<PAGE>
As filed with the Securities and Exchange Commission on August 16, 1999
Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EXODUS COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 77-0403076
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
2831 Mission College Blvd.
Santa Clara, CA 95054
(408) 346-2200
(Address and Telephone Number of Registrant's Principal Executive Offices)
Cohesive Technology Solutions, Inc. Stock Option and Restricted Stock Purchase
Plan
Stock Options Assumed by Registrant
(Full Title of the Plans)
Ellen M. Hancock
President and Chief Executive Officer
Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, CA 95054
(408) 346-2200
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Robert A. Freedman, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Amount Proposed Proposed Maximum Amount of
to be Maximum Offering Aggregate Offering Registration
Title of Securities to be Registered Registered Price Per Share Price Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 102,178 (1) $67.40 (2) $6,886,900 $1,915.00 (3)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares subject to assumed outstanding stock options as of July 27, 1999
under the Cohesive Technology Solutions, Inc. Stock Option and Restricted
Stock Purchase Plan.
(2) Represents weighted average per share exercise price for such outstanding
options, calculated pursuant to Rule 457(h)(1) solely for the purpose of
calculating the registration fee.
(3) Fee calculated pursuant to Section 6(b) of the Securities Act of 1933, as
amended.
<PAGE>
EXODUS COMMUNICATIONS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- ------ ---------------------------------------
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed with the Commission on February 22, 1999.
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999 filed with the Commission on May 17, 1999, as amended
by a Form 10-Q/A filed with the Commission on June 25, 1999.
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 filed with the Commission on August 13, 1999.
(d) The Registrant's Current Reports on Form 8-K filed with the Commission
on January 29, 1999, February 22, 1999, March 2, 1999, June 18, 1999
and August 11, 1999.
(e) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed on February 13,
1998 under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including any amendment or report filed
for the purpose of updating such description.
(f) The description of the Registrant's Preferred Stock Purchase Rights
contained in the Registrant's Registration Statement on Form 8-A filed
on January 29, 1999 under Section 12(g) of the Exchange Act, including
any amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities registered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed incorporated by reference herein and to be a part hereof from the date of
the filing of such documents.
Item 4. Description of Securities.
- ------- -------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
- ------ --------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers and Limitation of Liability.
- ------ ---------------------------------------------------------------------
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Certificate of Incorporation includes a provision that eliminates
the personal liability of its directors to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (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
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the Bylaws of
the Registrant
<PAGE>
provide that: (i) the Registrant is required to indemnify its directors and
executive officers to the fullest extent permitted by the Delaware General
Corporation Law; (ii) the Registrant may, in its discretion, indemnify other
officers, employees and agents as set forth in the Delaware General Corporation
Law; (iii) upon receipt of an undertaking to repay such advances if
indemnification is determined to be unavailable, the Registrant is required to
advance expenses, as incurred, to its directors and executive officers to the
fullest extent permitted by the Delaware General Corporation Law in connection
with a proceeding (except if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the proceeding or, in certain circumstances, by
independent legal counsel in a written opinion that the facts known to the
decision-making party demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in, or
not opposed to, the best interests of the corporation); (iv) the rights
conferred in the Bylaws are not exclusive and the Registrant is authorized to
enter into indemnification agreements with its directors, officers and employees
and agents; (v) the Registrant may not retroactively amend the Bylaw provisions
relating to indemnity; and (vi) to the fullest extent permitted by the Delaware
General Corporation Law, a director or executive officer will be deemed to have
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the Registrant and, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe that
his or her conduct was unlawful if his or her action is based on the records or
books of account of the corporation or on information supplied to him or her by
officers of the corporation in the course of their duties or on the advice of
legal counsel for the corporation or on information or records given or reports
made to the corporation by independent certified public accountants or
appraisers or other experts.
The Registrant's policy is to enter into indemnification agreements with
each of its directors and executive officers. The indemnification agreements
provide that directors and executive officers will be indemnified and held
harmless to the fullest possible extent permitted by law including against all
expenses (including attorneys' fees), judgments, fines and settlement amounts
paid or reasonably incurred by them in any action, suit or proceeding, including
any derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or claims
(i) initiated or brought voluntarily by the indemnified party and not by way of
defense, except with respect to a proceeding to establish or enforce a right to
indemnification under the indemnification agreements or any other agreement or
insurance policy or under the Registrant's Certificate of Incorporation or
Bylaws now or hereafter in effect relating to indemnification, or authorized by
the Board of Directors or as otherwise required under Delaware statute or law,
regardless of whether the indemnified party is ultimately determined to be
entitled to such indemnification, (ii) for expenses and the payment of profits
arising from the purchase and sale by the indemnified party of securities in
violation of Section 16(b) of the Exchange Act or any similar successor statute
or (iii) if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful.
The indemnification agreement also provides for contribution in certain
situations in which the Registrant and a director or executive officer are
jointly liable but indemnification is unavailable, such contribution to be based
on the relative benefits received and the relative fault of the Registrant and
the director or executive officer. No contribution is allowed to a person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act of 1933, as amended (the "Securities Act")) from any person
who was not found guilty of such fraudulent misrepresentation.
The indemnification agreement requires a director or executive officer to
reimburse the Registrant for all expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the Bylaws, the indemnification agreement or otherwise, to
be indemnified for such expenses. The indemnification agreement provides that
it is not exclusive of any rights a director or executive officer may have under
the Certificate of Incorporation, Bylaws, other agreements, any majority-in-
interest vote of the stockholders or vote of disinterested directors, Delaware
law or otherwise.
2
<PAGE>
The indemnification provision in the Bylaws, and the form of
indemnification agreements entered into between the Registrant and its directors
and executive officers, may be sufficiently broad to permit indemnification of
the Registrant's executive officers and directors for liabilities arising under
the Securities Act.
As authorized by the Registrant's Bylaws, the Registrant, with approval by
the Board, maintains director and officer liability insurance.
In addition, Thadeus Mocarski, a director of the Registrant, is indemnified
in certain circumstances by Fleet Financial Group, Inc.
Item 7. Exemption from Registration Claimed.
- ------ -----------------------------------
Not applicable.
Item 8. Exhibits.
- ------ --------
4.01 Registrant's Restated Certificate of Incorporation, as amended
(incorporated herein by reference to Exhibit 4.01 of the
Registrant's Registration Statement on Form S-8 filed with the
Commission on July 19, 1999).
4.02 Certificate of Designations specifying the terms of the Series
A Junior Participating Preferred Stock of the Registrant, as
filed with the Delaware Secretary of State on January 28, 1999
(incorporated herein by reference to Exhibit 3.02 of the
Registrant's Registration Statement on Form 8-A filed with the
Commission on January 29, 1999).
4.03 Registrant's Bylaws (incorporated herein by reference to
Exhibit 3.06 of the Registrant's Registration Statement on Form
S-1, Registration No. 333-44469 declared effective by the
Commission on March 18, 1998.)
4.04 Rights Agreement, dated January 27, 1999, between Registrant
and BankBoston, N.A., as Rights Agent (incorporated herein by
reference to Exhibit 4.04 of the Registrant's Registration
Statement on Form 8-A filed with the Commission on January 29,
1999).
4.05 Cohesive Technology Solutions, Inc. Stock Option and Restricted
Stock Purchase Plan and related form of Stock Option Agreement
and Stock Option Exercise Agreement. (1)
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, independent auditors.
