Exhibit 4.5
TRANSWITCH CORPORATION
Incentive Stock Option Agreement
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TranSwitch Corporation, a Delaware corporation (the "Company"), hereby
grants as of ___________, 199_ to _______________________ (the "Employee"), an
option to purchase a maximum of __________ shares (the "Option Shares") of its
Common Stock, $.001 par value ("Common Stock"), at the price of $________ per
share, on the following terms and conditions:
1. Grant Under Second Amended and Restated 1995 Stock Plan. This option
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is granted pursuant to and is governed by the Company's Second Amended and
Restated 1995 Stock Plan (the "Plan") and, unless the context otherwise
requires, terms used herein shall have the same meaning as in the Plan.
Determinations made in connection with this option pursuant to the Plan shall be
governed by the Plan as it exists on this date.
2. Grant as Incentive Stock Option; Other Options. This option is
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intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Employee by
the Company or any Related Corporation (as defined in the Plan), but a duplicate
original of this instrument shall not effect the grant of another option.
3. Vesting of Option if Employment Continues. If the Employee has
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continued to be employed by the Company or any Related Corporation on the
following dates, the Employee may exercise this option for the number of shares
of Common Stock set opposite the applicable date:
[INSERT VESTING SCHEDULE]
The foregoing rights are cumulative and, while the Employee continues to be
employed by the Company or any Related Corporation, may be exercised on or
before the date which is ten (10) years from the date this option is granted.
All of the foregoing rights are subject to Sections 4 and 5, as appropriate, if
the Employee ceases to be employed by the Company and all Related Corporations.
4. Termination of Employment.
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(a) Termination Other Than for Cause: If the Employee ceases to be
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employed by the Company and all Related Corporations, other than by reason of
death or disability as defined in Section 5 or termination for Cause as defined
in Section 4(c), no further installments of this option shall become
exercisable, and this option shall terminate on the earlier of (i) ninety (90)
days after the date of termination of the Employee's employment, or (ii) the
scheduled expiration date of this option. In such a case, the Employee's only
rights hereunder shall be those which are properly exercised before the
termination of this option.
(b) Termination for Cause: If the employment of the Employee is
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terminated for Cause (as defined in Section 4(c)), this option shall terminate
upon the Employee's receipt of written notice of such termination and shall
thereafter not be exercisable to any extent whatsoever.
(c) Definition of Cause: "Cause" shall mean conduct involving one or
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more of the following: (i) the substantial and continuing failure of the
Employee, after notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of his or her
employment; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or
breach of fiduciary duty to the Company or Related Corporation; (iii) the
commission of an act of embezzlement or fraud; (iv) deliberate disregard of the
rules or policies of the Company or Related Corporation which results in direct
or indirect loss, damage or injury to the Company or Related Corporation; (v)
the unauthorized disclosure of any trade secret or confidential information of
the Company or Related Corporation; or (vi) the commission of an act which
constitutes unfair competition with the Company or Related Corporation or which
induces any customer or supplier to breach a contract with the Company or
Related Corporation.
5. Death; Disability.
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(a) Death: If the Employee ceases to be employed by the Company and
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all Related Corporations by reason of his or her death, this option may be
exercised, to the extent otherwise exercisable on the date of death, by the
estate, personal representative or beneficiary who has acquired this option by
will or by the laws of descent and distribution, until the earlier of (i) the
specified expiration date of this option or (ii) 180 days from the date of the
Employee's death.
(b) Disability: If the Employee ceases to be employed by the Company
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and all Related Corporations by reason of his or her disability (as defined in
Paragraph 10(B) of the Plan), the Employee shall have the right to exercise this
option on the date of termination of employment, for the number of shares for
which he or she could have exercised it on that date, until the earlier of (i)
the specified expiration date of this option or (ii) 180 days from the date of
the termination of the Employee's employment.
(c) Effect of Termination: At the expiration of the 180-day period
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provided in paragraph (a) or (b) of this Section 5 or the scheduled expiration
date, whichever is the earlier, this option shall terminate and the only rights
hereunder shall be those as to which the option was properly exercised before
such termination.
6. Partial Exercise. The Employee may exercise this option in part at
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any time and from time to time within the above limits, except that the Employee
may not exercise this option for a fraction of a share unless such exercise is
with respect to the final installment of stock subject to this option and cash
in lieu of a fractional share must be paid, in accordance with
Paragraph 13(G) of the Plan, to permit the Employee to exercise completely such
final installment. Any fractional share with respect to which an installment of
this option cannot be exercised because of the limitation contained in the
preceding sentence shall remain subject to this option and shall be available
for later purchase by the Employee in accordance with the terms hereof.
