<PAGE> 1
As filed with the Securities and Exchange Commission on May 22, 2000
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
CROSSROADS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2846643
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
8300 N. MOPAC EXPRESSWAY
AUSTIN, TEXAS 78759
(Address of principal executive offices) (Zip Code)
--------------------------
POLARIS COMMUNICATIONS, INC.
NON-PLAN STOCK OPTION GRANTS
TO CERTAIN INDIVIDUALS
(AS ASSUMED BY CROSSROADS SYSTEMS, INC.)
--------------------------
BRIAN R. SMITH
CHIEF EXECUTIVE OFFICER
CROSSROADS SYSTEMS, INC.
8300 N. MOPAC EXPRESSWAY
AUSTIN, TEXAS 78759
(Name and address of agent for service)
Telephone: (512) 349-0300; Facsimile: (512) 928-7097
(Telephone number, including area code, of agent for service)
--------------------------
Copy to:
J. MATTHEW LYONS, P.C.
Brobeck, Phleger & Harrison LLP
301 Congress Avenue, Suite 1200
Austin, Texas 78701
Telephone: (512) 477-5495
Facsimile: (512) 477-5813
--------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Amount to be Maximum Offering Maximum Aggregate Amount of
Title of Securities to be Registered Registered(1) Price per Share(2) Offering Price(2) Registration Fee
------------------------------------ ------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Polaris Communications, Inc. Non-Plan
Stock Option Grants to Certain
Individuals under written compensation
agreements(3)
Common Stock, $0.001 par value 21,375 shares $5.00 $106,875 $ 28.22
================
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable pursuant to the Polaris Communications,
Inc. Non-Plan Option Grants to certain individuals (as assumed by
Registrant) by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the outstanding
shares of Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price per share in effect for the outstanding Polaris
Communications, Inc. Non-Plan Stock Option Grants to certain individuals
options under the Digital Furnace Corporation Amended and Restated Stock
Incentive Plan as assumed by Registrant.
(3) The option grants were made to Steven King (10,125 shares), Peter LaPorte
(6,750 shares), David Wilk (2,250 shares) and Mark Geanakakis (2,250
shares).
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Crossroads Systems, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
October 31, 1999 filed with the Commission on January 31, 2000;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 31, 2000, filed with the Commission on March 15, 2000;
(c) The Registrant's Current Reports on Form 8-K filed with the Commission
on February 11, 2000, and March 31, 2000;
(d) The Registrant's Registration Statement No. 001-15331 on Form 8-A
filed with the Commission on September 27, 1999, and including any
other amendments or reports filed for the purpose of updating such
description, in which there is described the terms, rights and
provisions applicable to the Registrant's Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act") after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which de-registers all securities
then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a party to any action by reason of the
fact that he is or was a director, officer, employee or agent of Registrant may
and, in certain cases, must be indemnified by Registrant against, in the case of
a non-derivative action, judgments, fines, amounts paid in settlement and
reasonable expenses (including attorneys' fees) incurred by him as a result of
such action, and in the case of a derivative action, against expenses (including
attorneys' fees), if in either type of action he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
Registrant. This indemnification does not apply, in a derivative action, to
matters as to which it is adjudged that the director, officer, employee or agent
is liable to Registrant, unless upon court order it is determined that, despite
such adjudication of liability, but in view of all the circumstances of the
case, he is fairly and
II-1
<PAGE> 3
reasonably entitled to indemnity for expenses, and, in a non-derivative action,
to any criminal proceeding in which such person had reasonable cause to believe
his conduct was unlawful.
Article V of the Registrant's Sixth Amended and Restated Certificate
of Incorporation, provides that no director shall be liable to Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the DGCL.
Registrant has entered into indemnification agreements with each
director, a form of which is filed as Exhibit 10.1 to Registrant's Registration
Statement No. 333-85505. Pursuant to such agreements, the Registrant will be
obligated, to the extent permitted by applicable law, to indemnify such
directors against all expenses, judgments, fines and penalties incurred in
connection with the defense or settlement of any actions brought against them by
reason of the fact that they were directors of Registrant or assumed certain
responsibilities at the direction of Registrant. Registrant also intends to
purchase directors and officers liability insurance in order to limit its
exposure to liability for indemnification of directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
4 Instruments Defining the Rights of Shareholders. Reference
is made to Registrant's Registration Statements No.
001-15331 on Form 8-A, together with the amendments and
exhibits thereto, which is incorporated herein by reference
pursuant to Item 3(d) of this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Polaris Communications, Inc. Written Compensation
Agreement.