24.01 Power of Attorney (see page 5).
_____________________
(1) Cohesive Technology Solutions, Inc. ("Cohesive") is a Delaware corporation
(formerly known as Cohesive Network Systems, Inc.) that was acquired by
the Registrant on July 27, 1999 (through a merger of Cohesive with and
into a wholly-owned subsidiary of the Registrant) pursuant to the terms of
an Agreement and Plan of Reorganization dated April 21, 1999, as amended,
in which the Registrant agreed to assume all outstanding options of
Cohesive under its Stock Option and Restricted Stock Purchase Plan as of
July 27, 1999.
Item 9. Undertakings.
- ------ ------------
The undersigned Registrant hereby undertakes:
3
<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) 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.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not
-------- -------
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference 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 which remain unsold at the termination of the
offering.
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.
- ----
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 provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the 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 hereby, 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.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Santa Clara, State of California, on this 16th day of
August, 1999.
EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
---------------------------------
Richard S. Stoltz
Executive Vice President, Finance, Chief
Financial Officer and Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Ellen M. Hancock and Richard S. Stoltz,
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement on Form S-8, and to file
the same with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his, her or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ Ellen M. Hancock President, Chief Executive Officer and August 16, 1999
- ---------------------------------
Ellen M. Hancock Director
Principal Financial Officer and
Principal Accounting Officer:
/s/ Richard S. Stoltz Executive Vice President, Finance, August 16, 1999
- ---------------------------------
Richard S. Stoltz Chief Financial Officer and
Chief Operating Officer
Additional Directors:
/s/ K.B. Chandrasekhar Chairman of the August 16, 1999
- ---------------------------------
K.B. Chandrasekhar Board of Directors
Director August , 1999
- ---------------------------------
Frederick W.W. Bolander
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Mark Dubovoy Director August 16, 1999
- ---------------------------------
Mark Dubovoy
/s/ John R. Dougery Director August 16, 1999
- ---------------------------------
John R. Dougery
Director August , 1999
- ---------------------------------
Max D. Hopper
/s/ Peter A. Howley Director August 16, 1999
- ---------------------------------
Peter A. Howley
/s/ Daniel C. Lynch Director August 16, 1999
- ---------------------------------
Daniel C. Lynch
/s/ Thadeus Mocarski Director August 16, 1999
- ---------------------------------
Thadeus Mocarski
/s/ Naomi Seligman Director August 16, 1999
- ---------------------------------
Naomi Seligman
</TABLE>
6
<PAGE>
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
4.01 Registrant's Restated Certificate of Incorporation, as amended
(incorporated herein by reference to Exhibit 4.01 of the
Registrant's Registration Statement on Form S-8 filed with the
Commission on July 19, 1999).
4.02 Certificate of Designations specifying the terms of the Series A
Junior Participating Preferred Stock of the Registrant, as filed
with the Delaware Secretary of State on January 28, 1999
(incorporated herein by reference to Exhibit 3.02 of the
Registrant's Registration Statement on Form 8-A filed with the
Commission on January 29, 1999).
4.03 Registrant's Bylaws (incorporated herein by reference to Exhibit
3.06 of the Registrant's Registration Statement on Form S-1,
Registration No. 333-44469 declared effective by the Commission on
March 18, 1998.)
4.04 Rights Agreement, dated January 27, 1999, between Registrant and
BankBoston, N.A., as Rights Agent (incorporated herein by
reference to Exhibit 4.04 of the Registrant's Registration
Statement on Form 8-A filed with the Commission on January 29,
1999).
4.05 Cohesive Technology Solutions, Inc. Stock Option and Restricted
Stock Purchase Plan and related form of Stock Option Agreement and
Stock Option Exercise Agreement. (1)
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, independent auditors.
24.01 Power of Attorney (see page 5).
____________________
(1) Cohesive Technology Solutions, Inc. ("Cohesive") is a Delaware corporation
(formerly known as Cohesive Network Systems, Inc.) that was acquired by
the Registrant on July 27, 1999 (through a merger of Cohesive with and
into a wholly-owned subsidiary of the Registrant) pursuant to the terms of
an Agreement and Plan of Reorganization dated April 21, 1999, as amended,
in which the Registrant agreed to assume all outstanding options of
Cohesive under its Stock Option and Restricted Stock Purchase Plan as of
July 27, 1999.
7
<PAGE>
Exhibit 4.05
COHESIVE NETWORK SYSTEMS, INC.
(formerly Global Internet Access Services, Inc)
Stock Option and Restricted Stock Purchase Plan
Adopted July 13, 1995, as amended through January 28, 1998
Section 1. Purpose. The purpose of the Global Internet Access Services,
Inc. Stock Option and Restricted Stock Purchase Plan (the "Plan") is to promote
the interests of Global Internet Access Services, Inc., a Delaware corporation
(the "Company") and any Subsidiary thereof and its stockholders by providing an
opportunity to selected employees, officers and directors of the Company or any
Subsidiary thereof as of the date of the adoption of this Plan or at any time
thereafter to purchase Common Stock of the Company. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate such employees and
persons and to encourage such employees and persons to devote their best efforts
to the business and financial success of the Company. It is intended that this
purpose will be effected by the granting of "nonqualified stock options" and/or
"incentive stock options" to acquire the common stock of the Company and/or by
the granting of rights to purchase the common stock of the Company on a
"restricted stock" basis. Under this Plan, the Board of Directors (or the
Committee) shall have the authority (in its sole discretion) to grant "incentive
stock options" within the meaning of Section 422A(b) of the Code, "nonqualified
stock options" as described in Treasury Regulation Section 1.83-7 or any
successor regulation thereto, or "restricted stock" awards.
Section 2. Definitions. For purpose of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.1 "Award" shall mean an award of the right to purchase Common Stock
granted under the provisions of Section 7 of the Plan.
2.2 "Board of Directors" shall mean the Board of Directors of the Company.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean the Option Committee of the Board of Directors
unless and until its members are not qualified to serve on the Committee
pursuant to the provisions of the Plan, or such other Committee that the Board
of Directors appoints to administer the Plan. From and after such time as the
Company becomes subject to the requirements of the Securities Exchange Act of
1934, the Committee shall be composed entirely of members who meet the
Disinterested Person and other requirements of Rule 16b-3 as promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
and as such Rule may be amended from time to time, or any successor definition
adopted by the Commission.
<PAGE>
2.5 "Common Stock" shall mean the Common Stock, $0.01 par value, of the
Company.
2.6 "Disinterested Person" shall have the meaning set forth in Rule 16b-3,
and as such Rule may be amended from time to time, or any successor definition
adopted by the Commission.
2.7 "Employee" shall mean (i) with respect to an ISO, any person including
an officer or director of the Company, who, at the time an ISO is granted to
such person hereunder, is employed on a full-time basis by the Company or any
Subsidiary of the Company, and (ii) with respect to a NonQualified Option and/or
an Award shall mean any person employed by, or performing services for the
Company or any Subsidiary of the Company, including, without limitation,
officers and directors.
