As filed with the Securities and Exchange Commission on October 8, 1999.
Registration No. 333-_____
- --------------------------------------------------------------------------------
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
Delaware Rockville, Maryland 20850 52-1837515
(301) 296-2300
(State or other (Address of principal executive offices) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
Inverse Network Technology
1996 Stock Option 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)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAX
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE -IMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(2)
------------------ ------------- ----------------- ---------------- -------------------
Common Stock (par value 410,620 $3.665 $1,505,113.64 $418.42
$.01 per share)
Inverse Network Technology
1996 Stock Option Plan
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock that become issuable under the Inverse Network Technology 1996
Stock Option 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 $3.665 per share.
This Registration Statement shall hereafter become effective in accordance
with Rule 462 promulgated under the Securities Act of 1933 (the "Securities
Act").
<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, 1998, 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 October 8, 1999
pursuant to Section 13 of the Exchange Act.
(3) The Company's Schedule 14A Definitive Proxy Statement for the 1999
Annual Meeting of Stockholders filed on April 30, 1999, 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 3 months ended
June 30, 1999, 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.
As permitted by the General Corporation Law of Delaware ("GCLD"),
Section Twelve of the Amended and Restated Certificate of Incorporation (the
"Certificate") of Visual Networks, Inc. (the "Corporation") provides for
indemnification of directors and officers of the Corporation, as follows:
<PAGE>
The Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was, or has agreed to become, a
director or officer of the Corporation, or is or was serving, or had
agreed to serve, at the request of the Corporation, as a director,
officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan), or by reason of any action
alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or on his behalf
in connection with such action, suit or proceeding and any appeal
therefrom.
Also, the Corporation's By-Laws contain indemnification procedures that
implement the indemnification provisions of the Restated Certificate of
Incorporation. The GCLD permits a corporation to indemnify its directors and
officers, among others, against judgments, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceedings to which
they may be a party by reason of their service in those or other capacities, if
such person acted in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceedings, had no reasonable cause to
believe that such conduct was unlawful.
As permitted by the GCLD, Section Seven of the Corporation's
Certificate provides for limitation of liability of directors of the
Corporation, as follows:
No director of the Corporation shall be personally liable to the
Corporation or to any stockholder of the Corporation for monetary
damages for breach of fiduciary duty as a director, provided that this
provision shall not limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Corporation of its
stockholders, (ii) for acts or omissions not in good faith or which
involved intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the General Corporation Law of Delaware, or (iv)
for any transaction from which the director derived an improper
personal benefit.
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.
<PAGE>
(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.
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 8th day of
October, 1999.
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.
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Scott E. Stouffer Chairman of the Board of Directors, October 8, 1999
- ------------------------------- President and Chief Executive Officer
Scott E. Stouffer (Principal Executive Officer)
<PAGE>
/s/ Peter J. Minihane Executive Vice President, Chief October 8, 1999
- ------------------------------- Financial Officer and Treasurer
Peter J. Minihane (Principal Accounting and Financial Officer)
Director
- -------------------------------
Grant G. Behrman
/s/ Marc F. Benson Director October 8, 1999
- -------------------------------
Marc F. Benson
/s/ Theodore R. Joseph Director October 8, 1999
- --------------------------------
Theodore R. Joseph
/s/ Ted H. McCourtney Director October 8, 1999
- --------------------------------
Ted H. McCourtney
Director
- --------------------------------
Thomas A. Smith
/s/ William J. Smith Director October 8, 1999
- --------------------------------
William J. Smith
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.1 Agreement and Plan of Merger among the Registrant, Visual
Acquisitions Two, Inc. and Inverse Network Technology, dated
September 15, 1999 (incorporated by reference to Registrant's
Current Report on Form 8-K filed on October 8, 1999).
4.2 By-Laws (incorporated by reference to the Corporation's
Registration Statement on Form S-1, as amended (File No.
333-41517)).
5.1 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel)
as to the legality of securities being registered.
10.1 Inverse Network Technology 1996 Stock Option 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).
<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
October 8, 1999
Visual Networks, Inc.
2092 Gaither Road
Rockville, Maryland 20850
Re: Inverse Network Technology 1996 Stock Option 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 October 8, 1999 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 410,620 shares (the "Shares") of Common
Stock of Visual Networks, Inc. reserved for issuance under the Inverse Network
Technology 1996 Stock Option 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
AMENDMENT NO. 1 TO THE
INVERSE NETWORK TECHNOLOGY
1996 STOCK OPTION PLAN, ASSUMED BY
VISUAL NETWORKS, INC.
W I T N E S S E T H:
WHEREAS, Visual Networks, Inc. (the "Corporation") has assumed the
Inverse Network Technology 1996 Stock Option Plan (the "Plan") and all the
rights and obligations thereunder pursuant to a certain Agreement and Plan of
Merger by and among the Corporation and Inverse Network Technology, dated
September 15, 1999; and
WHEREAS, the Corporation has determined that it is desirable to amend
the Plan to reflect the change in sponsorship and administration of the Plan.
