EXHIBIT 99.5
INCENTIVE STOCK OPTION
GRANTED PURSUANT TO THE 1995 STOCK OPTION PLAN
__________________________, Optionee:
Terayon Communication Systems, Inc. (the "Company"), pursuant to its 1995
Stock Option Plan (the "Plan"), has this day granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers, directors and consultants) and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_________________ (_______). Subject to the limitations contained herein, this
option shall be exercisable with respect to each installment shown below on or
after the date of vesting applicable to such installment, as follows:
DATE OF EARLIEST EXERCISE NUMBER OF SHARES
(VESTING) (INSTALLMENT)
12th months after 20% of total
Commencement Date shares subject to option
Each month thereafter 1/60 of total
until fully vested shares subject to option
The Commencement Date for purposes of this option is _____________________.
2. (a) The exercise price of this option is ________________________
($________) per share, being not less than the fair market value of the Common
Stock on the date of grant of this option.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
(ii) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of Common Stock;
(iii) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise;
(iv) Provided that the option exercise price for the
installment, or portion thereof, being purchased exceeds one thousand dollars
($1,000), payment pursuant to the deferred payment alternative as described in
paragraph 2(c) hereof; or
(v) Payment by a combination of the methods of payment
permitted by subparagraph 2(b)(i) through 2(b)(iv) above.
(c) In the event that you elect to make payment of the exercise
price pursuant to the deferred payment alternative:
(i) Not less than twenty-five percent (25%) of the aggregate
exercise price shall be due at the time of exercise, not less than twenty-five
percent (25%) of said exercise price, plus accrued interest, shall be due each
year after the date of exercise, and final payment of the remainder of the
exercise price, plus accrued interest, shall be due three (3) years from date of
exercise or, at the Company's election, upon termination of your employment with
the Company or an affiliate;
(ii) Interest shall be payable 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; and
(iii) 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, both in form and substance satisfactory to the Company, or
such other or additional documentation as the Company may request.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Act or, if such shares are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the
registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
___________________________ (which date shall be no
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more than ten (10) years from date this option is granted). In no event may this
option be exercised on or after the date on which it terminates. This option
shall terminate prior to the expiration of its term as follows: three (3) months
after the termination of your employment with the Company or an affiliate of the
Company (as defined in the Plan) for any reason or for no reason unless:
(a) such termination of employment is due to your disability, in
which event the option shall terminate on the earlier of the termination date
set forth above or twelve (12) months following such termination of employment;
or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of employment
only as to that number of shares as to which it was exercisable on the date of
termination of employment under the provisions of paragraph 1 of this option.
Termination of employment, for ISO purposes, includes cessation of employment,
but continued service as a director or consultant (notwithstanding that your
continuous status will not have terminated for purpose of this Stock Option
Agreement or the Plan).
6. (a) This option may be exercised, to the extent specified above, 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 pursuant to subparagraph
6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter 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 this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise;
(ii) 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 this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and
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(iii) the Company (or a representative of the underwriters) may,
in connection with the first underwritten registration of the offering of any
securities of the Company under the Act, require that you not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for your brothers or sisters
(whether by whole or half blood) spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or beneficiary, but only
to the extent of your proportionate interest therein as a shareholder, partner
or beneficiary thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you. 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 this option.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
9. Any notices provided for in this 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 the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
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10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, 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 this option and those of the Plan, the provisions of the Plan
shall control.
Dated the _____ day of __________________, 19___.
Very truly yours,
TERAYON COMMUNICATION SYSTEMS, INC.
By_______________________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1995 Stock Option Plan
Notice of Exercise
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The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it
sets forth the entire understanding between the undersigned optionee and the
Company and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE ______________________
(Initial)
OTHER ___________________________________
___________________________________
___________________________________
____________________________________________
______________________________, OPTIONEE
Address:____________________________________
____________________________________________
____________________________________________
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NOTICE OF EXERCISE
Terayon Communication Systems, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
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: ___ 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: $___________________
Value of ______ shares of
common stock delivered herewith/1/: $___________________
_____________________________
/1/ Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
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By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Company's 1995 Stock Option 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 the Option, and
(iii) to the extent the Option is 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 the Option or within one (1) year after
--
such shares of Common Stock are issued upon exercise of the Option.