2.8 "Fair Market Value" shall mean the average of the closing prices of
sales of shares of Common Stock on all national securities exchanges on which
the Common Stock may at the time be listed or, if there shall have been no sales
on any such day, the average of the highest bid and lowest asked prices on all
such exchanges at the end of such day or, if on any day the Common Stock shall
not be so listed, the average of the representative bid and asked prices quoted
in the NASDAQ system as of 3:30 p.m., New York time, on such day or, if on any
day the Common Stock shall not be quoted in the NASDAQ system, the average of
the high and low bid and asked prices on such day in the over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization. If at any time the Common Stock is not listed on any
national securities exchange or quoted in the NASDAQ system or the over-the-
counter market, the Fair Market Value of the shares of Common Stock subject to
an Option on the date the ISO is granted shall be the fair market value thereof
determined in good faith by the Committee.
2.9 "ISO" shall mean an Option granted under the Plan which constitutes
and shall be treated as an "incentive stock option" as defined in Section
422A(b) of the Code.
2.10 "NonQualified Option" shall mean an Option granted to a Participant
pursuant to the Plan which is intended to be, and qualifies as, a "nonqualified
stock option" as described in Treasury Regulation Section 1.83-7 and which shall
not constitute nor be treated as an ISO.
2.11 "Outside Director" shall mean any director who is not an Employee,
who is not a 5% shareholder of the Company, who is not a director, officer, or
general partner of a 5% shareholder of the Company, and who is not a director,
officer or general partner of a general partner of a 5% shareholder of the
Company. For purposes of this definition, a "5% shareholder" is a person or
entity who beneficially owns stock possessing 5% or more of the total combined
voting power of the Company.
2.12 "Option" shall mean any ISO or NonQualified Option granted pursuant
to this Plan.
2
<PAGE>
2.13 "Participant" shall mean any Employee to whom an Award and/or an
Option is granted, and any non-employee director to whom a NonQualified Option
is granted, under this Plan.
2.14 "Parent of the Company" shall have the meaning set forth in Section
425(e) of the Code.
2.15 "Subsidiary of the Company" shall have the meaning set forth in
Section 425(f) of the Code.
Section 3. Eligibility. Awards and/or Options may be granted to any
Employee or director of the Company or any Subsidiary. Subject to the above
qualifications, the Committee shall have the sole authority to select the
Employees to whom Awards and/or Options are to be granted hereunder, and to
determine whether an Employee is to be granted a NonQualified Option, an ISO or
an Award or any combination thereof. No Employee shall have any right to
participate in the Plan. Any Employee selected by the Committee for
participation during any one period will not by virtue of such participation
have the right to be selected as a Participant for any other period.
Section 4. Common Stock Subject to the Plan.
4.1 The total number of shares of Common Stock for which Options and/or
Awards may be granted under this Plan shall not exceed in the aggregate four
million five hundred thousand (4,500,000)/1/ shares of Common Stock.
4.2 The shares of Common Stock that may be subject to Options and/or
Awards granted under this Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as Treasury stock as the
Committee may determine. In the event that any outstanding Option expires or is
terminated for any reason, the shares allocable to the unexercised portion of
such Option may again be subject to an Option and/or Award granted under this
Plan. If any shares of Common Stock acquired pursuant to an Award or the
exercise of an Option shall have been repurchased by the Company, then such
shares shall again become available for issuance pursuant to the Plan.
4.3 Special ISO Limitations.
(a) The aggregate Fair Market Value (determined as of the date an ISO
is granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all Incentive Stock Option Plans of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 425(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company unless the option price is at least 110% of
___________
/1/ Amended by the Board of Directors on July 29, 1998 to increase this number
to 5,500,000 shares.
3
<PAGE>
the Fair Market Value (determined as of the time the ISO is granted) of the
shares of Common Stock subject to the ISO and the ISO by its terms is not
exercisable more than five years from the date it is granted.
4.4 Notwithstanding any other provision of the Plan, the provisions of
Sections 4.3(a) and (b) shall not apply, nor shall be construed to apply, to any
NonQualified Option or Award granted under the Plan.
Section 5. Administration of the Plan.
5.1 The Plan shall be administered by a Committee which shall be appointed
by the Board of Directors and which shall serve at the pleasure of the Board of
Directors.
5.2 Options and Awards.
(a) Options. The Committee shall have the sole authority and
discretion under this Plan (i) to select the Participants who are to be granted
Options hereunder; (ii) to designate whether any Option to be granted hereunder
is to be an ISO or a NonQualified Option; (iii) to establish the number of
shares of Common Stock that may be issued under each Option; (iv) to determine
the time and the conditions subject to which Options may be exercised in whole
or in part; (v) to determine the form of consideration that may be used to
purchase shares of Common Stock upon exercise of any Option (including the
circumstances under which the Company's issued and outstanding shares of Common
Stock may be used by a Participant to exercise an Option); (vi) to impose
restrictions and/or conditions with respect to shares of Common Stock acquired
upon exercise of an Option; (vii) to determine the circumstances under which
shares of Common Stock acquired upon exercise of any Option may be subject to
repurchase by the Company; (viii) to determine the circumstances and conditions
subject to which shares acquired upon exercise of an Option may be sold or
otherwise transferred, including without limitation, the circumstances and
conditions subject to which a proposed sale of shares of Common Stock acquired
upon exercise of an Option may be subject to the Company's right of first
refusal (as well as the terms and condition of any such right of first refusal);
(ix) to establish a vesting provision for any Option relating to the time (or
the circumstance) when the Option may be exercised by a Participant, including
vesting provisions which may be contingent upon the Company meeting specified
financial goals; (x) to establish any other terms, restrictions and/or
conditions applicable to any Option not inconsistent with the provisions of this
Plan.
(b) Awards. The Committee shall have the sole authority and
discretion under this Plan (i) to select the Participants who are to be granted
Awards hereunder; (ii) to determine the amount to be paid by a Participant to
acquire shares of Common Stock pursuant to an Award, which amount may be equal
to, more than, or less than 100% of the Fair Market Value of such shares on the
date the Award is granted (but in no event less than the par value of such
shares); (iii) to determine the time or times and the conditions subject to
which Awards may be made; (iv) to determine the time or times and the conditions
subject to which any shares of Common Stock subject to an Award are to become
vested and no longer subject to repurchase by the Company; (v) to establish
transfer restrictions and the terms and conditions on which any such
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<PAGE>
transfer restriction with respect to an Award shall lapse; (vi) to establish
vesting provisions with respect to any shares of Common Stock subject to an
Award, including vesting provisions which may be contingent upon the Company
meeting specified financial goals; (vii) to determine the circumstances under
which shares of Common Stock acquired pursuant to an Award may be subject to
repurchase by the Company; (viii) to determine the time or times and the
conditions subject to which any shares of Common Stock subject to an Award may
be repurchased by the Company (as well as the terms and conditions of any such
repurchase); (ix) to determine the circumstances and conditions subject to which
a proposed sale of shares of Common Stock subject to an Award may be subject to
the Company's right of first refusal (as well as the terms and conditions of any
such right of first refusal); (x) to determine the form of consideration that
may be used to purchase shares of Common Stock pursuant to an Award (including
the circumstances under which the Company's issued and outstanding shares of
Common Stock may be used by a Participant to purchase the Common Stock subject
to an award); (xi) to accelerate time at which any or all restrictions imposed
with respect to any shares of Common Stock subject to an Award will lapse or
otherwise remove any or all such restrictions; and (xii) to establish any other
terms, restrictions and/or conditions applicable to any Award not inconsistent
with the provisions of this Plan.
