Cavium Networks, Inc. 2007 Equity Incentive Plan Option Agreement (Incentive Stock Option or Nonstatutory Stock Option)
Exhibit 10.4
Cavium Networks, Inc.
2007 Equity Incentive Plan
2007 Equity Incentive Plan
Option Agreement
(Incentive Stock Option or Nonstatutory Stock Option)
(Incentive Stock Option or Nonstatutory Stock Option)
Pursuant to your Option Grant Notice (“Grant Notice”) and this Option Agreement, Cavium
Networks, Inc. (the “Company”) has granted you an option under its 2007 Equity Incentive Plan (the
“Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined
in this Option Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.
2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.
3. Exercise Restriction for Non-Exempt Employees. In the event that you are an
Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended
(i.e., a “Non-Exempt Employee”), you may not exercise your option until you have completed at least
six (6) months of Continuous Service measured from the Date of Grant specified in your Grant
Notice, notwithstanding any other provision of your option.
4. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check, bank draft or money order payable to the Company or in any other manner permitted by your
Grant Notice, which may include one or more of the following:
(a) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.
(b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of
1.
exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your attestation of ownership of
such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you
may not exercise your option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.
(c) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided further, that shares of Common Stock will no longer be outstanding under your
option and will not be exercisable thereafter to the extent that (i) shares are used to pay the
exercise price pursuant to the “net exercise,” (ii) shares are delivered to you as a result of such
exercise, and (iii) shares are withheld to satisfy tax withholding obligations.
(d) In any other form of legal consideration that may be acceptable to the Board.
5. Whole Shares. You may exercise your option only for whole shares of Common Stock.
6. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.
7. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:
(a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death (the “Three Month Post-Termination Exercise Period”);
(b) twelve (12) months after the termination of your Continuous Service due to your
Disability;
(c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
2.
(e) the day before the tenth (10th) anniversary of the Date of Grant.
If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or Disability. The Company has provided for extended exercisability of your option
under certain circumstances for your benefit but cannot guarantee that your option will necessarily
be treated as an Incentive Stock Option if you continue to provide services to the Company or an
Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise
your option more than three (3) months after the date your employment with the Company or an
Affiliate terminates.
8. Extension of Term.
(a) If during any part of the Three Month Post-Termination Exercise Period, your option is not
exercisable solely because of the condition set forth in Section 6, your option shall not expire
until the earlier of the Expiration Date indicated in your Grant Notice or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of your Continuous
Service.
(b) If during any part of the Three Month Post-Termination Exercise Period, the sale of shares
issued upon exercise of your option would violate the Company’s Xxxxxxx Xxxxxxx Policy, your option
shall not expire until the earlier of (i) the Expiration Date indicated in your Grant Notice, (ii)
until it shall have been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service during which you can sell the shares issued upon exercise of
your option without violating the Company’s Xxxxxxx Xxxxxxx Policy, (iii) the 15th day
of the third month after the date on which your option would cease to be exercisable but for this
section, or (iv) such longer period as would not cause your option to become subject to Section
409A(a)(1) of the Code.
(c) If (i) you are a Non-Exempt Employee, (ii) you terminate your Continuous Service within
six (6) months after the Date of Grant specified in your Grant Notice, and (iii) you have vested in
a portion of your option at the time of your termination of Continuous Service, your option shall
not expire until the earlier of (A) the later of the date that is seven (7) months after the Date
of Grant specified in your Grant Notice or the date that is three (3) months after the termination
of your Continuous Service or (B) the Expiration Date indicated in your Grant Notice.
9. Exercise.
(a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.
3.
(b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of
your option, or (ii) the disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
10. Transferability.
(a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner that is not prohibited by applicable tax and/or securities laws upon your request.
Additionally, if your option is an Incentive Stock Option, the Board may permit you to transfer
your option only to the extent permitted by Sections 421, 422 and 424 of the Code and the
regulations and other guidance thereunder.
(b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.
(c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.
11. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.
12. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums
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required to satisfy the federal, state, local and foreign tax withholding obligations of the
Company or an Affiliate, if any, which arise in connection with the exercise of your option.
