PIPER & MARBURY
L.L.P.
1200 NINETEENTH STREET, N.W.
WASHINGTON, D.C. 20036-2430
202-861-3900
FAX: 202-223-2085
BALTIMORE
NEW YORK
PHILADELPHIA
EASTON
May 20, 1998
ELECTRONIC DELIVERY
U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Visual Networks, Inc. (the "Registrant")
Registration Statement on Form S-8
Ladies and Gentlemen:
On behalf of the Registrant, attached hereto for filing by your
electronic data gathering analysis and retrieval ("EDGAR") system is one copy of
the Registrant's registration statement on Form S-8 relating to the sale of up
to 189,733 shares of the Registrant's common stock, par value $.01 per share,
pursuant to the terms of the Net2Net Corporation 1994 Stock Plan, assumed by the
Registrant, together with a copy of the exhibits required to be filed with such
registration statement.
The Registrant has delivered immediately available funds in the amount of
$141 by wire transfer to your bank account (Account No.: 910-8739) at the Mellon
Bank (ABA No.: 043 000261) in payment of the aggregate filing fee.
Please acknowledge receipt of this filing by delivering written
confirmation by electronic mail to Piper & Marbury L.L.P. at the electronic mail
address set forth in the filing.
Should you have any questions, please call me at (202) 861-6314.
Very truly yours,
/s/ Nancy A. Spangler
<PAGE>
As filed with the Securities and Exchange Commission on
May 20,1998.
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
VISUAL NETWORKS, INC.
(Exact name of registrant as specified in its charter)
2092 Gaither Road
Rockville, Maryland 20850
Delaware (301) 296-2300 52-1837515
(State or other (Address of principal executive offices) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
Net2Net Corporation
1994 Stock Plan Assumed by
Visual Networks, Inc.
(Full title of the plan)
Copy to:
PETER J. MINIHANE NANCY A. SPANGLER, ESQ.
Executive Vice President, Piper & Marbury L.L.P.
Chief Financial Officer and Treasurer 1200 Nineteenth Street, N.W.
Visual Networks, Inc. Washington, D.C. 20036-2430
2092 Gaither Road (202) 861-3900
Rockville, Maryland 20850
(301) 296-2300
(Name, address and telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE MAX-IMUM AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE AGGREGATE REGISTRATION FEE
OFFERING PRICE
Common Stock 189,733 $ 2.51(2) $ 476,230 (2) $ 141 (2)
(par value $.01 per share)
Net2Net Corporation 1994
Stock Plan
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(1) This Registration Statement shall also cover any additional shares of
Common Stock that become issuable under the Net2Net Corporation 1994 Stock
Plan by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration
that results in an increase in the number of the Registrant's outstanding
shares of Common Stock.
(2) Calculated pursuant to Rule 457(h) on the basis of a weighted average
exercise price of $2.51 per share.
This Registration Statement shall hereafter become effective in accordance
with Rule 462 promulgated under the Securities Act of 1933 (the
"Securities Act").
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information previously filed with the
Securities and Exchange Commission (the "Commission") by Visual Networks, Inc.
(the "Company" or the "Registrant") are hereby incorporated by reference in this
Registration Statement:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997, filed pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(2) The Company's Current Report on Form 8-K filed April 20, 1998
pursuant to Section 13 of the Exchange Act.
(3) The Company's Schedule 14A Definitive Proxy Statement for the 1998
Annual Meeting of Stockholders filed on April 29, 1998, pursuant to Section 14
of the Exchange Act.
(4) The description of the Company's Common Stock, $.01 par value per
share, contained in the Company's Registration Statement on Form 8-A filed
January 30, 1998 pursuant to Section 12(g) of the Exchange Act.
(5) The Company's Quarterly Report on Form 10-Q for the 13 weeks
ended March 31, 1998, filed pursuant to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment that indicates
that all securities offered have been sold or that deregisters all securities
remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. The documents required to be so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. The class of securities
to be offered is registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-laws provide that the Company shall, to the full extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto. In addition, the Company's Certificate of
Incorporation eliminates personal liability of its directors to the full extent
permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, as amended from time to time.