5.3 The Committee shall be authorized to interpret this Plan and may, from
time to time, adopt such rules and regulations, not inconsistent with the
provisions of this Plan, as it may deem advisable to carry out the purpose of
this Plan.
5.4 The interpretation and construction by the Committee of any provision
of the Plan, any Option and/or Award granted hereunder or any agreement
evidencing any such Option and/or Award shall be final and conclusive upon all
parties.
5.5 All expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons in connection with
the administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No member of the Committee shall be liable for any action,
determination or interpretation taken or made in good faith with respect to the
Plan or any Option and/or Award granted hereunder.
Section 6. Terms and Conditions of Options.
6.1 ISOs. The terms and conditions of each ISO granted under the Plan
shall be specified by the Committee and shall be set forth in an ISO agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each ISO shall be such that each ISO
issued hereunder shall constitute and shall be treated as an "incentive stock
option" as defined in Section 422A of the Code. The terms and conditions of any
ISO granted hereunder need not be identical to those of any other ISO granted
hereunder.
The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Committee but shall in no
event be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the
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Fair Market Value of the shares of Common Stock subject to the ISO on the date
the ISO is granted.
(b) ISOs, by their terms, shall not be transferable otherwise than by
will or the laws of descent and distribution, and, during a Participant's
lifetime, an ISO shall be exercisable only by the Participant.
(c) The Committee shall fix the term of all ISOs granted pursuant to
the Plan (including the date on which such ISO shall expire and terminate),
provided, however, that such term shall in no event exceed ten years from the
date on which such ISO is granted (or, in the case of an ISO granted to an
Employee referred to in Section 4.3(b) hereof, such term shall in no event
exceed five years from the date on which such ISO is granted). Each ISO shall
be exercisable in such amount or amounts, under such conditions and at such
times or intervals or in such installments as shall be determined by the
Committee in its sole discretion; provided, however, except in the case of ISOs
granted to officers directors (who are employed by the Company) ISOs shall
become exercisable at a rate of no less than twenty percent (20%) per year over
five (5) years from the date the ISOs are granted."
(d) In the event that the Company or any Parent or Subsidiary of the
Company is required to withhold any federal, state or local taxes in respect of
any compensation income realized by the Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such federal, state or local taxes, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. A Participant may use issued and outstanding Common Stock for the
payment of taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be determined by the
Committee in its sole discretion.
(e) In the sole discretion of the Committee, the terms and conditions
of any ISO may (but need not) include any of the following provisions:
(i) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis for
any reason other than as a result of his death or "disability" (within the
meaning of Section 22(e)(3) of the Code), the unexercised portion of any
ISO held by such Participant at that time may only be exercised within one
month after the date on which the Participant ceased to be so employed, and
only to the extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(ii) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis by
reason of his "disability" (within the meaning of Section 22(e)(3) of the
Code), the unexercised portion of any ISO held by such Participant at that
time may only be exercised within one
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<PAGE>
year after the date on which the Participant ceased to be so employed, and
only to the extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(iii) In the event a Participant shall die while in the full-
time employ of the Company or a Parent or Subsidiary of the Company (or
within a period of one month after ceasing to be an Employee for any reason
other than such "disability" or within a period of one year after ceasing
to be an Employee by reason of such "disability"), the unexercised portion
of any ISO held by such Participant at the time of his death may only be
exercised within one year after the date of such Participant's death, and
only to the extent that the Participant could have otherwise exercised such
ISO at the time of his death. In such event, such ISO may be exercised by
the executor or administrator of the Participant's estate or by any person
or persons who shall have acquired the ISO directly from the Participant by
bequest or inheritance.
6.2 NonQualified Options. The terms and conditions of each NonQualified
Option granted under the Plan shall be specified by the Committee, in its sole
discretion, and shall be set forth in a written option agreement between the
Company and the Participant in such form as the Committee shall approve. The
terms and conditions of each Option will be such that each Option issued
hereunder shall not constitute nor be treated as an "incentive stock option" as
defined in Section 422A of the Code and will be a "nonqualified stock option"
for federal income tax purposes. The terms and conditions of any Option granted
hereunder need not be identical to those of any other Option granted hereunder.
The terms and conditions of each NonQualified Option Agreement shall
include the following:
(a) The option (exercise) price shall be fixed by the Committee and
may be equal to, more than or less than 100% of the Fair Market Value of the
shares of Common Stock subject to the NonQualified Option on the date such
NonQualified Option is granted; provided, however, that the exercise price of a
NonQualified Option shall be no less than eighty-five percent (85%) of the Fair
Market Value on the date of grant and, with respect to any person who owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary, the exercise price
of a NonQualified Option shall not be less than one hundred ten percent (110%)
of the Fair Market Value of the shares of common stock on the date such Option
is granted.
(b) The Committee shall fix the term of all NonQualified Options
granted pursuant to the Plan (including the date on which such NonQualified
Option shall expire and terminate). Such term may be more than ten years from
the date on which such NonQualified Option is granted. Each NonQualified Option
shall be exercisable in such amount or amounts, under such conditions, and at
such times or intervals or in such installments as shall be determined by the
Committee in its sole discretion; provided, however, except in the case of
NonQualified Options granted to officers, directors and consultants,
NonQualified Options shall become exercisable at a rate of no less than twenty
percent (20%) per year over five (5) years from the date such Options are
granted.
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<PAGE>
(c) NonQualified Options shall not be transferrable other than by will
or the laws of descent and distribution, and during the Participant's life time,
a NonQualified Option shall be exercisable only by the Participant.
(d) In the event that the Company or any Parent or Subsidiary of the
Company is required to withhold any federal, state or local taxes in respect of
any compensation income realized by the Participant in respect of an
NonQualified Option granted hereunder or in respect of any shares of Common
Stock acquired upon exercise of a NonQualified Option, the Company shall deduct
from any payments of any kind otherwise due to such Participant the aggregate
amount of such federal, state or local taxes required to be so withheld or, if
such payments are insufficient to satisfy such federal, state or local taxes, or
if no such payments are due or to become due to such Participant, then such
Participant will be required to pay to the Company, or make other arrangements
satisfactory to the Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total amount of taxes
to be withheld in respect of any such compensation income shall be determined by
the Committee in its sole discretion.
6.3 In the event an Optionee's service relationship with the Company is
terminated, unless such termination is for cause (as defined by applicable law),
the Optionee shall have the right to exercise the option after termination of
the service relationship with the Company (to the extent vested) for at least
thirty (30) days from the date of termination unless such termination was caused
by death or disability in which case the Optionee (or the Optionee's estate or
the person who has acquired the Option by bequest or inheritance) shall have at
least six (6) months from the date of termination of the service relationship.
Section 7. Terms and Conditions of Awards.
The terms and conditions of each Award granted under the Plan shall be
specified by the Committee, in its sole discretion, and shall be set forth in a
written agreement between the Participant and the Company, in such form as the
Committee shall approve. The terms and provisions of any Award granted
hereunder need not be identical to those of any other Award granted hereunder;
provided, however, that all Awards shall comply with Section 260.140.42 of Title
10 of the California Code of Regulations.".