(b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount required to be withheld by law (or such
lower amount as may be necessary to avoid variable award accounting). Any adverse consequences to
you arising in connection with such share withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.
13. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.
14. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.
5.
Cavium Networks, Inc.
2007 Equity Incentive Plan
2007 Equity Incentive Plan
Option Grant Notice
Cavium Networks, Inc. (the “Company”), pursuant to its 2007 Equity Incentive Plan (the
“Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s
Common Stock set forth below. This option is subject to all of the terms and conditions as set
forth herein and in the Option Agreement, the Plan, and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan or the Option Agreement.
Optionholder: |
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Date of Grant: |
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Vesting Commencement Date: |
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Number of Shares Subject to Option: |
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Exercise Price (Per Share): |
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Total Exercise Price: |
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Expiration Date: |
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Type of Grant:
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¨ Incentive Stock Option1 | ¨ Nonstatutory Stock Option | ||
Exercise Schedule:
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Same as Vesting Schedule | |||
Vesting Schedule:
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[___] | |||
| Payment: | By one or a combination of the following methods of payment (described in the Option Agreement): | |||
| ¨ By cash, check, bank draft or money order payable to the Company | ||||
| ¨ Pursuant to a Regulation T Program (cashless exercise) if the shares are publicly traded | ||||
| ¨ By delivery of already-owned shares if the shares are publicly traded | ||||
| ¨ By net exercise if the Company has established procedures for net exercise | ||||
Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Option Grant Notice, the Option Agreement, and the Plan.
Optionholder further acknowledges that as of the Date of Grant, this Option Grant Notice, the
Option Agreement, and the Plan set forth the entire understanding between Optionholder and the
Company regarding the acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted and delivered to
Optionholder under the Plan, and (ii) the following agreements only:
Other Agreements: |
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Cavium
Networks, Inc.
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Optionholder: | |||||
By: |
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| Signature | Signature | |||||
Title: |
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Date:
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Date: | |||||
Attachments: Option Agreement, 2007 Equity Incentive Plan, and Notice of Exercise
| 1 | If this is an Incentive Stock Option, it (plus other outstanding incentive stock options granted to Optionholder by the Company) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. |
Attachment II
2007 Equity Incentive Plan
Attachment III
Notice of Exercise
Notice Of Exercise
| Cavium Networks, Inc. 000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxxxxx Xxxx, 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 (check one): | ¨ | Incentive | ¨ | Nonstatutory |
Stock option grant date: |
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Number of shares as
to which option is
exercised: |
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Certificates to be
issued in name of: |
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Exercise price per share: |
$ | |||
Total exercise price: |
$ | |||
Payment delivered
herewith: |
$ | |||
Form of payment: |
¨ Cash or check | |||
| ¨ Bank draft or money order payable to the Company | ||||
| ¨
Pursuant to a Regulation T program (cashless exercise) if the shares
are publicly traded |
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| ¨ Delivery of already-owned shares if the Shares are publicly traded | ||||
| ¨ Net exercise if the Company has established procedures for net exercise | ||||
By this exercise, I agree (i) to provide such additional documents as you may require pursuant
to the terms of the Cavium Networks, Inc. 2007 Equity Incentive Plan, (ii) to provide for the
payment by me to you (in the manner designated by you) of your withholding obligation, if any,
relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock
option, to notify you in writing within fifteen (15) days after the date of any disposition of any
of the shares of Common Stock issued upon exercise of this option that occurs within two (2) years
after the date of grant of this option or within one (1) year after such shares of Common Stock are
issued upon exercise of this option.
I agree that, if required by the Company (or a representative of the underwriters) in
connection with an 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
1.
Stock or other securities of the Company during such period following the effective date of
the registration statement of the Company filed under the Securities Act as may be requested by the
Company or the representative 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.
| Submitted By: | Accepted by: | |||
| Cavium Networks, Inc. | ||||
| |
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| Printed Name | ||||
| By: | |
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| Signature | Signature | |||
| Title: | |
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| Date: | |
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2.