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 or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days following the effective date of the registration statement of the
Company filed under the Securities Act as may be requested by the Company or
representatives of the underwriters. I further agree that the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
Very truly yours,
______________________________________
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EARLY EXERCISE STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made by and between TERAYON COMMUNICATION SYSTEMS, INC.,
a Delaware corporation (the "Corporation"), and ________________ ("Purchaser").
WITNESSETH:
WHEREAS, Purchaser holds an incentive/non-statutory stock option to
purchase shares of common stock of the Corporation pursuant to the Corporation's
1995 Stock Option Plan (the "Plan") which Purchaser desires to exercise; and
WHEREAS, Xxxxxxxxx wishes to take advantage of the early exercise provision
of his option and therefore to enter into this Agreement;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Purchaser hereby agrees to purchase from the Corporation, and the
Corporation hereby agrees to sell to Purchaser, an aggregate of _______ shares
of the common stock (the "Stock") of the Corporation, for an exercise price of
$_______ per share (total exercise price: _______________ ($________)), payable
as follows:
Cash at Closing $__________________________
Promissory Note in the form $__________________________
of Exhibit E (the "Note")
Value of _____ shares of Terayon $__________________________
Communication Systems, Inc.
common stock/1/
Total Exercise Price $__________________________
The closing hereunder shall occur at the offices of the Corporation on the
date of this Agreement or at such other time and place as the parties may
mutually agree upon in writing.
At the closing, Purchaser shall deliver three (3) stock assignments in the
form of Exhibit B, duly endorsed (with date and number of shares left blank),
joint escrow instructions (the "Joint Escrow Instructions") in the form of
Exhibit C, duly executed by Purchaser, and the total exercise price (including
an executed Note in the form of Exhibit E if a portion of the total exercise
price is to be paid by promissory note) and an executed pledge agreement in the
form of
___________________________
/1/ Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
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Exhibit F (the "Pledge Agreement") under which all shares of the Stock
acquired by Note shall be pledged as collateral security for the payment of the
indebtedness represented by the Note; and including endorsed certificates
representing the appropriate number of shares of the Corporation's common stock
if a portion of the total exercise price is to be paid by common stock.
At the closing or as soon thereafter as practicable, the Corporation shall
deliver to the Escrow Agent (as defined in paragraph 8 below) share certificates
for all of the Stock that is to be subject to the Purchase Option (as defined in
paragraph 2 below), and shall deliver share certificates to Purchaser for all of
the Stock, if any, that is not to be subject to the Purchase Option or the
Pledge Agreement. The certificates for all of the Stock that is subject to the
Pledge Agreement but not the Purchase Option shall be retained by the
Corporation as security pursuant to the Pledge Agreement.
2. In accordance with the provisions of section 408(b) of the California
General Corporation Law, the Stock to be purchased by Purchaser pursuant to this
Agreement shall be subject to the following option ("Purchase Option"):
(a) In the event that Purchaser shall cease to be an employee of the
Corporation for any reason (including his death), or no reason, with or without
cause, the Purchase Option may be exercised. The Corporation shall have the
right at any time within sixty (60) days after such cessation of employment to
purchase from Purchaser or his personal representative, as the case may be, at
the price per share paid by Purchaser pursuant to this Agreement ("Option
Price"), up to but not exceeding the number of shares of the Stock set forth on
Exhibit A hereto which is incorporated herein by this reference.
(b) In addition, and without limiting the foregoing Purchase Option,
if at any time during the term of the Purchase Option, there occurs: (a) a
dissolution or liquidation of the Corporation; (b) a merger or consolidation
involving the Corporation in which the Corporation is not the surviving
corporation; (c) a reverse merger in which the Corporation is the surviving
corporation but the shares of the Corporation's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of other securities, cash or otherwise; or
(d) any other capital reorganization in which more than fifty percent (50%) of
the shares of the Corporation entitled to vote are exchanged, then: (i) if
there is no successor to the Corporation, the Corporation shall have the right
to exercise its Purchase Option as to all or any portion of the Stock then
subject to the Purchase Option set forth above to the same extent as if
Purchaser's employment by the Corporation had ceased on the date preceding the
date of consummation of said event or transaction or (ii) the Purchase Option
may be assigned to any successor of the Corporation, and the Purchase Option
shall apply if Purchaser shall cease for any reason to be an employee of such
successor on the same basis as set forth above. In that case, references herein
to the "Corporation" shall be deemed to refer to such successor.