Section 145 of the General Corporation Law of the State of Delaware
permits a corporation to indemnify its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties, if such directors or officers acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reason to believe their conduct was unlawful. In a derivative
action, i.e., one by or in the right of the corporation, indemnification may be
made only for expenses actually and reasonably incurred by directors and
officers in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interest of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
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<PAGE>
determine upon application that the defendant officers or directors are
reasonably entitled to indemnity for such expenses despite such adjudication of
liability.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware provides that a corporation may eliminate or limit the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable.
ITEM 8. EXHIBITS. See Exhibit Index.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act ) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockville, State of Maryland, on this 20th day of
May, 1998.
VISUAL NETWORKS, INC.
By: /s/ Scott E. Stouffer
-----------------------------------------------
Scott E. Stouffer, President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Each person whose signature appears below in so signing also makes,
constitutes and appoints Scott E. Stouffer, Peter J. Minihane and Nancy A.
Spangler and each of them acting alone, his true and lawful attorney-in-fact,
with full power of substitution, for him in any and all capacities, to execute
and cause to be filed with the Securities and Exchange Commission any and all
amendments and post-effective amendments to this Registration Statement on Form
S-8, with exhibits thereto and other documents in connection therewith, and
hereby ratifies and confirms all that said attorney-in-fact or his substitute or
substitutes may do or cause to be done by virtue hereof.
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<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
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<S> <C> <C>
Signature Title Date
/s/ Scott E. Stouffer Chairman of the Board of Directors, May 20, 1998
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Scott E. Stouffer President and Chief Executive Officer
(Principal Executive Officer)
/s/ Peter J. Minihane Executive Vice President, Chief May 20, 1998
- -------------------------------------------- Financial Officer and Treasurer
Peter J. Minihane (Principal Accounting and
Financial Officer)
/s/ Grant G. Behrman Director May 20, 1998
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Grant G. Behrman
/s/ Marc F. Benson Director May 20, 1998
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Marc F. Benson
/s/ Theodore R. Joseph Director May 20, 1998
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Theodore R. Joseph
/s/ Ted H. McCourtney Director May 20, 1998
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Ted H. McCourtney
/s/ Thomas A. Smith Director May 20, 1998
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Thomas A. Smith
/s/ William J. Smith Director May 20, 1998
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William J. Smith
</TABLE>
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<PAGE>
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EXHIBIT INDEX
<S> <C>
Exhibit
Number Description
4.1* Agreement and Plan of Merger among the Registrant, Visual Acquisitions,
Inc. and Net2Net Corporation, dated as of April 15, 1998.
5.1 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel) as to the
legality of securities being registered.
10.1 Net2Net Corporation 1994 Stock Plan, assumed by Visual Networks, Inc.
23.1 Consent of Counsel (contained in Exhibit 5.1).
23.2 Consent of Independent Accountants.
24.1 Power of Attorney (included in signature pages).
------------------------
*Incorporated by reference to Registrant's Current Report on Form 8-K
filed on May 19, 1998.
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</TABLE>
<PAGE>
Exhibit 5.1
PIPER & MARBURY
L.L.P.
1200 NINETEENTH STREET, N.W.
WASHINGTON, D.C. 20036-2430
202-861-3900
FAX: 202-223-2085
BALTIMORE
NEW YORK
PHILADELPHIA
EASTON
May 20, 1998
Visual Networks, Inc.
2092 Gaither Road
Rockville, Maryland 20850
Re: Net2Net Corporation 1994 Stock Plan
Assumed by Visual Networks, Inc.
Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about May 20, 1998 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 189,733 shares (the "Shares") of Common
Stock of Visual Networks, Inc. reserved for issuance under the Net2Net
Corporation 1994 Stock Plan (the "Plan"). As your legal counsel, we have
examined the proceedings proposed to be taken by you in connection with the sale
and issuance of said shares.
It is our opinion that, upon completion of the proceedings to be taken
prior to issuance of the Shares pursuant to the Prospectus constituting part of
the Registration Statement on Form S-8 and upon completion of the proceedings
being taken in order to permit such transactions to be carried out in accordance
with the securities laws of the various states where required, the Shares, when
issued and sold in the manner referred to in the Plan and in the agreements that
accompany the Plan, and in accordance with the Company's Restated Certificate of
Incorporation, will be legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement and amendments thereto.
Very truly yours,
/s/ PIPER & MARBURY L.L.P.
