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EXHIBIT 99.4
CONEXANT SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
ISTARI DESIGN, INC.
1997 STOCK PLAN
OPTIONEE: [Optionee Name]
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 9th day of
November, 1999 by Conexant Systems, Inc., a Delaware corporation ("Conexant").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Istari Design,
Inc., a California corporation ("Istari"), which were granted to Optionee under
the Istari Design, Inc. 1997 Stock Option Plan (the "Plan") and are each
evidenced by a Stock Option Agreement (the "Option Agreement");
WHEREAS, Istari has been acquired by Conexant through the merger of
Istari Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Conexant, with and into Conexant (the "Merger") pursuant to the Agreement and
Plan of Reorganization, dated November 9, 1999, by and among Conexant, Istari
Acquisition Corp. and Istari (the "Merger Agreement");
WHEREAS, the provisions of the Merger Agreement require Conexant to
assume all obligations of Istari under all outstanding options under the Plan at
the consummation of the Merger (except for options held by a certain individual,
which will be cancelled as of the Effective Time, as hereinafter defined), and
this Agreement evidences the assumption of such options by Conexant;
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.035895
shares of Conexant common stock ("Conexant Stock") for each outstanding share of
Istari common stock ("Istari Stock"); and
WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options that have become necessary by
reason of the assumption of those options by Conexant in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Istari Stock subject to the options held by
Optionee immediately prior to the Effective Time (the "Istari Options") and the
exercise price payable per share are set forth below. Conexant hereby assumes,
as of the Effective Time, all the duties and obligations of Istari under each of
the Istari Options. In connection with such assumption, the number of shares of
Conexant Stock purchasable under each Istari Option hereby assumed and the
exercise price payable thereunder have been adjusted to reflect the Exchange
Ratio. Accordingly, the number of shares of Conexant Stock subject to each
Istari Option hereby
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assumed shall be as specified for that option below, and the adjusted exercise
price payable per share of Conexant Stock under the assumed Istari Option shall
also be as indicated for that option below.
ISTARI OPTIONS
PRE-MERGER AS ASSUMED BY CONEXANT
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# of Shares of Exercise Price # of Shares Adjusted Exercise
Istari Stock per Share of Conexant Stock Price per Share
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2. The intent of the foregoing adjustments to each assumed Istari
Option is to assure that the spread between the aggregate fair market value of
the shares of Conexant Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, be not less than the spread
which existed, immediately prior to the Merger, between the then aggregate fair
market value of the Istari Stock subject to the Istari Option and the aggregate
exercise price in effect at such time under the Option Agreement. Such
adjustments are also intended to preserve, immediately after the Merger, on a
per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Istari Option immediately prior
to the Merger.
3. The following provisions shall govern each Istari Option hereby
assumed by Conexant:
a. Unless the context otherwise requires, all references
in each Option Agreement and in the Plan (i) to the
"Company" shall mean Conexant, (ii) to "Shares,"
"Stock" or "Common Stock" shall mean shares of
Conexant Stock, (iii) to the "Board of Directors"
shall mean the Board of Directors of Conexant and
(iv) to the "Committee" shall mean the Compensation
Committee of the Conexant Board of Directors.
b. The grant date and the expiration date of each
assumed Istari Option and all other provisions that
govern either the exercise or the termination of the
assumed Istari Option shall remain the same as set
forth in the Plan and the Option Agreement applicable
to that option, and the provisions of the Plan and
the Option Agreement shall accordingly govern and
control Optionee's rights to purchase Conexant Stock
under the assumed Istari Option.
c. Pursuant to the terms of the Option Agreement, none
of your Istari Options as assumed by Conexant in
connection with the transaction vested or became
exercisable on an accelerated basis upon the
consummation of the Merger. Accordingly, each such
assumed Istari Option shall continue to vest for any
remaining unvested shares of Conexant Stock subject
to that option in
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accordance with the same installment vesting schedule
in effect under the applicable Option Agreement
immediately prior to the Effective Time; provided,
however, that the number of shares subject to each
such installment shall be adjusted to reflect the
Exchange Ratio.
d. For purposes of applying any and all provisions of
the Option Agreement relating to Optionee's status as
an employee, director, consultant, or advisor
providing service to Istari, Optionee, shall be
deemed to continue in such status for so long as
Optionee renders service as an employee, director,
consultant, or advisor, respectively, to Conexant or
a subsidiary. Accordingly, the provisions of the
Option Agreement governing the termination of the
assumed Istari Options upon Optionee's cessation of
service with Istari shall hereafter be applied on the
basis of Optionee's cessation of such service with
respect to Conexant or a subsidiary, and each assumed
Istari Option shall accordingly terminate, within the
designated time period in effect under the Option
Agreement for that option, following such cessation
of such service for Conexant or a subsidiary.
e. The adjusted exercise price payable for the Conexant
Stock subject to each assumed Istari Option shall be
payable in any of the forms authorized under the
Option Agreement applicable to that option. For
purposes of determining the holding period of any
shares of Conexant Stock delivered in payment of such
adjusted exercise price, the period for which such
shares were held as Istari Stock prior to the Merger
shall be taken into account.
f. In order to exercise each assumed Istari Option,
Optionee must deliver to Conexant a written notice of
exercise in which the number of shares of Conexant
Stock to be purchased thereunder must be indicated.
The exercise notice must be accompanied by payment of
the adjusted exercise price payable for the purchased
shares of Conexant Stock and should be delivered to
Conexant at the following address:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Option Plan Administrator
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4. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, Conexant Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly authorized officer
effective as of the 9th day of November, 1999.
CONEXANT SYSTEMS, INC.
By:
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ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Istari Options hereby assumed by Conexant are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
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[OPTIONEE NAME], OPTIONEE
DATED: November 9, 1999
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