NOW, THEREFORE, the Plan is amended, effective as of September 30, 1999
as follows:
1. The Plan is amended so that all references in the Plan to Inverse Network
Technology or "the Company" shall be deemed to be references to the Corporation
and all references to "Stock" shall be deemed to be references to the common
stock, par value $0.01 per share, of the Corporation.
2. Section 2(d) of the Plan is amended in its entirety to read as follows:
(d) "Committee" shall mean the Board of Directors of Visual Networks,
Inc. or any committee or committees as may be appointed by the Board from time
to time to administer the Plan.
3. Section 2(e) of the Plan is amended in its entirety to read as follows:
(e) "Company" shall mean Visual Networks, Inc., a Delaware Corporation.
4. Section 2(n) is amended in its entirety to read as follows:
(n) "Plan" shall mean this Inverse Network Technology 1996 Stock
Option Plan Assumed by Visual Networks, Inc.
5. Section 3 of the Plan shall be deleted in its entirety and be replaced
with the following:
The Plan shall be administered by the Committee. The Committee shall
have full power and authority to take all actions necessary to carry out the
purpose and intent of the Plan. The Committee shall have full power and
authority, in its sole and absolute discretion, to administer and interpret the
Plan and to adopt and interpret such rules, regulations, agreements, guidelines,
and instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
executed by its duly authorized officers this 6th day of October, 1999.
ATTEST: VISUAL NETWORKS, INC.
By: /s/ Richard H. Deily By: /s/ Peter J. Minihane
---------------------------- --------------------------
<PAGE>
INVERSE NETWORK TECHNOLOGY
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
Inverse Network Technology (the "Company"), or to increase such interest, to
encourage such selected persons to remain in the employ of the Company and to
attract new employees with outstanding qualifications by purchasing Shares of
the Company's Common Stock. The Plan provides for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well. as Incentive Stock Options intended to qualify under section 422 of the
Internal Revenue Code.
SECTION 2. DEFINITIONS
(a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Change in Control" shall mean the occurrence of any of the following
events:
(i) the consumption of the acquisition of fifty-one percent
(51%) or more of the outstanding stock of the Company by one person or
by two or more persons acting as a partnership, limited partnership,
syndicate or other group pursuant to a tender offer validly made under
any federal or state law (other than a tender offer by the Company);
(ii) the consummation of a merger, consolidation or other
reorganization of the Company (other than a reincorporation of the
Company), if after giving effect to such merger, consolidation or other
reorganization of the Company, the stockholders of the Company
immediately prior to such merger, consolidation or other reorganization
do not represent a majority in interest of the holders of voting
securities (on a fully diluted basis) with the ordinary voting power to
elect directors of the surviving or resulting entity after such merger,
consolidation or other reorganization;
(iii) the sale of all or substantially all of the assets of
the Company to a third party who is not an affiliate (including a
Parent or subsidiary) of the Company; or
(iv) the dissolution of the Company pursuant to action
validly taken by the stockholders of the Company in accordance
with applicable state law.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
(d) "Committee" shall mean a committee of the Board of Directors which is
authorized to administer to the Plan under Section 3. After the initial public
offering of the Company's common stock, the Committee shall have membership
composition which enables the Plan to qualify under Rule l6b-3 with regard to
the grant of options to persons who are subject to Section 16 of the Securities
Exchange Act of 1934.
(e) "Company" shall mean Inverse Network Technology, a California
corporation.
(f) "Disability" shall mean that an Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment.
(g) "Employee" shall mean (i) any individual who is a common-law employee
of the Company or of a Subsidiary, (ii) a member of the Board of Directors, or
(iii) a consultant who performs services for the Company or a Subsidiary.
Service as a member of the Board of Directors or as a consultant shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
(h) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(i) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(j) "ISO" shall mean an employee incentive stock option described in Code
section 411(b)
(k) "Nonstatutory Option" shall mean an employee stock option that is not
an ISO.
(1) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(m) "Optionee" shall mean an individual who holds an Option.
(n) "Plan" shall mean this Inverse Network Technology 1996 Stock Option
Plan.
(o) "Service" shall mean service as an Employee.
(p) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(q) "Stock" shall mean the common stock of the Company.
<PAGE>
(r) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(s) "Subsidiary" shall mean any corporation, of which the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION
(a) Committee Membership. The Plan shall be administered by the Committee,
which sha1l consist of members of the Board of Directors. The members of the
Committee shall be appointed by the Board of Directors. If no Committee has been
appointed, the entire Board of Directors shall constitute the Committee.
(b) Committee Procedures. The Board of Directors shall designate one of the
members of the Committee as chairperson. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to, the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, the vesting schedu1e, to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(viii) To amend or terminate any outstanding Stock Option Agreement;
<PAGE>
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option under
the Plan and to determine the sufficiency of such consideration; and
(xii) To take any other actions deemed necessary or advisable for the
administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Optionees, and all persons deriving their rights
from an Optionee. No member of the Committee shall be liable for any action that
he or she has taken or has failed to take in good faith with respect to the Plan
or any Option.