(c) The Corporation shall be entitled to pay for any shares
purchased pursuant to its Purchase Option at the Corporation's option in cash,
by offset against any indebtedness given in payment for the Stock, or a
combination of both.
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(d) As used herein, employee, employment and similar terms shall
including acting as a consultant or director of the Corporation, and employment
with the Corporation shall include employment with an affiliate of the
Corporation.
(e) This Agreement is not an employment contract and nothing in this
Agreement shall be deemed to create in any way whatsoever any obligation on the
part of Purchaser to continue in the employ of the Corporation, or of the
Corporation to continue Purchaser in the employ of the Corporation.
(f) In the event that the Stock's fair market value (as defined in
the Plan) is equal to or exceeds the Option Price on the date that the
Purchaser ceases to be employed, the Company shall exercise its purchase
option to the extent permitted by law.
3. The Purchase Option may be exercised by giving written notice of
exercise delivered or mailed as provided in paragraph 14. Upon providing of
such notice and payment or tender of the purchase price, the Corporation shall
become the legal and beneficial owner of the Stock being purchased and all
rights and interests therein or related thereto.
4. If from time to time during the term of the Purchase Option there is
any stock dividend or liquidating dividend or distribution of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Corporation, then, in such event, any and all new,
substituted or additional securities or other property to which Purchaser is
entitled by reason of his ownership of Stock will be immediately subject to the
Purchase Option and be included in the word "Stock" for all purposes of the
Purchase Option with the same force and effect as the shares of Stock then
subject to the Purchase Option. While the total Option Price shall remain the
same after each such event, the Option Price per share of Stock upon exercise of
the Purchase Option shall be appropriately adjusted.
5. All certificates representing any shares of Stock of the Corporation
subject to the provisions of this Agreement shall have endorsed thereon legends
in substantially the following form:
(i) "The shares represented by this certificate are subject
to an option set forth in an agreement between the corporation and the
registered holder, or his predecessor in interest, a copy of which is on file
at the principal office of this corporation. Any transfer or attempted
transfer of any shares subject to such option is void without the prior
express written consent of the issuer of these shares."
(ii) "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
corporation that such registration is not required."
(iii) Any legend required to be placed thereon by the California
Commissioner of Corporations.
6. Purchaser acknowledges that he is aware that the Stock to be issued to
him by the Corporation pursuant to this Agreement has not been registered under
the Securities Act of 1933,
11
as amended (the "Act"), on the basis that no distribution or public offering
of the Stock is to be effected, and in this connection acknowledges that the
Corporation is relying on the following representations. In this connection,
Purchaser warrants and represents to the Corporation that he is acquiring the
Stock for investment and not with a view to or for sale in connection with any
distribution of the Stock or with any present intention of distributing or
selling the Stock and he does not presently have reason to anticipate any
change in circumstances or any particular occasion or event which would cause
him to sell the Stock. Purchaser recognizes that the Stock must be held
indefinitely unless it is subsequently registered under the Act or an
exemption from such registration is available and, further, recognizes that
the Corporation is under no obligation to register the Stock or to comply with
any exemption from such registration.
7. Purchaser is aware that the Stock may not be sold pursuant to Rule 144
adopted under the Act unless certain conditions are met and until Purchaser has
held the Stock for at least two (2) years. Among the conditions for use of Rule
144 is the availability of specified current public information about the
Corporation. Purchaser recognizes that the Corporation presently has no plans
to make such information available to the public.