7. Payment of Price. (a) The option price shall be paid in the following
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manner:
(i) in United States dollars in cash or by check;
(ii) subject to paragraph 7(b) below, through delivery of
shares of Common Stock having a fair market value
(determined by the Board of Directors of the Company or a
committee appointed by the Board) equal as of the date of
the exercise to the cash exercise price of the Option;
(iii) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the
proceeds from the sale of the Common Stock acquired upon
exercise of the Option and an authorization to the broker
or selling agent to pay that amount to the Company, which
sale shall be at the participant's direction at the time
of exercise; or
(iv) by any combination of (i), (ii) or (iii) above.
(b) Limitations on Payment by Delivery of Common Stock: If the
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Employee delivers Common Stock held by the Employee ("Old Stock") to the Company
in full or partial payment of the option price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Employee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Employee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless the Employee has
owned such Common Stock free of any substantial risk of forfeiture for at least
six months.
(c) Permitted Payment by Recourse Note: In addition, if this
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paragraph is signed below by the person signing this Agreement on behalf of the
Company, the option price may be paid by delivery of the Employee's personal
recourse note bearing interest payable not less than annually at no less than
100% of the lowest applicable Federal rate, as defined in Section 1274(d) of the
Code.
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signature
8. Method of Exercising Option. Subject to the terms and conditions
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of this Agreement, this option may be exercised by written notice to the Company
at its principal executive office, or to such transfer agent as the Company
shall designate. Such notice shall state the election to exercise this option
and the number of Option Shares for which it is being exercised and shall be
signed by the person or persons exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option is exercised by the Employee and if
the Employee requests in the notice exercising this option, shall be registered
in the name of the Employee and another person jointly, with right of
survivorship). In the event this option is exercised, pursuant to Section 5
hereof, by any person or persons other than the Employee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option.
9. Option Not Transferable. This option is not transferable or
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assignable except by will or by the laws of descent and distribution. During
the Employee's lifetime only the Employee can exercise this option.
10. No Obligation to Exercise Option. The grant and acceptance of
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this option imposes no obligation on the Employee to exercise it.
11. No Obligation to Continue Employment. Neither the Plan, this
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Agreement, nor the grant of this option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
12. No Rights as Stockholder until Exercise. The Employee shall have
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no rights as a stockholder with respect to the Option Shares until the date of
issuance of a stock certificate to the Employee. Except as is expressly provided
in the Plan with respect to certain changes in the capitalization and stock
dividends of the Company, no adjustment shall be made for dividends or similar
rights for which the record date is before the date such stock certificate is
issued.
13. Capital Changes and Business Successions. The Plan contains
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provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
14. Early Disposition. The Employee agrees to notify the Company in
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writing immediately after the Employee transfers any Option Shares, if such
transfer occurs on or before the later of (a) the date two years after the date
of this Agreement or (b) the date one year after the date the Employee acquired
such Option Shares. The Employee also agrees to provide the Company with any
information concerning any such transfer required by the Company for tax
purposes.
15. Withholding Taxes. If the Company or any Related
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Corporation in its discretion determines that it is obligated to withhold any
tax in connection with the exercise of this option, the making of a
Disqualifying Disposition (as defined in Paragraph 18 of the Plan), the vesting
or transfer of Option Shares acquired on the exercise of this option, or the
making of a distribution or other payment with respect to the Option Shares, the
Employee hereby agrees that the Company or any Related Corporation may withhold
from the Employee's wages or other remuneration the appropriate amount of tax.
At the discretion of the Company or Related Corporation, the amount required to
be withheld may be withheld in cash from such wages or other remuneration or in
kind from the Common Stock or other property otherwise deliverable to the
Employee on exercise of this option. The Employee further agrees that, if the
Company or any Related Corporation does not withhold an amount from the
Employee's wages or other remuneration sufficient to satisfy the withholding
obligation of the Company or Related Corporation, the Employee will make
reimbursement on demand, in cash, for the amount underwithheld.
16. Provision of Documentation to Employee. By signing this
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Agreement the Employee acknowledges receipt of a copy of this Agreement and a
copy of the Plan.
17. Miscellaneous.
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(a) Notices: All notices hereunder shall be in writing and
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shall be deemed given when sent by certified or registered mail, postage
prepaid, return receipt requested, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice given in the
manner provided for herein.
(b) Entire Agreement; Modification: This Agreement
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constitutes the entire agreement between the parties relative to the subject
matter hereof, and supersedes all proposals, written or oral, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may be modified, amended or rescinded only by a
written agreement executed by both parties.
(c) Severability: The invalidity, illegality or
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unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision.
(d) Successors and Assigns: This Agreement shall be binding
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upon and inure to the benefit of the parties hereto and their respective
successors and assigns, subject to the limitations set forth in Section 9
hereof.
(e) Governing Law: This Agreement shall be governed by and
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interpreted in accordance with the laws of the State of Delaware, without giving
effect to the principles of the conflicts of laws thereof.
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
TranSwitch Corporation
---------------------------- 0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
By:
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Print Name of Employee [Name of officer]
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Street Address Title
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City State Zip Code
