TRANSWITCH CORPORATION
Exhibit
4.8
TRANSWITCH
CORPORATION
TranSwitch
Corporation, a Delaware corporation (the “Company”),
hereby issues as of _________, 2008 to ________ (the “Participant”),
_______ shares (the “Shares”)
of its
Common Stock, $ 0.001 par value each (“Common
Stock”),
for
no consideration, on the following terms and conditions:
1. Issuance
Under 2008 Equity Incentive Plan.
The
Shares are issued pursuant to, and are governed by, the 2008 Equity Incentive
Plan and its addendum for Israeli participants (together, 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 the Shares
pursuant to the Plan shall be governed by the Plan as it exists on this date.
The Plan is held by the Company, and the Participant is encouraged to thoroughly
review its terms and provisions.
2. Issuance
as Section 102 Shares.
This
Share Award is subject to the provisions of Section 102 of the Israeli
Income Tax Ordinance [New version], 1961 (the “Ordinance”
and
“Section
102”,
respectively), as well as the Income Tax Rules (Tax Relief in Issuance of Shares
to Employees), 2003 (the “102
Rules”),
promulgated thereunder. A copy of the complete version of Section 102 and
the 102 Rules as currently in effect may be reviewed at the Company’s office and
shall be delivered to the Participant upon his request by the Company.
Accordingly,
the Company elected the Capital Gains Route of Section 102(b)(2) of the
Ordinance (the “Capital
Gains Route”)
for
the purpose of the taxation of Participant’s income from the Shares. In general,
taxable income that should be attributed to the Participant as a result of
the
Issuance of the Shares will be tax-free on the date of grant, but will be taxed
on the sale of the Shares or transfer of such Shares from the Trustee (as
defined in the Plan) to the Participant (a “Transfer”).
In
accordance with the Capital Gains Route, if the Shares are held in trust by
the
Trustee (see Section 3 below) until the end of the Holding Period (as defined
in
the Plan), gains derived from the sale of Shares shall be classified as capital
gains and taxed at a rate of only 25%; Except
for
the
benefit derived at the time of issuance of the Shares,
equal
to the difference between (a) the average closing price of the Company’s share
of Common Stock on NASDAQ during 30 trading days prior to the date of issuance
of such Shares, and (b) the purchase price per Share, if any. Such benefit
shall
be subject to tax at the time of sale of the Shares, or a Transfer, as ordinary
work income (i.e. at marginal tax rates (up to 47% in 2008) plus social security
and national health insurance payments).
At
the
time of sale of the Shares or a Transfer, the Participant shall be subject
to
tax, which will be calculated, in general, according to difference between
(a)
the market price (or the actual sale price) of the Shares at such time, and
(b)
the consideration paid by the Participant, if any, in connection with the
issuance of the Shares1 .
Such
tax shall be withheld at source by TranSwitch (Israel) Ltd. (“TranSwitch
Israel”),
in
accordance with the provisions of the 102 Rules, and the issuance of Shares
to
the Participant is conditioned upon the payment of such tax, if and when
due.
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The
above tax description is a general summary only and does not refer
to
expenses involved with the sale of Shares or changes in the Israeli
Consumer Price Index or in currency exchange rates, which may impact
the
final tax calculation.
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The
Participant shall not be entitled to sell the Shares or to execute a Transfer,
prior to the lapse of the Holding Period. Furthermore, any and all rights issued
in respect of the Shares, including bonus shares(“Rights”(,
shall
be deposited with the Trustee and held thereby until the lapse of the Holding
Period, and such Rights shall be subject to the Capital Gains Route.
Notwithstanding
the aforesaid, the Participant may sell Shares or Rights or execute a Transfer
prior to the lapse of the Holding Period,
provided, however, that tax is withheld at source by TranSwitch Israel in
accordance with the 102 Rules. In such case, the Participant’s gains shall be
classified
as ordinary work income and the Participant shall be subject to tax on such
income at marginal tax rates (up to 47% in 2008) plus social security and
national health insurance payments.
THE
PARTICIPANT
IS ADVISED TO CONSULT WITH A TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES
RELATED TO THE ISSUANCE OF THE SHARES, AND/OR THEIR
DISPOSITION.