Whether or not the Purchase Option is exercised or has lapsed, Purchaser
further agrees not to make any disposition of any of the Stock in any event
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 such registration statement; or
(b) (i) Purchaser 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, and (ii)
Purchaser shall have given the Corporation an opinion of counsel, which
opinion and counsel shall be satisfactory to the Corporation, to the effect
that such disposition will not require registration of the Stock under the
Act.
8. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser's Stock
upon exercise of the Purchase Option herein provided for, Xxxxxxxxx agrees, at
the closing hereunder (or as soon thereafter as practicable), to deliver (or
have the Corporation deliver on the Purchaser's behalf) to and deposit with
the Secretary of the Corporation ("Escrow Agent"), as Escrow Agent in this
transaction, three (3) stock assignments duly endorsed (with date and number
of shares left blank) in the form attached hereto as Exhibit B, together with
a certificate or certificates evidencing all of the Stock subject to the
Purchase 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 Corporation and Purchaser set forth in Exhibit C attached hereto and
incorporated herein by this reference, which instructions shall also be
delivered to the Escrow Agent at the closing hereunder (or as soon thereafter
as practicable). If a portion of the total purchase price is paid by a
promissory note, the Stock is also subject to the Pledge Agreement, and
possession of the certificates and stock assignments by the Escrow Agent shall
also constitute possession by the Corporation of such instruments pursuant to
the Pledge Agreement.
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9. Purchaser shall not sell or transfer any of the Stock subject to the
Purchase Option or any interest therein so long as such Stock is subject to the
Purchase Option or the Pledge Agreement.
10. The Corporation shall not be required (i) to transfer on its books any
shares of Stock of the Corporation which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (ii) 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.
11. Subject to the provisions of paragraphs 9 and 10 above, Purchaser (but
not any unapproved transferee) shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Corporation with
respect to the Stock.
12. Purchaser acknowledges receipt of a copy of Section 260.141.11 of
Title 10 of the California Code of Regulations, attached hereto as Exhibit D.
13. The parties agree to execute such further instruments and to take such
further action as reasonably may be necessary to carry out the intent of this
Agreement.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
any United States Post Office Box, by registered or certified mail with postage
and fees prepaid, addressed to the other party hereto at his address hereinafter
shown below his signature or at such other address as such party may designate
by ten (10) days' advance written notice to the other party hereto.
15. This Agreement shall bind and inure to the benefit of the successors
and assigns of the Corporation and, subject to the restrictions on transfer
herein set forth, inure to the benefit of and be binding upon Xxxxxxxxx, his
heirs, executors, administrators, successors, and assigns. Without limiting the
generality of the foregoing, the Purchase Option of the Corporation hereunder
shall be assignable by the Corporation at any time or from time to time, in
whole or in part. Should the right of repurchase be assigned by the
Corporation, the assignee shall pay to the
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Corporation cash equal to the excess, if any, of the Stock's Fair Market Value
(as defined in the Plan) over the Option Price.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the ____ day of __________, 19__.
TERAYON COMMUNICATION SYSTEMS, INC.
By:_________________________________
Address: 0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
____________________________________
Purchaser
Address: ___________________________
___________________________
ATTACHMENTS:
Exhibit A Vesting Schedule
Exhibit B Assignment Separate from Certificate
Exhibit C Joint Escrow Instructions
Exhibit D California Code of Regulations, Title 10, Section 260.141.11
Exhibit E Promissory Note
Exhibit F Stock Pledge Agreement
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EXHIBIT A
VESTING SCHEDULE
NUMBER OF SHARES SUBJECT TO
IF CESSATION OF EMPLOYMENT OCCURS: PURCHASE OPTION:
Before __________, 19 __________ shares
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
After __________, 19 __________ shares
but before __________ , 19
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EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Early Exercise Stock
Purchase Agreement dated as of ____________, 19__ (the "Agreement"),
_________________________ hereby sells, assigns and transfers unto
_____________________________________________ (_________) shares of common stock
of Terayon Communication Systems, 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. 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 Purchase Option
under the Agreement.