99.2 Form of Polaris Communications, Inc. Non-Qualified Stock
Option Agreement
99.3 Form of Crossroads Systems, Inc. Stock Option Assumption
Agreement.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement: (i) to include any prospectus required by
Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or
events arising after the effective date of this 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 this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 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; and (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 Polaris
Communications, Inc. Non-Plan Option Grants to certain individuals as assumed by
Registrant.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new
II-2
<PAGE> 4
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 Austin, State of Texas on this 22nd
day of May, 2000.
CROSSROADS SYSTEMS, INC.
By:/s/ BRIAN R. SMITH
----------------------------------
Brian R. Smith
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Crossroads Systems,
Inc., a Delaware corporation, do hereby constitute and appoint Brian R. Smith
and Reagan Y. Sakai and each of them, the lawful attorneys-in-fact and agents
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or any one of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------------------- --------------
<S> <C> <C>
/s/ BRIAN R. SMITH Chief Executive Officer (Principal Executive May 22, 2000
- ------------------------------------- Officer)
Brian R. Smith
/s/ REAGAN Y. SAKAI Vice President and Chief Financial Officer May 22, 2000
- ------------------------------------- (Principal Financial and Accounting Officer)
Reagan Y. Sakai
/s/ RICHARD D. EYESTONE Director May 22, 2000
- -------------------------------------
Richard D. Eyestone
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------------------- -------------
<S> <C> <C>
Director May , 2000
- -------------------------------------
David L. Riegel
/s/ MORTON L. TOPFER Director May 22, 2000
- -------------------------------------
Morton L. Topfer
/s/ WILLIAM P. WOOD Director May 22, 2000
- -------------------------------------
William P. Wood
/s/ PAUL S. ZITO Director May 22, 2000
- -------------------------------------
Paul S. Zito
</TABLE>
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CROSSROADS SYSTEMS, INC.
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4 Instruments Defining the Rights of Shareholders. Reference
is made to Registrant's Registration Statements No.
001-15331 on Form 8-A, together with the amendments and
exhibits thereto, which is incorporated herein by reference
pursuant to Item 3(d) of this Registration Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Polaris Communications, Inc. Written Compensation
Agreement.
99.2 Form of Polaris Communications, Inc. Non-Qualified Stock
Option Agreement
99.3 Form of Crossroads Systems, Inc. Stock Option Assumption
Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
May 22, 2000
Crossroads Systems, Inc.
8300 N. Mopac Expressway
Austin, Texas 78759
Re: Crossroads Systems, Inc.- Registration Statement for Offering of
an Aggregate of 21,375 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to Crossroads Systems, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
21,375 shares of the Company's Common Stock (the "Shares") issuable pursuant to
stock options granted to certain individuals in the service of Polaris
Communications, Inc. ("Polaris") pursuant to their written compensation
agreements with Polaris, as assumed by the Company in connection with the
Company's acquisition of Polaris (the "Assumed Options").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the Company's assumption of
the Assumed Options, and we have also reviewed the written compensation
agreements and other documentation evidencing the options. Based on such review,
we are of the opinion that, if, as and when the Shares have been issued and sold
(and the consideration therefor received) pursuant to the provisions of option
agreements evidencing the Assumed Options and in accordance with the
Registration Statement, such Shares will be duly authorized, legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Assumed Options or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated November 30, 1999 relating to the
financial statements and financial statement schedule, which appears in the
Crossroads Systems, Inc. and Subsidiary's Annual Report on Form 10-K for the
year ended October 31, 1999.
PricewaterhouseCoopers LLP
Austin, Texas
May 19, 2000
<PAGE> 1
EXHIBIT 99.1
COMPENSATION AGREEMENT
Agreement made as of the 21st day of March, 2000 by and between
Polaris Communications, Inc., an Oregon corporation (the "Corporation"), and
________________ ("Optionee").
W I T N E S S E T H
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on March 2, 1999 to purchase
_________ shares of the Corporation's Common Stock (the "Option") upon the terms
and conditions set forth in the documentation evidencing such Option.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the Option
is granted solely as compensation for services rendered the Corporation by
Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. This agreement is intended solely to memorialize the agreement and
understanding which exists between Optionee and the Corporation concerning the
grant of the Option. Nothing herein or in the documentation evidencing the
Option is intended to provide Optionee with the right to remain in the
Corporation's service for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
POLARIS COMMUNICATIONS, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
OPTIONEE
------------------------------
<PAGE> 1
EXHIBIT 99.2
POLARIS COMMUNICATIONS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Optionee:
-----------------------
-----------------------
-----------------------
Number of Option Shares:
-----
Option Price per Share: $1,125.00
Date of Grant: March 2, 1999
Vesting Commencement
Date:
-------------
<TABLE>
<S> <C> <C>
Vesting Schedule: Number of Number of Years After
Shares Vested Vesting Commencement Date
</TABLE>
The Company's Board of Directors (the "Board") has granted to the
Optionee an option to purchase shares of the Company's Common Stock, without par
value (the "Stock") upon and subject to the terms and conditions of this
Agreement.