The terms and conditions of each Award shall include the following:
(a) The amount to be paid by a Participant to acquire the shares of
Common Stock pursuant to an Award shall be fixed by the Committee and may be
equal to, more than or less than 100% of the Fair Market Value of the shares of
Common Stock subject to the Award on the date the Award is granted; provided,
however, that the amount to be paid by a Participant to acquire shares of Common
Stock pursuant to an Award shall be no less than eighty-five percent (85%) of
the Fair Market Value of the shares of Common Stock on the date the Award is
granted.
(b) Each Award shall contain such vesting provisions, such transfer
restrictions and such other restrictions and conditions as the Committee, in its
sole discretion, may determine, including, without limitation, the circumstances
under which the Company shall
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<PAGE>
have the right and option to repurchase shares of Common Stock acquired pursuant
to an Award; provided, however, that the right to repurchase shares of Common
Stock acquired pursuant to an Award shall lapse at a rate of at least twenty
percent (20%) of the shares per year over five (5) years from the date of grant
of the Award except with respect to grants to officers, directors or consultants
of the Company or an affiliate of the Company.
(c) Stock certificates representing Common Stock acquired pursuant to
an Award shall bear a legend referring to the restrictions imposed on such Stock
and such other matters as the Committee may determine.
(d) Awards shall not be transferable otherwise than by will or the
laws of descent and distribution, and during a Participant's lifetime, Awards
shall be exercisable only by the Participant.
(e) In the event that the Company or any Parent or Subsidiary of the
Company is required to withhold any federal, state or local taxes in respect of
any compensation income realized by the Participant in respect of an Award
granted hereunder, or in respect of any shares acquired pursuant to an Award, or
in respect of the vesting of any such shares of Common Stock, then the Company
shall deduct from any payments of any kind otherwise due to such Participant the
aggregate amount of such federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such federal, state or
local taxes, or if no such payments are due or to become due to such
Participant, then such Participant will be required to pay to the Company, or
make other arrangements satisfactory to the Company regarding payment to the
Company of, the aggregate amount of any such taxes. All matters with respect to
the total amount of taxes to be withheld in respect of any such compensation
income shall be determined by the Committee in its sole discretion.
Section 8. Adjustments.
8.1 In the event that after the adoption of the Plan by the Board of
Directors, the outstanding shares of the Company's Common Stock shall be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, split-up, combination or exchange of shares or
declaration of any dividends payable in Common Stock, the Committee shall
appropriately adjust (a) the number of shares of Common Stock (and the option
price per share) subject to the unexercised portion of any outstanding Option
(to the nearest possible full share), provided, however, that the limitations of
Section 425 of the Code shall apply with respect to adjustments made to ISOs;
(b) the number of shares of Common Stock to be acquired pursuant to an Award
which have not become vested, and (c) the number of shares of Common Stock for
which Options and/or Awards may be granted under this Plan, as set forth in
Section 4.1 hereof, and such adjustments shall be effective and binding for all
purposes of this Plan.
8.2 Notwithstanding the foregoing, in the event of (a) any offer to
holders of the Company's Common Stock generally relating to the acquisition of
their shares, including, without limitation, through purchase, merger or
otherwise, or (b) any transaction generally
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<PAGE>
relating to the acquisition of substantially all of the assets or business of
the Company, the Committee may make such adjustment as it deems equitable in
respect of outstanding Options and Awards including, without limitation, the
revision or cancellation of any outstanding Options and/or Awards. Any such
determination by the Committee shall be effective and binding for all purposes
of this Plan.
Section 9. Effect of the Plan on Employment Relationship. Neither this
Plan nor any Option and/or Award granted hereunder to a Participant shall be
construed as conferring upon such Participant any right to continue in the
employ of the Company or the service of the Company or any Subsidiary as the
case may be, or limit in any respect the right of the Company or any Subsidiary
to terminate such Participant's employment or other relationship with the
Company or any Subsidiary, as the case may be, at any time.
Section 10. Amendment of the Plan. The Committee may amend, alter or
discontinue the Plan, but no amendment, alteration or discontinuation shall be
made that would impair the rights of the Participant or Outside Directors under
any Option or Award theretofore granted without such Participant's or Outside
Directors' consent, or that without the approval of the shareholders (as
described below) would:
(a) except as provided in Section 4.2, increase the total number of
shares of Common Stock reserved for the purpose of the Plan;
(b) except as provided in this Plan, decrease the option price of any
Option to less than 100% of the Fair Market Value on the date of the grant of
the Option;
(c) change the Employees or class of Employees eligible to participate
in the Plan; or
(d) extend the maximum option period under Section 6.1(c).
Notwithstanding the foregoing, shareholder approval under this Section 10
shall only be required at such time as Rule 16b-3 shall require the approval of
the shareholders of a company of any material amendment to any employee benefit
plan of such company.
The Committee may amend the terms of any Option or Award theretofore
granted, prospectively or retroactively, but, subject to Section 8 above, no
such amendment shall impair the rights of any Participant or Outside Director
without his or her consent.
Section 11. Termination of the Plan. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
initial adoption by the Board of Directors. No Option and/or Award may be
granted hereunder after termination of the Plan. The termination or amendment
of the Plan shall not alter or impair any rights or obligations under any Option
and/or Award theretofore granted under the Plan.
Section 12. Effective Date of the Plan. This Plan shall be effective as
of July 13, 1995, the date on which the Plan was adopted by the Board of
Directors of the Company. The Plan
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<PAGE>
was approved by the written consent of holders of a majority of the outstanding
Common Stock of the Company as of July 13, 1995.
Section 13. Information to Optionees, Participants, and Purchasers. The
Company shall provide copies of annual financial statements to each Optionee and
Participant, and to each individual who acquires shares pursuant to the Plan,
not less frequently than annually during the period such Optionee, Participant
or purchaser has one (1) or more Options, Awards, or in the case of an
individual who acquires shares pursuant to the Plan, during such period such
individual owns such shares. The Company shall not be required to provide such
statements to key employees whose duties in connection with the Company assure
their access to equivalent information.
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
COHESIVE NETWORK SYSTEMS, INC.
Stock Option Agreement
----------------------
(Pursuant to Stock Option and Restricted Stock Purchase Plan)
Employee/Optionee:
Number of shares of Common Stock subject to this Agreement: shares.
Vesting Commencement Date:
Exercise Price Per Share: $_________
Type of Option:
Incentive Stock Option;
Non-statutory Stock Option:
Pursuant to the Cohesive Network Systems, Inc. Stock Option and Restricted Stock
Purchase Plan (the "Plan"), the Board of Directors of Cohesive Network Systems,
Inc. (the "Company") has granted to you on this date an option (the "Option") to
purchase the number of shares of the Company's common stock, $.01 par value
("Common Stock"), set forth above. Such number of shares (as such may be
adjusted as described in Section 11 below) is herein referred to as the "Option
Shares." If designated above as an incentive stock option, the Option is
intended to constitute and be treated as an "incentive stock option" as defined
under Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code") for federal income tax purposes. The terms and conditions of the Option
are set out below.
If designated in this Agreement as an Incentive Stock Option ("ISO"), this
Option is intended to qualify as an Incentive Stock Option as defined in Section
422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule
of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock
Option ("NSO").
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1. Date of Grant. The Option is granted to you as of the date the Board
of Directors of the Company approved the grant of this Option.