Dated:______________________
___________________________________
Signature
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EXHIBIT C
JOINT ESCROW INSTRUCTIONS
Terayon Communication Systems, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attn: Secretary
Dear Sir or Madam:
As Escrow Agent for both Terayon Communication Systems, Inc., a Delaware
corporation ("Corporation"), and the undersigned purchaser of stock of the
Corporation ("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 Corporation or an assignee shall elect to exercise
the Purchase Option set forth in the Agreement, the Corporation or its assignee
will give to Purchaser and you a written notice specifying the number of shares
of stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Corporation. Purchaser and the
Corporation 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 stock to be transferred, to the Corporation 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 stock
being purchased pursuant to the exercise of the Purchase Option.
3. Purchaser irrevocably authorizes the Corporation to deposit with you
any certificates evidencing shares of 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 his 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
Purchase 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 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 Corporation that the property
17
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 Corporation.
6. Except at 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. You shall be entitled to employ such legal counsel (including without
limitation the firm of Xxxxxx Godward llp) and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Corporation or if you shall resign by written
notice to each party. In the event of any such termination, the Corporation may
appoint any officer or assistant officer of the Corporation as successor Xxxxxx
Agent and Purchaser hereby confirms the appointment of such successor or
successors as his attorney-in-fact and agent to the full extent of your
appointment.
13. 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.
14. 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
may (but are not obligated
18
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.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
any United States Post Box, 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' written notice to each of the other parties hereto:
CORPORATION: TERAYON COMMUNICATION SYSTEMS, INC.
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
PURCHASER: ___________________________________
___________________________________
___________________________________
SECRETARY: Secretary
TERAYON COMMUNICATION SYSTEMS, INC.
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
16. 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.
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 Xxxxxx
19
Agents. It is understood and agreed that the Corporation 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.
Very truly yours,
______________________________________
By____________________________________
PURCHASER:
______________________________________
ESCROW AGENT:
___________________________________
Secretary
TERAYON COMMUNICATION SYSTEMS, INC.
20
EXHIBIT D
CALIFORNIA CODE OF REGULATIONS, TITLE 10, SECTION 260.141.11
21
EXHIBIT E
PROMISSORY NOTE
$_______________ _____________, Delaware
______________, 199_
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to pay
to the order of TERAYON COMMUNICATION SYSTEMS, INC., a Delaware corporation (the
"Company"), at Santa Clara, California, or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of ________________
Dollars ($_________) together with interest accrued from the date hereof on the
unpaid principal at the rate of ______%/2/ 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 subject to scheduled amortized repayments on the dates and in the
amounts listed below.
PRINCIPAL REPAYMENT DATE REPAYMENT AMOUNT
INTEREST PAYMENTS. Interest shall be payable in arrears on each
Principal Repayment Date 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 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
___________________________
/2/ Check with Tax Department attorney to get applicable interest rate for the
month the note is made and for the terms thereof. Note that not using the
appropriate interest rate may result in there being imputed interest income.
22
Agreement and the Pledge Agreement, each of even date herewith between the
undersigned and the Company.
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_______________________________
23
EXHIBIT F
STOCK PLEDGE AGREEMENT
1. As collateral security for the payment of that certain promissory note
in principal amount of $______________ issued this date to _____________________
("Pledgee") by the undersigned (hereinafter called "indebtedness"), the
undersigned hereby assigns, transfers to and pledges with the Pledgee the
securities listed on Schedule 1 hereto which were this day delivered to be
deposited with Pledgee, together with any stock rights, rights to subscribe,
dividends paid in cash or other property in connection with the complete or
partial liquidation of Pledgee, stock dividends, dividends paid in stock, new
securities or other property except cash dividends other than liquidating
dividends to which the undersigned is or may hereafter become entitled to
receive on account of such property, and in the event that the undersigned
receives any such, the undersigned will immediately deliver it to Pledgee to be
held by Pledgee hereunder in the same manner as the property originally pledged
hereunder. All property assigned, transferred to and pledged with Pledgee under
this paragraph is hereinafter called "collateral."
