1
EXHIBIT 99.4
STRATACOM, INC.
STOCK OPTION AGREEMENT
STRATACOM, INC., a Delaware corporation (the "Company"), has granted to
1~ ("Optionee"), an option to purchase a total of 2~ shares of Common Stock, at
the price determined as provided herein, and in all respects subject to the
terms, definitions, and provisions of the 1986 Incentive Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference. The
terms defined in the Plan shall have the same defined meanings herein.
1. Nature of the Option. This Option is intended to qualify as an
Incentive Stock Option as defined in Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Exercise Price. The exercise price shall be $3~ for each share
of Common Stock, which price is not less than the fair market value per share of
the Common Stock on the date of grant.
3. Exercise of Option. This Option shall be exercisable during
its term in accordance with the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) Subject to subsections 3(i)(b) and (c),
below, this Option shall be exercisable cumulatively, to the extent of 25% of
the Shares subject to the Option for each year which has expired after the Date
of Grant.
(b) This Option may not be exercised for a
fraction of a share.
(c) In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Sections 7, 8 and 9 below.
(ii) Methods of Exercise. This Option shall be exercisable
by written notice stating the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied
2
by payment of the exercise price for the total number of shares being purchased.
This Option shall be deemed to be exercised upon receipt by the Company of said
written notice accompanied by said exercise price. A form of notice is attached
to this Agreement as Exhibit A and a form of investment representation letter is
attached hereto as Exhibit B for Optionee's convenience.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, the Shares shall be considered to be transferred to
Optionee on the date on which the Option is exercised with respect to such
Shares.
4. Optionee's Representations. By receipt of this Option, by its
execution, and by its exercise in whole or in part, Optionee represents to the
Company that he understands that:
(i) both this Option, and any Shares purchased upon its
exercise, are securities the issuance by the Company of which requires
compliance with federal and state security laws;
(ii) these securities are made available to him only on
the condition that he makes the representation contained in this section (4) to
the Company;
(iii) he has made a reasonable investigation of the affairs
of the Company sufficient to be well informed as to the rights and the value of
these securities;
(iv) he understands that the securities have not been
registered under the Securities Act of 1933 (the "Act") in reliance upon a
specific exemption contained in that Act which depends upon his bona fide
investment intention in acquiring these securities; that his intention is to
hold these securities for his own benefit for an indefinite period; that he has
no present intention of selling or transferring any part thereof (recognizing
that the Option is not transferable) and that there may be certain restrictions
on transfer of the shares subject to the Option;
(v) he understands that the Shares subject to the Option,
in addition to other restrictions on transfer, must be held indefinitely unless
subsequently registered under the Act, or unless an exemption from registration
is available; that Rule 144, the usual exemption from registration is only
available after the satisfaction of certain holding periods and in the presence
of a public market for the Shares; that there is no certainty that a public
market for the Shares will exist, and that otherwise it will be necessary that
the Shares be sold pursuant to another exemption from registration which may be
difficult to satisfy;
2.
3
(vi) he understands that the certificate representing the
Shares will bear a legend prohibiting their transfer in the absence of their
registration or the opinion of counsel for the Company that registration is not
required, and a legend prohibiting their transfer without the consent of the
Commissioner of Corporations of the State of California; and
(vii) he has read the applicable rules of the Commissioner
of Corporations, which are attached as Exhibit C to this Agreement.
5. Method of Payment. Payment of the exercise price shall be by:
(a) cash; or
(b) check.
6. 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 that may be required by any applicable law or regulation.
7. Termination of Status as an Employee. If Optionee ceases to
serve as an Employee, he may, but only within thirty (30) days after the date he
ceases to be an Employee of the Company, exercise this Option to the extent that
he was entitled to exercise it at the date of such termination. To the extent
that he was not entitled to exercise this Option at the date of such
termination, or if he does not exercise this Option within the time specified
herein, the Option shall terminate.
8. Disability of Optionee. Notwithstanding the provisions of
Section 7 above, if Optionee is unable to continue his employment with the
Company as a result of his total and permanent disability (as defined in Section
422A(c)(9) of the Internal Revenue Code), he may, but only within six (6) months
from the date of termination of employment, exercise his Option to the extent he
was entitled to exercise it at the date of such termination. To the extent that
he was not entitled to exercise the Option at the date of termination, or if he
does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
9. Death of Optionee. In the event of the death of Optionee:
(a) during the term of this Option and while an Employee
of the Company and having been in Continuous Status as an Employee since the
date of grant
3.