2. Termination of Option. Your right to exercise the Option (and to
purchase the Option Shares) shall expire and terminate in all events on the
earliest to occur of (i) ten (10) years from the date of grant set forth in
Section 1 hereof, or (ii) the date provided in Sections 9(a), 9(b) or 9(c) below
in the event you cease to be employed by, or a Consultant to, the Company or any
Subsidiary of the Company (as defined in the Plan).
3. Option Price. The purchase price to be paid upon the exercise of the
Option will be the Exercise Price Per Share set forth above.
4. Vesting Provisions; Entitlement to Exercise Option and Purchase Option
Shares. You shall be entitled to exercise the Option and purchase Option Shares
on a cumulative basis, vesting annually over four years, as outlined below:
Vesting Period Percentage of Shares Subject to
Option Which Are Exercisable
12 months after Vesting Commencement Date 25 percent
24 months after Vesting Commencement Date 50 percent
36 months after Vesting Commencement Date 75 percent
48 months after Vesting Commencement Date 100 percent
If you cease to be employed by, or a Consultant to, the Company prior to
the next Vesting Period, you will be entitled to exercise this Option only for
the percentage of the Shares referred to opposite the last vesting period you
were employed by, or a Consultant to, the Company. There will be no pro rata
right to exercise the Option by virtue of being employed for a partial period.
5. Additional Provisions Relating to Exercise.
(a) Once you become entitled to exercise the Option (and purchase
Option Shares) as provided in Section 4 hereof, such right will continue until
the date on which the Option expires and terminates pursuant to Section 2
hereof.
(b) The Board of Directors of the Company, in its sole discretion, may
at any time accelerate the time at which the Option may be exercised by you with
respect to any Option Shares.
6. Exercise of Option. To exercise the Option, you must deliver a
completed copy of the attached Option Exercise Form to the address indicated on
the Form, specifying the number of Option Shares being purchased as a result of
such exercise, together with payment of the full option price for the Option
Shares being purchased. Payment of the option price must be made in cash or by
check.
7. Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration
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of the offering of any securities of the Company under the Securities Act,
Optionee shall not sell or otherwise transfer any Option 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. Such
restriction shall apply only to the first registration statement of the Company
to become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering 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. Transferability of Option. The Option may not be transferred by you
(other than by will or the laws of descent and distribution) and may be
exercised during your lifetime only by you.
9. Termination of Employment or Consulting Relationship.
(a) In the event that you cease to be employed by the Company or any
Subsidiary on a full time basis (or your consulting relationship ceases) for any
reason other than because of your death or disability (within the meaning of
Section 22(e)(3) of the Code), the Option may only be exercised within one month
after you cease to be so employed or retained as a Consultant, and only to the
same extent that you were entitled to exercise the Option on the date you ceased
to be so employed or retained as a Consultant and had not previously done so.
(b) In the event that you cease to be employed by the Company or any
Subsidiary on a full time basis (or your consulting relationship ceases) by
reason of "disability" (as defined in paragraph (a) above), the Option may only
be exercised within one year after the date you cease to be so employed or
retained as a Consultant, and only to the same extent that you were entitled to
exercise the Option on the date you cease to be so employed or retained as a
Consultant by reason of such disability and had not previously done so.
(c) In the event that you die while employed or retained as a
Consultant on a full-time basis by the Company or any Subsidiary (or within a
period of one month after ceasing to be employed by the Company or any
Subsidiary on a full-time basis for any reason other than disability (as defined
in paragraph (a) above) or within a period of one year after ceasing to be
employed by the Company or any Subsidiary or retained as a Consultant on a full-
time basis by reason of such "disability"), the Option may only be exercised
within one year after your death. In such event, the Option may be exercised
during such one year period by the executor or administrator of your estate or
by any person who shall have acquired the Option through bequest or inheritance,
but only to the same extent that you were entitled to exercise the Option
immediately prior to the time of your death and you had not previously done so.
(d) Notwithstanding any provision contained in this Section 8 to the
contrary, in no event may the Option be exercised to any extent by anyone after
ten (10) years from the date of grant set forth in Section I hereof.
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<PAGE>
10. Representations. You represent and warrant that you understand the
federal, state and local income tax consequences of the granting of the Option
to you, the exercise of the Option and purchase of Option Shares, and the
subsequent sale or other disposition of any Option Shares. In addition, you
understand that the Company will be required to withhold federal, state or local
taxes in respect of any compensation income realized by you as a result of your
exercise of this Option if this Option is a non-statutory stock option or as a
result of any "disqualifying disposition" of any Option Shares acquired upon
exercise of the Option granted hereunder if this Option is an incentive stock
option. In the event that the Company is required to withhold any such taxes as
a result of any such exercise or disqualifying disposition you hereby agree to
allow the Company to deduct such amounts from any compensation or other payment
owed to you by the Company or to provide the Company with cash funds equal to
the total federal, state and local taxes required to be so withheld, or make
other arrangements satisfactory to the Company regarding such payment, in each
case at the election of the Company in its sole discretion. It is understood
that all matters with respect to the total amount of taxes to be withheld in
respect of any such compensation income shall be determined by the Board of
Directors in its sole discretion.
11. Notice of Sale. You agree to give the Company prompt notice of any
sale or other disposition of any Option Shares that occurs (i) within two years
from the date of the granting of the Option to you, or (ii) within one year
after the transfer of such Shares to you upon the exercise of the Option.
12. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Option Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
law.
13. Continuation of Employment or Consulting relationship. Neither the
Plan nor the Option shall confer upon you any right to continue in the employ
of, or as a consultant to, the Company or any Subsidiary or limit in any respect
the right of the Company or any Subsidiary to terminate your employment or
consulting relationship at any time.
14. Plan Documents. This Option Agreement is qualified in its entirety by
reference to the provisions of the Plan, which are hereby incorporated herein by
reference.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to their
conflicts of laws provisions. If any one or more provisions of this Agreement
shall be found to be illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
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16. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS AN EMPLOYEE OR CONSULTANT AT ANY TIME, WITH
OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
COHESIVE NETWORK SYSTEMS, INC.
By _____________________
Dated as of
Accepted and Agreed to:
________________________
Address
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COHESIVE NETWORK SYSTEMS, INC.
NOTICE OF EXERCISE OF STOCK OPTIONS
STOCK PURCHASE AGREEMENT
This Agreement is made as of this ____ day of ____________, 199__ by and between
Cohesive Network Systems, Inc., a Delaware corporation (the "Company"), and
(the "Optionee"), the holder of a stock option under the Cohesive Network
Systems, Inc. Stock Option and Restricted Stock Purchase Plan.
I. EXERCISE OF OPTION
I.1 Exercise. The Optionee hereby purchases ___________shares of the
Company's Common Stock ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on (the "Grant Date"), to purchase up to shares
of the Company's Common Stock (the "Total Purchasable Shares") under the
Company's Stock Option at an option price of $______ per share (the "Option
Price").
I.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Company, Optionee shall pay the Option Price for the Purchased
Shares in accordance with the provisions of the agreement between the Company
and Optionee evidencing the option ("Stock Option Agreement").
I.3 Delivery of Certificates. Within a reasonable time from the receipt
of this Agreement, executed by the Optionee, and the Option Price, the Company
shall deliver a certificate representing the Purchased Shares to the Optionee.