2. At any time, without notice, and at the expense of the undersigned,
Pledgee in its name or in the name of its nominee or of the undersigned 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 collateral; (2) enter into any extension, reorganization, deposit, merger,
or consolidation agreement, or any agreement in any wise relating to or
affecting the collateral, and in connection therewith may deposit or surrender
control of such collateral thereunder, accept other property in exchange for
such collateral and do and perform such acts and things as it may deem proper,
and any money or property received in exchange for such collateral shall be
applied to the indebtedness or thereafter held by it pursuant to the provisions
hereof; (3) insure, process and preserve the collateral; (4) cause the
collateral to be transferred to its name or to the name of its nominee; (5)
exercise as to such collateral all the rights, powers, and remedies of an owner,
except that so long as the indebtedness is not in default the undersigned shall
retain all voting rights as to the collateral.
3. The undersigned agrees to pay prior to delinquency all taxes, charges,
liens and assessments against the collateral, and upon the failure of the
undersigned 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. All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by Pledgee in exercising any right, power or
remedy conferred by this agreement, or in the enforcement thereof, shall become
a part of the indebtedness secured hereunder and shall be paid to Pledgee by the
undersigned immediately and without demand.
5. At the option of Pledgee and without necessity of demand or notice,
all or any part of the indebtedness of the undersigned 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 agreement; (2) default in the payment of principal or
interest when due; (3) the levy of any attachment, execution or other
24
process against the 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, United
States Code, Bankruptcy, of, by, or against the undersigned.
6. 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 paragraph, 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 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 at private sale,
then the purchase price of the collateral shall be equal to the public market
price then in effect, or, if at the time of sale no public market for the
collateral exists, then, in recognition of the fact that the sale of the
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 the undersigned hereby agree
that such private sale shall be at a purchase price mutually agreed to by
Pledgee and the undersigned 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 the
undersigned within 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 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 collateral
so sold and hold the same thereafter in its own right free from any claim of the
undersigned or right of redemption. Demands of performance, notices of sale,
advertisements and presence of property at sale are hereby waived, and Xxxxxxx
is hereby authorized to sell hereunder any evidence of debt pledged to it. Any
sale hereunder may be conducted by any officer or agent of Pledgee.
7. The proceeds of the sale of any of the collateral and all sums
received or collected by Pledgee from or on account of such 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 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 pay any balance
to the undersigned.
8. Pledgee shall be under no duty or obligation whatsoever to make or
give any presentments, demands for performance, notices of non-performance,
protests, notices of protest or notices of dishonor in connection with any
obligations or evidences of indebtedness held by Pledgee as collateral, or in
connection with any obligations or evidences of indebtedness which constitute in
whole or in part the indebtedness secured hereunder.
9. Pledgee may at any time deliver the collateral or any part thereof to
the undersigned and the receipt of the undersigned shall be a complete and full
acquittance for the
25
collateral so delivered, and Pledgee shall thereafter be discharged from any
liability or responsibility therefor.
10. Upon the transfer of all or any part of the indebtedness Pledgee may
transfer all or any part of the collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such collateral
so transferred, and the transferee shall be vested with all the rights and
powers of Pledgee hereunder with respect to such collateral so transferred; but
with respect to any collateral not so transferred Pledgee shall retain all
rights and powers hereby given.
11. 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
the undersigned may have ceased.
12. Pledgee agrees that so long as the indebtedness is not in default,
shares of Terayon Communication Systems, Inc. common stock held hereunder as
collateral for the indebtedness shall 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 even date herewith among the parties to this
Pledge Agreement and the Escrow Agent named therein or from the Purchase Option
of Terayon Communication Systems, Inc., set forth in the Early Exercise Stock
Purchase Agreement dated __________________, 19__, if any, between the parties
to this Pledge Agreement.
13. The rights, powers and remedies given to Pledgee by this agreement
shall be in addition to all rights, powers and remedies given to Pledgee by
virtue of any statute or rule of law. Pledgee may exercise its Pledgee's lien
or right of setoff with respect to the indebtedness in the same manner as if the
indebtedness were unsecured. 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
26
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.
Dated: __________ , 19__
_________________________________
ATTACHMENT:
Schedule 1
27
SCHEDULE 1
TO
PLEDGE AGREEMENT
[SHARES PLEDGED]
28