4
of this Option, this Option may be exercised, at any time within three (3)
months 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 of the right to exercise that would have accrued had Optionee
continued living and remained in Continuous Status as an Employee three (3)
months after the date of death; or
(b) within thirty (30) days after the termination of
Optionee's Continuous Status as an Employee, this Option may be exercised, at
any time within three (3) months 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 of the right to exercise that had accrued
at the date of termination.
10. Non-Transferability of Option. This Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of Optionee only by him. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors, and assigns of
Optionee.
11. Right of First Refusal. In the event, at any time after the
date of this Option, the Optionee or his transferee desires to sell or transfer
in any manner the Shares which he has received under this Option, he shall first
offer such Shares for sale to the Company at the same price, and upon the same
terms (or terms as similar as reasonably possible) upon which he is proposing or
is to dispose of said Shares. Said right of first refusal shall be provided to
the Company for a period of thirty (30) days following receipt by the Company of
written notice by the Optionee of the terms and conditions of said proposed sale
or transfer and the name, address and phone number of each proposed buyer of
transferee. If the Company desires to exercise such right of first refusal, it
shall notify Optionee in writing within such thirty day period. In the event the
Shares are not disposed of on such terms within thirty (30) days following lapse
of the period of the right of first refusal provided to the Company or if the
Optionee proposes to change the price or other terms to make them more favorable
to the buyer, they shall once again be subject to the right of first refusal
herein provided.
12. Involuntary Transfer. In the event, at any time after the date
of this Option, of any transfer by operation of law or other involuntary
transfer (including death or divorce) of all or portion of the Shares by the
record holder thereof, the Company shall have an option to purchase all of the
Shares transferred. Upon such a transfer, the person acquiring the Shares shall
promptly notify the Secretary of the Company of such transfer. The right to
purchase such Shares shall be provided to the Company for a period of thirty
(30) days following receipt by the Company of written notice by the person
acquiring the Shares. With respect to any stock to be transferred pursuant to
this Section 12, the price per Shares shall be the price established by the
Board of Directors as the then fair market value of the Shares.
4.
5
13. Assignment. The right of the Company to purchase any part of
the Shares under Sections 11 or 12 of this Option may be assigned in whole or in
part to any shareholder or shareholders of the Company or other persons or
organizations.
14. Termination of Repurchase and Refusal Rights. The right of
first refusal granted the Company by Section 11 of this Option and the right of
repurchase granted the Company by Section 12 of this Option shall terminate at
such time as a public market exists for the Company's Common Stock (or any other
stock issued to Optionee in exchange for the Shares purchased under this
Agreement). For the purpose of this Agreement, a "Public Market" shall be deemed
to exist if (i) said stock is listed on a national securities exchange (as that
term is used in the Securities Exchange Act of 1934) or (ii) said stock is
traded on the over-the-counter market and prices are published daily on business
days in a recognized financial journal.
Upon termination of the right of first refusal imposed by this Option
and the expiration or exercise of the Company's repurchase option described
above, a new certificate or certificates representing the Shares not repurchased
shall be issued, on request, without any legend referring to such right of first
refusal or repurchase options.
15. Exempt Transfers. The restrictions on transfer on the Shares
(but not the restriction on transfer of the unexercised option which is the
subject of this Agreement) under Sections 11 and 12 shall not apply to a
transfer to Optionee's spouse or to a trustee for their benefit, or to
Optionee's ancestors or descendants by descent provided that such transferee
shall agree in writing to take such Shares subject to all the terms of this
Agreement, including restrictions on further transfer.
16. Term of Option. This Option may not be exercised more than
five (5) years from the date of grant of this Option, and may be exercised
during such term only in accordance with the Plan and the terms of this Option.
17. Early Disposition of Stock. Optionee understands that, if he
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to him, then he will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the Shares at the time such Shares were
delivered to him over the price paid for the Shares. Optionee hereby agrees to
notify the Company in writing within thirty (30) days after the date of any such
disposition. Optionee understands that, if he disposes of such Shares at any
time after the expiration of such two-year and one-year holding periods, then
any gain on such sale will be taxed at capital gain rates.
5.
6
DATE OF GRANT: 6~
STRATACOM, INC.
A California corporation
By:
----------------------------------
Sanjay Subhedar,
Vice President
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR
CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY,
NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decision
or interpretations of the Board upon any questions arising under the Plan.