II. SECURITIES LAW COMPLIANCE
II.1 Exemption from Registration. The Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are being issued to the Optionee in reliance upon the exemption from such
registration provided by Rule 701 of the Securities and Commission for stock
issuances under compensatory benefit plans such as the Plan. The Optionee
hereby acknowledges previous receipt of a copy of the Plan.
II.2 Restricted Securities.
(a) The Optionee hereby confirms that the Optionee has been informed
that the Purchased Shares are restricted securities under the 1933 Act and may
not be resold or transferred unless the Purchased Shares are first registered
under the Federal securities laws or unless an exemption from such registration
is available. Accordingly, the Optionee hereby acknowledges that the Optionee
is prepared to hold the Purchased Shares for an indefinite period and that the
Optionee is aware that Rule 144 of the Securities and Exchange Commission issued
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under the 1933 Act is not presently available to exempt the sale of the
Purchased Shares from the registration requirements of the 1933 Act.
(b) Upon the expiration of the 90 day period immediately following the
date on which the Company first becomes subject to the reporting of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Purchased
Shares may be sold (without registration) pursuant to the applicable
requirements of Rule 144. If the Optionee is at the time of such sale an
affiliate of the Company for purposes of Rule 144 or was such an affiliate
during the preceding three months, then the sale must comply with all the
requirements of Rule 144 (including the volume limitation on the number of
shares sold, the broker/market maker sale requirement and the requisite notice
to the Securities and Exchange Commission); however, the two year holding period
requirement of the Rule will not be applicable. If the Optionee is not at the
time of the sale an affiliate of the Company nor was such an affiliate during
the preceding three months, then none of the requirements of Rule 144 (other
than the broker/market maker sale requirement for Purchased Shares held for less
than three years following payment in cash of the Option Price therefor) will be
applicable to the sale.
(c) Should the Company not become subject to the reporting
requirements of the Act, then the Optionee may, provided he/she is not at the
time an affiliate of the Company (and was not such an affiliate during the
preceding three months), sell the Purchased Shares (without registration)
pursuant to paragraph (k) of Rule 144 after the Purchased Shares have been held
for a period of three years following the payment in cash of the Option Price
for such shares.
II.3 Disposition of Shares. The Optionee hereby agrees that the Optionee
shall make no disposition of the Purchased Shares (other than a permitted
transfer under paragraph 4.1) unless and until the Optionee shall have notified
the Company of the proposed disposition and provided the Company with, written
assurances, in form and substance satisfactory to the Company, that (a) the
proposed disposition does not require registration of the Purchased Shares under
the 1933 Act or (b) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.
The Company shall not be required to transfer on its books any Purchased
Shares which have been sold or transferred in violation of the provisions of
this Article II or to treat as the owner of the Purchased Shares, or otherwise
to accord voting or dividend rights to, any transferee to whom the Purchased
Shares have been transferred in contravention of this Agreement.
III. MARITAL DISSOLUTION OR LEGAL SEPARATION
III.1 Grant. In connection with the dissolution of the Optionee's
marriage or the legal separation of the Optionee and the Optionee's spouse, the
Company shall have the right (the "Special Purchase Right"), exercisable at any
time during the thirty (30) day period following the Company's receipt of the
required Dissolution Notice under paragraph 3.2, to purchase from the Optionee's
spouse, in accordance with the provisions of paragraph 3.3, all or any portion
of the
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<PAGE>
Purchased Option Shares which would otherwise be awarded to such spouse in
settlement of any community property or other marital property rights such
spouse may have in such shares.
III.2 Notice of Decree or Agreement. The Optionee shall promptly provide
the Secretary of the Company with written notice ("Dissolution Notice") of (a)
the entry of any judicial decree or order resolving the property rights of the
Optionee and the Optionee's spouse in connection with their marital dissolution
or legal separation or (b) the execution of any contract or agreement relating
to the distribution or division of such property rights. The Dissolution Notice
shall be accompanied by a copy of the actual decree of dissolution or settlement
agreement between the Optionee and the optionee's spouse which provides for the
award to the spouse of one or more Purchased Shares in settlement of any
community property or other marital property rights such spouse may have in such
shares.
III.3 Exercise of Special Purchase Right. The Special Purchase Right
shall be exercisable by written notice ("Purchase Notice") delivered to the
Optionee and the Optionee's spouse within thirty (30) days after the Company's
receipt of the Dissolution Notice. The Purchase Notice shall indicate the
number of shares to be purchased, the date the purchase is to be effected (such
date to be not less than five (5) business days, nor more than ten (10) business
days, after the date of the Purchase Notice), and the fair-market value to be
paid for such Purchased Shares. The Optionee (or the Optionee's spouse, to the
extent such spouse has physical possession of the Purchased Shares) shall, prior
to the close of business on the date specified for the purchase, deliver to the
Secretary of the Company the certificates representing the shares to be
purchased, each certificate to be properly endorsed for transfer. The Company
shall, concurrently with the receipt of such stock certificates, pay to the
Optionee's spouse (in cash or cash equivalents) an amount equal to the fair
market value specified for such shares in the Purchase Notice.
If the Optionee's spouse does not agree with the fair market value
specified for the shares in the Purchase Notice, then the spouse shall promptly
notify the Company in writing of such disagreement and the fair market value of
such shares shall thereupon be determined by an appraiser of recognized standing
selected by the Company and the spouse. If they cannot agree on an appraiser
within twenty (20) days after the date of the Purchase Notice, each shall select
an appraiser of recognized standing, and the two appraisers shall designate a
third appraiser of recognized standing whose appraisal shall be determinative of
such value. The cost of the appraisal shall be shared equally by the Company
and the Optionee's spouse. The closing shall then be held on the fifth business
day following the completion of such appraisal; provided, however, that if the
appraised value is more than twenty five percent (25%) greater than the fair
market value specified for the shares in the Purchase Notice, the Company shall
have the right, exercisable prior to the expiration of such five (5) business
day period, to rescind the exercise of the Special Purchase Right and thereby
revoke its election to purchase the shares awarded to the spouse.
III.4 Lapse. The Special Purchase Right under this Article IV shall lapse
and cease to have effect upon the earlier of a public offering of the Company's
Common Stock or expiration
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of the thirty (30) day exercise period specified in paragraph 3.3, to the extent
the Special Purchase Right is not timely exercised in accordance with such
paragraph.
IV. GENERAL PROVISIONS
IV.1 Assignment. The Company may assign its Special Purchase Right under
Article III to any person or entity selected by the Company's Board of
Directors, including (without limitation) one or more shareholders of the
Company.
IV.2 Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
IV.3 Restrictions on Transfer.
(a) Stop-Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(b) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Option Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii) to
treat as owner of such Option Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Option Shares shall
have been so transferred.
IV.4 Notices. Any notice required in connection with the Special Purchase
Right or the disposition of any purchased shares covered thereby shall be given
in writing and shall be deemed effective upon personal delivery or upon deposit
in the United States mail, registered or certified, postage prepaid and
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
4.4 to all other parties to this Agreement
IV.5 No Waiver. The failure of the Company (or its assignees) in any
instance to exercise the Special Purchase Right granted under Article IV shall
not constitute a waiver of any other rights that may subsequently arise under
the provisions of this Agreement or any other agreement between the Company and
the Optionee or the Optionee's spouse. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature.
