The Notice of Grant and this
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements and all contemporaneous oral undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, including but
not limited to the grant or promise of any right or option to purchase shares of
capital stock of the Company to Optionee pursuant to any employment agreement or
offer letter delivered by the Company to Optionee or otherwise, and the
SysKonnect Option, and may not be modified to materially and adversely affect
the Optionee's interest except by means of a writing signed by the Company and
Optionee. This Agreement is governed by California law except for that body of
law pertaining to its conflict of laws.
15. Optionee Acknowledgments. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THIS OPTION IS EARNED ONLY BY CONTINUING
CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY OR ITS SUBSIDIARIES (NOT
THROUGH ANY OTHER MEANS, INCLUDING WITHOUT LIMITATION, THE ACT OF BEING HIRED,
BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY
THE COMPANY OR ITS SUBSIDIARIES, NOR SHALL IT INTERFERE IN ANY WAY WITH
OPTIONEE'S RIGHT OR THE COMPANY'S OR SUBSIDIARY'S RIGHT TO TERMINATE OPTIONEE'S
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee hereby accepts this Option subject to all of the terms and
provisions of this Agreement. Optionee acknowledges that the grant of this
Option constitutes a voluntary benefit offered by the Company to the Optionee,
and that even if options should be offered continuously (and without any
reservation that this is a voluntary benefit), no obligation shall be created to
grant additional options or similar or comparable rights. Optionee has reviewed
this Agreement and the Notice of Grant in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of such documents. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Notice of Grant or this
Agreement. Notwithstanding the foregoing, if any party brings any action, suit,
counterclaim, cross-claim, appeal, arbitration, or mediation for any relief
against the other to enforce the terms of or to declare rights under the
Agreement, in addition to any damages and costs which the prevailing party
otherwise would be entitled, the non-prevailing party shall pay to the
prevailing party a reasonable sum for attorneys' fees and costs incurred in
bringing and prosecuting or defending such action or enforcing any judgment,
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order, ruling, or award. Optionee agrees to timely notify the Company upon any
change in the residence address set forth in this Notice of Grant, and
acknowledges that the Company may at in its discretion deliver share
certificates representing Shares issued pursuant to the exercise of this Option
to such address. If Optionee is a California resident, Optionee agrees to
provide the Company within 7 days of the execution of this Agreement the Consent
of Spouse attached hereto if applicable, or within 7 days of any event that
would cause such consent to be applicable. Optionee acknowledges that the
Company will rely on such agreement.
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CONSENT OF SPOUSE
The undersigned spouse of the Optionee has read and hereby approves the
terms and conditions of the Notice of Grant and this Agreement. In consideration
of the Company's granting his or her spouse the right to purchase Shares as set
forth in this Agreement, the undersigned hereby agrees to be irrevocably bound
by the terms and conditions of this Agreement and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under this Agreement.
Dated:
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Spouse of Optionee
(Spouse Name)
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