Dated:
------------------------------------
-----------------------------------
1~, Optionee
4~
5~
7
EXHIBIT A
NOTICE OF EXERCISE OF
INCENTIVE STOCK OPTION
StrataCom, Inc.
1400 Parkmoor Avenue Date of
San Jose, CA 95126 Exercise:_______________
Re: Incentive Stock Option Grant Dated 6~
Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares of StrataCom, Inc. Common Stock set forth below for the
price set forth below:
Stock option dated: 6~
Number of shares as
to which option is
exercised:
--------------------------------------
Total exercise price:
--------------------------------------
Cash payment delivered herewith:
---------------------------
Unless such documents are enclosed herewith, I hereby agree to execute
such additional documents as may be required pursuant to subparagraph 9(a) of
the 1986 Incentive Stock Option Plan. Please advise what additional documents
may be required.
Very truly yours,
--------------------------------------
1~
8
EXHIBIT B
, 19
------------------ ----
StrataCom, Inc.
1400 Parkmoor Avenue
San Jose, CA 95126
Gentlemen:
In connection with the proposed purchase of shares of Common
Stock (the "Stock") of StrataCom, Inc., a Delaware corporation (the
"Corporation"), upon the exercise of an Incentive Stock Option dated 6~, by
the undersigned ("Purchaser"), Purchaser hereby agrees, represents and
warrants as follows:
1. Purchase Entirely for Own Account. I represent and warrant
that I am purchasing the Stock solely for my own account for investment and not
with a view to or for sale or distribution of the Stock or any portion thereof
and not with any present intention of selling, offering to sell, or otherwise
disposing of or distributing the Stock or any portion thereof. I also represent
that the entire legal and beneficial interest of the Stock I am purchasing is
being purchased for and will be held for my account only and neither in whole
nor in part for any other person, except that, since I am a resident of the
State of California, my spouse, if any, may have a community property interest
in such shares.
2. Information Concerning Corporation. I represent and warrant
that I have discussed the Corporation and its plans, operations, and financial
condition with its officers and that I have received all such information as I
deem necessary and appropriate to enable me to evaluate the financial risk
inherent in making an investment in the Stock. I further represent and warrant
that I have received satisfactory and complete information concerning the
business and financial condition of the Corporation in respect to all inquiries
in respect thereto.
3. Economic Risk. I represent and warrant that I realize that my
purchase of the Stock will be a highly speculative investment and that I am
able, without impairing my financial condition, to hold the Stock for an
indefinite period of time and to suffer a complete loss on my investment.
4. Restricted Securities. I represent and warrant that the
Corporation has disclosed to me in writing that:
9
a. the sale of the Stock that I am purchasing has not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and the Stock must be held indefinitely unless a transfer of the Stock is
subsequently registered under the Securities Act or an exemption from such
registration is available;
b. any shares certificates representing the Stock will
be stamped with the following legends:
(i) "These securities have not been registered
under the Securities Act of 1933. 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."
(ii) "Any legend required to be placed thereon by
the California Commissioner of Corporations."
c. the Corporation will make a notation in its records
of the aforementioned restrictions on transfer and legends.
5. Disposition Under Rule 144. I represent and warrant that I
understand that the shares of the Stock are restricted securities within the
meaning of Rule 144 promulgated under the Act; that the exemption from
registration under Rule 144 will not be available in any event for at least two
(2) years from the date of sale of the Stock to me, and even then will not be
available unless (a) a public trading market then exists for the securities of
the Corporation, (b) adequate information concerning the Corporation is then
available to the public and (c) other terms and conditions of Rule 144 are
complied with; and that any sale of the Stock may be made by me only in
accordance with such terms and conditions.
6. Further Limitations on Disposition. Without in any way
limiting my representations set forth above, I further agree that I shall in no
event make any disposition of all or any portion of the Stock that I am
purchasing unless and until:
a. There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
b. (i) I shall have notified the Corporation of the
proposed disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) I
shall have furnished the Corporation with an opinion of my own counsel to the
effect that such disposition will not require registration of such Shares under
the Securities Act, and (iii) such opinion of
2.
10
my counsel shall have been concurred in by counsel for the Corporation and the
Corporation shall have advised me of such concurrence.
Very truly yours,
--------------------------------
1~
ACCEPTED AND AGREED TO:
StrataCom, Inc.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
3.