3. Trust.
To
secure performance of tax law requirements, the Shares awarded to the
Participant according to this 102 Stock Award Agreement (the “Agreement”)
will
be held in trust by the Trustee that was approved for this purpose by the tax
authorities, who shall release them to the Participant only upon full compliance
with the legal requirements and the terms of the Plan. For this purpose, a
trust
deed was signed between TranSwitch Israel and the Trustee, a copy of which
is
attached hereto as “Exhibit
A”
(the
“Trust
Deed”).
The
conditions of the Trust Deed apply to the Shares awarded to the Participant;
thus, the Participant is required to carefully read the provisions of the said
Trust Deed.
4. [Reserved].
5. No
Obligation to Continue Business Relationship.
Neither
the Plan, this Agreement, nor the issuance of these Shares imposes any
obligation on the Company or any Subsidiary to continue to maintain a business
relationship or any other relationship with the Participant.
6. Capital
Changes and Business Successions.
The Plan
contains provisions covering the treatment of Shares in a number of
contingencies such as Change of Control. Provisions in the Plan for adjustment
with respect to the Shares 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.
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7. Lock-Up
Period.
Participant hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing
Underwriter”)
in
connection with any registration of the offering of any securities of the
Company under the Securities Act, Participant shall not sell or otherwise
transfer any Shares or other securities of the Company during the 180-day period
(or such other period as may be requested in writing by the Managing Underwriter
and agreed to in writing by the Company) (the “Market
Standoff Period”)
following the effective date of a registration statement of the Company filed
under the Securities Act. The Company may impose stop-transfer instructions
with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
8. Withholding
Taxes.
If the
Company or any Subsidiary in its discretion determines that it is obligated
to
withhold any tax in connection with the issuance and/or transfer of the Shares,
or the making of a distribution or other payment with respect to the Shares,
the
Participant hereby agrees that the Company or any Subsidiary may withhold from
the Participant’s wages or other remuneration the appropriate amount of tax. At
the discretion of the Company or any Subsidiary, 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
Participant upon issuance of the Shares. The Participant further agrees that,
if
the Company or any Subsidiary does not withhold an amount from the Participant’s
wages or other remuneration sufficient to satisfy the withholding obligation
of
the Company or any Subsidiary, the Participant will make reimbursement on
demand, in cash, for the amount underwithheld.
9. Provision
of Documentation to Participant.
By
signing this Agreement the Grantee acknowledges receipt of a copy of this
Agreement and a copy of the Plan. It is hereby clarified that reading this
Agreement is not, and cannot be, a substitute for the full and thorough reading
of the Plan and the Trust Deed. The Plan and the Trust Deed include important
details that the Grantee should know and understand. In any case of
contradiction between the aforesaid in this Agreement and the Plan, or in any
case of dispute on any of the issues discussed in this Agreement, the provisions
of the Plan shall prevail. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan. Participant further agrees to notify the
Company upon any change in the residence address indicated below.
10. Miscellaneous.
(a) Notices:
All
notices hereunder shall be in writing and 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:
The Plan
is incorporated herein by reference. The Plan and this Agreement 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 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 upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
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(e) Governing
Law:
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Delaware, without giving effect to the principles of the conflicts
of laws thereof, except to the extent that mandatory provisions of the laws
of
the State of Israel apply. The preceding choice of law provision shall apply
to
all claims, under any theory whatsoever, arising out of the relationship of
the
parties contemplated herein.
IN
WITNESS WHEREOF, the Company and the Participant have caused this instrument
to
be executed as of the date first above written.
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TranSwitch
Corporation
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By:
______________________________________________
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Title:
_____________________________________________
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Consent:
I
hereby
approve and agree to all the terms and conditions aforesaid in this 102 Stock
Award Agreement and the Trust Deed attached thereto, and I declare that I am
familiar with the provisions of Section 102 and the Capital Gains Route. I
hereby undertake not to sell or transfer the Shares prior to the lapse of the
Holding Period (as defined in the Plan), unless I pay all taxes, which may
arise
in connection with such sale and/or transfer.
____________________________
Participant
Print
Name of Participant
____________________________
Street
Address
____________________________
City
State Zip Code
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Attached:
Exhibit
A - Trust Deed
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