(d) Financial Reports. To the extent required by applicable law, and not
less often than annually, the Company shall furnish to Optionees, Company
financial statements including a balance sheet regarding the Company's financial
condition and results of operations, unless such Optionees have duties with the
Company that assure them access to equivalent information. Such financial
statements need not be audited.
SECTION 4. ELIGIBILITY
(a) General Rule. Only Employees, as defined in Section 2(g), shall be
eligible for designation as Optionees by the Committee. In addition, only
individuals who are employed as common-law employees by the Company or a
subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10 percent of
the total combined voting power of all classes of Outstanding Stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee unless (i) the Exercise Price for an ISO (and an NSO to the extent
required by applicable law) is at least 110 percent of the Fair Market Value of
a Share on the date of grant, and (ii) in the case of an ISO, such ISO by its
terms is not exercisable after the expiration of five years from the date of
grant.
(c) Attribution on Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
<PAGE>
(d) Outstanding Stock. For purposes of Subsection (b) above, "Outstanding
Stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding Stock" shall not include shares authorized for issuance
under outstanding Options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN
(a) Basic Limitation. Shares offered under the Plan shall be authorized but
unissued Shares. The aggregate number of Shares which may be issued under the
Plan (upon exercise of Options) shall not exceed one million seven hundred
thousand (1,700,000) Shares, subject to adjustment pursuant to Section 8. The
number of Shares which are subject to Options outstanding at any time under the
Plan shall not exceed the number of Shares which then remain available for
issuance under the Plan. The company, during the term of the Plan, shall at all
times reserve and keep available sufficient Shares to satisfy the requirements
of the Plan.
(b) Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall, be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the exercise
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant. To the extent
required by applicable law, the Exercise Price of a Nonstatutory Option shall
not be less than eighty-five percent (85%) of the Fair Market Value of a Share
on the date of grant. Subject to the preceding two sentences, the Exercise Price
under any Option shall be determined by the Committee in its sole discretion.
The Exercise Price shall be payable in a form described in Section 7.
<PAGE>
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable. To the extent
required by applicable law, an Option shall become exercisable no less rapidly
than the rate of 20% per year for each of the first five years from the date of
grant. Subject to the preceding sentence, the exercisability of any Option shall
be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the Option.
The term shall not exceed ten (10) years from the date of grant and may be
required to be shorter as provided in Section 4(b). Subject to the preceding
sentence, the Committee at its sole discretion shall determine when an Option is
to expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by him or by his guardian or
legal representative. No Option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(h) Exercise of Options on Termination of Service. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee' s service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no right as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of Outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
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(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of.
an Option shall be subject to such rights of repurchase, rights of first refusal
and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 7. PAYMENT FOR SHARES
(a) General Rule. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time
when such Shares are purchased, except as provided in Subsections (b), (c) and
(d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee may require
that the Optionee pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee until such note is paid
in full.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES
(a) General. In the event of a subdivision of the Outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the Outstanding Stock into a lesser
number of shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the exercise Price
under each outstanding Option.
(b) Reorganizations. In the event of: (1) a dissolution or liquidation of
the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the Shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, or (4) any
other capital reorganization in which more than fifty percent (50%) of the
Shares of the Company entitled to vote are exchanged, then at the sole
discretion of the Board and to the extent permitted by applicable law (i) any
surviving corporation shall assume any Options outstanding under the Plan or
shall substitute similar options for those outstanding under the Plan, or (ii)
such Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute similar
options for those outstanding under the Plan, then, with respect to Options held
by persons then performing services as employees, consultants or directors for
the Company, the time during which such Options may be exercised shall be
accelerated and the Options terminated if not exercised within three (3) months
of such event. Notwithstanding the foregoing, at the discretion of the
Committee, individual Stock Option Agreements may permit acceleration of vesting
under specified circumstances.
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(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any Class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or Exercise Price of
Shares subject to an Option. The grant of an Option pursuant to the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
SECTION 9. LEGAL REQUIREMENTS
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an employee. The Company and its Subsidiaries reserve the right to
terminate any person's 5ervice at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS
(a) Term of the Plan. The Plan, as set forth herein, shall become effective
on the date of its adoption by the Board of Directors, subject to the approval
of the Company's shareholders. In the event that the shareholders fail to
approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants already made shall be null and void, and no
additional Option grants shall be made after such date. The Plan shall terminate
automatically June 23, 2006, and may be terminated on any earlier date pursuant
to Subsection (b) below.
<PAGE>
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
the Plan at any time and from time to time. Rights and obligations under any
Option granted before amendment of the Plan shall not be materially altered, or
impaired adversely, by such amendment, except with consent of the person to whom
the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Option previously granted under the Plan.
SECTION 12. EXECUTION
To record the amendment of the Plan initially adopted by the Board of
Directors on June 24, 1996, the Company has caused its authorized officer to
execute the same as of January 22, 1999.
INVERSE NETWORK TECHNOLOGY
By /s/ Michael G. Watters
----------------------------------
Its President
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Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 15, 1999
included in the Visual Networks, Inc. Annual Report on Form 10-K for the year
ended December 31, 1998 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
Vienna, Virginia
October 5, 1999