<PAGE>
Exhibit 10.1
NET2NET CORPORATION
1994 STOCK PLAN
1. Purpose.
The purpose of the Net2Net Corporation 1994 Stock Plan (the
"Plan") is to encourage key employees of Net2Net Corporation (the "Company") and
of any present or future parent or subsidiary of the Company (collectively,
"Related Corporations") and other individuals who render services to the Company
or a Related Corporation, by providing opportunities to participate in the
ownership of the Company and its future growth through (a) the grant of options
which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"); (b) the grant of options
which do not qualify as ISOs ("Non-Qualified Options"); (c) awards of stock in
the Company ("Awards"); and (d) opportunities to make direct purchases of stock
in the Company ("Purchases"). Both ISOs and Non-Qualified Options are referred
to hereafter individually as an "Option" and collectively as "Options." Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall be administered by the
Board of Directors of the Company (the "Board") or by a committee appointed by
the Board (the "Committee"); provided that the Plan shall be administered to the
extent required by Rule 16b-3 promulgated under the Securities Exchange Act of
1934 or any successor provision ("Rule 16b-3"), by a disinterested administrator
or administrators within the meaning of Rule 16b-3. Hereinafter, all references
in this Plan to the "Committee" shall mean the Board if no Committee has been
appointed. Subject to ratification of the grant or authorization of each Stock
Right by the Board (if so required by applicable state law), and subject to the
terms of the Plan, the Committee shall have the authority to (i) determine to
whom (from among the class of employees eligible under paragraph 3 to receive
ISOs) ISOs shall be granted, and to whom (from among the class of individuals
and entities eligible under paragraph 3 to receive Non-Qualified Options and
Awards and to make Purchases) Non-Qualified Options, Awards and authorizations
to make Purchases may be granted; (ii) determine the time or times at which
Options or Awards shall be granted or Purchases made; (iii) determine the
purchase price of shares subject to each Option or Purchase, which prices shall
not be less than the minimum price specified in paragraph 6; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any, and (viii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section 422 of
the Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the Committee
of any provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from time to
time adopt such rules and regulations for carrying out the Plan as it may deem
advisable. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any Stock
Right granted under it.
B. Committee Actions. The Committee may select one of
its members as its chairman, and shall hold meetings at such time and places as
it may determine. A majority of the Committee shall constitute a quorum and acts
of a majority of the members of the Committee at a meeting at which a quorum is
present, or acts reduced to or approved in writing by all the members of the
Committee (if consistent with applicable state law), shall be the valid acts of
the Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
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<PAGE>
C. Grant of Stock Rights to Board Members. Subject to the provisions of the
first sentence of paragraph 2(A) above, if applicable, Stock Rights may be
granted to members of the Board. All grants of Stock Rights to members of the
Board shall in all other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Consistent with the provisions
of the first sentence of Paragraph 2(A) above, members of the Board who either
(i) are eligible to receive grants of Stock Rights pursuant to the Plan or (ii)
have been granted Stock Rights may vote on any matters affecting the
administration of the Plan or the grant of any Stock Rights pursuant to the
Plan, except that no such member shall act upon the granting to himself or
herself of Stock Rights, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board during which action is taken
with respect to the granting to such member of Stock Rights.
3. Eligible Employees and Others.
ISOs may be granted only to employees of
the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.
4. Stock.
The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $0.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 800, subject to adjustment as provided in paragraph 13. If any Stock Right
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the shares of Common Stock
subject to such Stock Right shall again be available for grants of Stock Rights
under the Plan.
5. Granting of Stock Rights.
Stock Rights may be granted under the Plan at
any time on or after November 30, 1994 and prior to November 30, 2004. The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
6. Minimum Option Price; ISO Limitations.
A. Price for Non-Qualified Options, Awards and Purchases. The exercise
price per share specified in the agreement relating to each Non-Qualified Option
granted, and the purchase price per share of stock granted in any Award or
authorized as a Purchase, under the Plan shall in no event be less than the
minimum legal consideration required therefor under the laws of any jurisdiction
in which the Company or its successors in interest may be organized.
B. Price for ISOs. The exercise price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
For purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply.
C. $100,000 Annual Limitation on ISO Vesting. Each eligible employee may be
granted Options treated as ISOs only to the extent that, in the aggregate under
this Plan and all incentive stock option plans of the Company and any Related
Corporation, ISOs do not become exercisable for the first time by such employee
during any calendar year with respect to stock having a fair market value
(determined at the time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of such limitations
as Non-Qualified Options.