IV.6 Cancellation of Shares. If the Company (or its assignees) shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement,
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<PAGE>
then from and after such time, the person from whom such shares are to be
repurchased shall no longer have any rights as a holder of such shares (other
than the right to receive payment of such consideration in accordance with this
Agreement), and such shares shall be deemed purchased in accordance with the
applicable provisions hereof and the Company (or its assignees) shall be deemed
the owner and holder of such shares, whether or not the certificates therefor
have been delivered as required by this Agreement.
IV.7 Legend. All certificates representing the Purchased Shares shall be
endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SHARES MAY NOT BE SOLD, TRANSFERRED, OR
OFFERED FOR SALE IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SHARES UNDER SUCH ACT, (B) A 'NO ACTION' LETTER OF THE SECURITIES AND
EXCHANGE COMMISSION WITH RESPECT TO SUCH SALE OR OFFER, OR (C) AN OPINION OF THE
HOLDER'S COUNSEL TO THE COMPANY THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED
WITH RESPECT TO SUCH SALE OR OFFER. NO SALE OR TRANSFER OF ANY INTEREST IN THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE WITHOUT FIRST
SURRENDERING THIS CERTIFICATE TO THE COMPANY OR ITS TRANSFER AGENT AS A
CONDITION PRECEDENT TO ANY SUCH SALE OR TRANSFER. THIS CERTIFICATE AND THE
SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS IN CONFORMITY WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER
OF THE SHARES. THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.
V. VOTING OF PURCHASED SHARES
V.1 Optionee Undertaking. Optionee hereby agrees to vote purchased shares
on each matter with respect to which such shares are entitled to vote in the
same manner as are voted the majority of all other outstanding shares of the
Company's Common Stock at the time of such vote.
V.2 Lapse. The undertaking set forth in paragraph 5.1 shall lapse and
cease to have effect on all Purchased Shares upon the occurrence of one or more
of the events specified under paragraph 2.7 and shall lapse and cease to have
effect with respect to any Purchased Shares transferred by Optionee in
compliance with the provisions of Article II upon the effective date of such
transfer.
VI. MISCELLANEOUS PROVISIONS
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<PAGE>
VI.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Company may in
its judgment deem necessary or advisable in order to carry out or effect one or
more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement
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<PAGE>
VI.2 Agreement Is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and the Plan and
Stock Option Agreement are incorporated by reference. This Agreement shall in
all respects be construed in conformity with the express terms and provisions of
the Plan.
VI.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State without resort to that
State's conflict of laws rules.
VI.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument
VI.5 Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof
VI.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his or
her true and lawful attorney in fact, for him or her and in his or her name,
place and stead, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement Optionee's spouse further gives and grants unto Optionee as
his or her attorney in fact fall power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with fall power
of substitution and revocation, hereby ratifying and confirming all that
Optionee shall lawfully do and cause to be done by virtue of this power of
attorney.
VI.7 Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
COHESIVE NETWORK SYSTEMS, INC.
By _____________________
Title: Chief Executive Officer
Address: Cohesive Network Systems, Inc.
Embarcadero Corporate Center
2465 E. Bayshore Rd., Ste. 400
Palo Alto, California 94303
Attention: Corporate Secretary
Optionee
Address:________________
________________
________________
Phone: ________________
Fax (if any):___________
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<PAGE>
The undersigned, spouse of Optionee, has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Company's granting
the Optionee the right to acquire the Purchased Shares in accordance with the
terms of such Agreement, the undersigned hereby agrees to be irrevocably bound
by all the terms and provisions of such Agreement, including (specifically) the
right of the Company (or its assignees) to purchase any and all interest or
right the undersigned may otherwise have in such shares pursuant to community
property laws or other marital property rights.
OPTIONEE'S SPOUSE
Address:_______________
_______________
_______________
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<PAGE>
Exhibit 5.01
[Letterhead of Fenwick & West LLP]
August 16, 1999
Exodus Communications, Inc.
2831Mission College Boulevard
Mission College Boulevard
Santa Clara, CA 95054
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about August 16, 1999 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 102,178 shares of your Common Stock (the "Stock"), subject to
issuance by you upon the exercise of outstanding stock options of Cohesive
Technology Solutions, Inc. ("Cohesive") under its Stock Option and Restricted
Stock Purchase Plan (the "Cohesive Plan") that have been assumed by you (the
"Assumed Options"), pursuant to the Agreement and Plan of Reorganization dated
as of April 21, 1999, as amended (the "Merger Agreement"), among you, Cohesive
and Marley Acquisition Corp., a Delaware corporation and your wholly-owned
subsidiary (which has since been renamed Cohesive Technology Solutions, Inc.).
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the Exhibits filed as a part
thereof, including the Cohesive Plan and related form of stock option
agreement and form of stock option exercise agreement;
(2) the prospectus prepared in connection with the Registration Statement;
(3) copies provided to us of the minutes of meetings and actions by
written consent of the stockholders and Board of Directors that are
contained in your minute books and the minute books of your
predecessor, Exodus Communications, Inc., a California corporation,
which are maintained by you;
(4) a certificate from your transfer agent dated August 16, 1999 regarding
the number of shares outstanding, and a list prepared by you
identifying all outstanding options, warrants and other rights to
acquire your capital stock;
(5) the Merger Agreement; and
(6) a Management Certificate addressed to us and dated of even date
herewith executed by you containing certain factual and other
representations.
We have also confirmed the continued effectiveness of your registration on
Form 8-A filed on February 13, 1998 under the Securities Exchange Act of 1934,
as amended, by telephone call to the offices of the Commission and have
confirmed your eligibility to use Form S-8.
<PAGE>
Exodus Communications Inc.
August 16, 1999
Page 2
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals or copies of originals, the conformity to originals of all documents
submitted to us as copies, the legal capacity of all natural persons executing
the same, the lack of any undisclosed terminations, modifications, waivers or
amendments to any documents reviewed by us and the due execution and delivery of
all documents where due execution and delivery are prerequisites to the
effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from records referred to
above. We have made no independent investigation or other attempt to verify the
accuracy of any of such information or to determine the existence or non-
existence of any other factual matters; however, we are not aware of any facts
-------
that would cause us to believe that the opinion expressed herein is not
accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the State of California and the
existing Delaware General Corporation Law without reference to case law or
secondary sources.
Our opinion herein is given on the assumption that you will, at all times
in the future, reserve a sufficient number of authorized and unissued shares of
Common Stock for issuance upon exercise of the Assumed Options, after taking
into account other securities issued or reserved by you.
Based upon the foregoing, it is our opinion that the 102,178 shares of
Stock that may be issued and sold by you upon the exercise of the Assumed
Options, when issued and sold in accordance with the Cohesive Plan and the stock
option agreements entered into thereunder, and in the manner referred to in the
prospectus associated with the Cohesive Plan and the Registration Statement,
will be 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 all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
/s/ FENWICK & WEST LLP
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Exodus Communications, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-8 filed on or about August 16, 1999, of our report dated January 26,
1999, relating to the consolidated balance sheets of Exodus Communications, Inc.
and subsidiaries as of December 31, 1997 and 1998, and the related consolidated
statements of operations, stockholders' (deficit) equity, and cash flows for
each of the years in the three-year period ended December 31, 1998, and the
related financial statement schedule, which report appears in the December 31,
1998, annual report on Form 10-K of Exodus Communications, Inc.
/s/ KPMG LLP
Mountain View, California
August 16, 1999