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<PAGE>
D. Determination of Fair Market Value. If, at the time an Option is granted
under the Plan, the Company's Common Stock is publicly traded, "fair market
value" shall be determined as of the last business day for which the prices or
quotes discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low prices
of the Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that date) of the
Common Stock on the Nasdaq National Market, if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing bid price (or
average of bid prices) last quoted (on that date) by an established quotation
service for over-the-counter securities, if the Common Stock is not reported on
the Nasdaq National Market. If the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall mean the
fair value of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. Option Duration.
Subject to earlier termination as provided in paragraphs 9 and 10 or in the
agreement relating to such Option, each Option shall expire on the date
specified by the Committee, but not more than (i) ten years from the date of
grant in the case of Options generally and (ii) five years from the date of
grant in the case of ISOs granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, as determined under paragraph
6(B). Subject to earlier termination as provided in paragraphs 9 and 10, the
term of each ISO shall be the term set forth in the original instrument granting
such ISO, except with respect to any part of such ISO that is converted into a
Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option.
Subject to the provisions of paragraphs 9 through 12, each Option granted under
the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
B. Full Vesting of Installments. Once an installment becomes exercisable it
shall remain exercisable until expiration or termination of the Option, unless
otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the right to accelerate the
date that any installment of any Option becomes exercisable; provided that the
Committee shall not, without the consent of an optionee, accelerate the
permitted exercise date of any installment of any Option granted to any employee
as an ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in paragraph 6(C).
9. Termination of Employment.
Unless otherwise specified in the agreement relating to such ISO, if an ISO
optionee ceases to be employed by the Company and all Related Corporations other
than by reason of death or disability as defined in paragraph 10, no further
installments of his or her ISOs shall become exercisable, and his or her ISOs
shall terminate on the earlier of (a) thirty (30) days after the date of
termination of his or her employment, or (b) their specified expiration dates,
except to the extent that such ISOs (or unexercised installments thereof) have
been converted into Non-Qualified Options pursuant to paragraph 16. For purposes
of this paragraph 9, employment shall be considered as continuing uninterrupted
during any bona fide leave of absence (such as those attributable to illness,
military obligations or governmental service) provided that the period of such
leave does not exceed 30 days or, if longer, any period during which such
optionee's right to reemployment is guaranteed by statute. A bona fide leave of
absence with the written approval of the Committee shall not be considered an
interruption of employment under this paragraph 9, provided that such written
approval contractually obligates the Company or any Related Corporation to
continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
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<PAGE>
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her death, any ISO owned by such
optionee may be exercised, to the extent otherwise exercisable on the date of
death, by the estate, personal representative or beneficiary who has acquired
the ISO by will or by the laws of descent and distribution, until the earlier of
(i) the specified expiration date of the ISO or (ii) 180 days from the date of
the optionee's death.
B. Disability. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his or her disability, such optionee shall
have the right to exercise any ISO held by him or her 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 the
ISO or (ii) 180 days from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code or
any successor statute.
11. Assignability.
No Stock Right shall be assignable or transferable by the grantee except by
will, by the laws of descent and distribution. Except as set forth in the
previous sentence, during the lifetime of a grantee each Stock Right shall be
exercisable only by such grantee.
12. Terms and Conditions of Options.
Options shall be evidenced by instruments (which need not be identical) in such
forms as the Committee may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in paragraphs 6 through 11 hereof
and may contain such other provisions as the Committee deems advisable which are
not inconsistent with the Plan, including restrictions applicable to shares of
Common Stock issuable upon exercise of Options. The Committee may specify that
any Non-Qualified Option shall be subject to the restrictions set forth herein
with respect to ISOs, or to such other termination and cancellation provisions
as the Committee may determine. The Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments.
Upon the occurrence of any of the following events, an optionee's rights with
respect to Options granted to such optionee hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the written
agreement between the optionee and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially of the
Company's assets or otherwise (an "Acquisition"), the Committee or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
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appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options either (a) the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (b) shares of stock of the surviving
corporation or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed the fair
market value of the shares of Common Stock subject to such Options immediately
preceding the Acquisition; or (ii) upon written notice to the optionees, provide
that all Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the Options shall terminate; or (iii) terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
an optionee upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C with respect to ISOs shall be made only
after the Committee, after consulting with counsel for the Company, determines
whether such adjustments would constitute a "modification" of such ISOs (as that
term is defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a modification of such
ISOs or would cause adverse tax consequences to the holders, it may refrain from
making such adjustments.
E. Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, each Option will terminate immediately prior to the
consummation of such proposed action or at such other time and subject to such
other conditions as shall be determined by the Committee.
F. Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
G. Fractional Shares. No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such fractional
shares.
H. Adjustments. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options.
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, or to such
transfer agent as the Company shall designate. Such notice shall identify the
Option being exercised and specify the number of shares as to which such Option
is being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, (b) at the discretion
of the Committee and 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 (c) at the
discretion of the Committee, by any combination of (a) and (b) above. If the
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Committee exercises its discretion to permit payment of the exercise price of an
ISO by means of the methods set forth in clauses (b) or (c) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant
of the ISO in question. The holder of an Option shall not have the rights of a
shareholder with respect to the shares covered by such Option until the date of
issuance of a stock certificate to such holder for such shares. Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
15. Term and Amendment of Plan.
This Plan was adopted by the Board on November 30, 1994, and approved by
the stockholders of the Company as of November 30, 1994. The Plan shall expire
at the end of the day on November 29, 2004 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13); (b) the benefits
accruing to participants under the Plan may not be materially increased; (c) the
requirements as to eligibility for participation in the Plan may not be
materially modified; (d) the provisions of paragraph 3 regarding eligibility for
grants of ISOs may not be modified; (e) the provisions of paragraph 6(B)
regarding the exercise price at which shares may be offered pursuant to ISOs may
not be modified (except by adjustment pursuant to paragraph 13); (f) the
expiration date of the Plan may not be extended; and (g) the Board may not take
any action which would cause the Plan to fail to comply with Rule 16b-3. Except
as otherwise provided in this paragraph 15, in no event may action of the Board
or stockholders alter or impair the rights of a grantee, without such grantee's
consent, under any Option previously granted to such grantee.
16. Conversion of ISOs into Non-Qualified Options.
The Committee, at the written request or with the written consent of any
optionee, may in its discretion take such actions as may be necessary to convert
such optionee's ISOs (or any installments or portions of installments thereof)
that have not been exercised on the date of conversion into Non-Qualified
Options at any time prior to the expiration of such ISOs, regardless of whether
the optionee is an employee of the Company or a Related Corporation at the time
of such conversion. Such actions may include, but shall not be limited to,
extending the exercise period or reducing the exercise price of the appropriate
installments of such ISOs. At the time of such conversion, the Committee (with
the consent of the optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate action.
17. Application of Funds.
The proceeds received by the Company from the sale of shares pursuant to
Options granted and Purchases authorized under the Plan shall be used for
general corporate purposes.
18. Notice to Company of Disqualifying Disposition.
By accepting an ISO granted under the Plan, each optionee agrees to
notifying the Company in writing immediately after such optionee makes a
Disqualifying Disposition (as described in Sections 421, 422 and 424 of the Code
and regulations thereunder) of any stock acquired pursuant to the exercise of
ISOs granted under the Plan. A Disqualifying Disposition is generally any
disposition occurring on or before the later of (a) the date two years following
the date the ISO was granted or (b) the date one year following the date the ISO
was exercised.
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19. Withholding of Additional Income Taxes.
Upon the exercise of a Non-Qualified Option, the grant of an Award, the
making of a Purchase of Common Stock for less than its fair market value, the
making of a Disqualifying Disposition (as defined in paragraph 18), the vesting
or transfer of restricted stock or securities acquired on the exercise of an
Option hereunder, or the making of a distribution or other payment with respect
to such stock or securities, the Company may withhold taxes in respect of
amounts that constitute compensation includible in gross income. The Committee
in its discretion may condition (i) the exercise of an Option, (ii) the grant of
an Award, (iii) the making of a Purchase of Common Stock for less than its fair
market value, or (iv) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the grantee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the grantee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the grantee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. Governmental Regulation.
The Company's obligation to sell and deliver shares of the Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.
21. Governing Law.
The validity and construction of the Plan and the instruments evidencing
Options shall be governed by the laws of Delaware, or the laws of any
jurisdiction in which the Company or its successors in interest may be
organized.
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Exhibit 23.2
Washington, D.C.
May 20, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 10, 1998
included in the Visual Networks, Inc. Annual Report on Form 10-K for the year
ended December 31, 1997 and to all references to our Firm included in or made a
part of this registration statement filed on Form S-8.
ARTHUR ANDERSEN LLP