(form adopted 11/96)
<PAGE> 2
NOW, THEREFORE, the parties agree as follows:
1. Grant; Terms of Option. Subject to the terms and conditions of this
Agreement, the Company grants to the Optionee the right and option (the
"Option") to purchase any part of an aggregate number of shares of the Company's
authorized but unissued Stock stated in the caption of this Agreement at the
price per share stated in the caption of this Agreement. It is the intent of the
Board that the Option not qualify as an "incentive stock option" under the tax
laws. The Option is granted upon the following terms and conditions:
(a) Term of Option. Subject to reductions in the Option term provided
in subparagraphs (c) and (e) below, the Option shall continue in
effect through the tenth anniversary of the date of this
Agreement.
(b) Timing of Right to Exercise. Except as provided in subparagraphs
(c) and (d) hereof, the Option may be exercised from time to time
over the term of the Option in the amounts specified in the
vesting schedule set forth in the caption of this Agreement. If
the Optionee does not purchase in any one year the full number of
shares that the Optionee is then entitled to purchase, the
Optionee's rights shall be cumulative, and, subject to the other
provisions of this Agreement, the Optionee may purchase those
shares thereafter during the term of the Option.
(c) Termination of Employment. If the employment of Optionee by the
Company is terminated at any time during the term of the Option
for any reason, the vesting of the Option shall cease and the
right to purchase vested shares pursuant to the Option shall
cease and terminate 30 days following the date of termination of
employment. To the extent that the Option is not exercised within
the applicable period, all further rights to purchase shares
pursuant to the Option shall cease and terminate at the
expiration of such period.
(d) Change of Control. The Option shall become fully vested and
exercisable if the Company is subject to a Change of Control
before the Optionee's service terminates. If not exercised during
the 20 day period prior to the effective date of such Change of
Control, the Option shall terminate if (i) the Option is not
assumed by the surviving corporation or its parent and (ii) the
surviving corporation or its parent does not substitute an option
with substantially the same terms for this Option. "Change of
Control" shall mean (x) the consummation of a merger or
consolidation of the Company with or into another entity or any
other corporate reorganization, if more that 50% of the combined
voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of
the Company immediately prior to such merger,
2
<PAGE> 3
consolidation or other reorganization; or (y) the sale, transfer
or other disposition of all or substantially all of the Company's
assets.
(e) Manner of Exercise. Shares may be purchased pursuant to the
Option only upon receipt by the Company of written notice from
the Optionee of the Optionee's desire to purchase, specifying the
number of shares the Optionee desires to purchase and the date on
which the Optionee desires to complete the purchase. The Option
may not be exercised for a fraction of a share. If required to
comply with any applicable federal or state securities laws, the
notice also shall contain a representation that it is the
Optionee's intention to acquire the shares for investment and not
for resale. No shares shall be issued until full payment has been
made, and the Optionee shall have none of the rights of a
shareholder until shares are issued. Upon notification of the
amount due and prior to or concurrently with delivery of the
certificate representing the shares, the Optionee shall pay to
the Company any amounts necessary to satisfy applicable federal,
state and local withholding tax requirements.
(f) Payment for Stock. All or part of the purchase price may be paid
in cash or cash equivalents. If the Company's stock is publicly
traded, Optionee may pay all or any part of the purchase price by
surrender, or attesting to the ownership of shares that are
already owned by the Optionee. Such shares shall be surrendered
to the Company in good form for transfer and shall be valued at
their fair market value on the date when the Option is exercised.
The Optionee shall not surrender, or attest to the ownership of,
shares in payment of the purchase price if such action would
cause the Company to recognize compensation expense (or
additional compensation expense) with respect to this Option for
financial reporting purposes. If the Company's stock is publicly
traded, all or part of the purchase price and any withholding
taxes may be paid by the delivery (on a form prescribed by the
Company of an irrevocable direction to a securities broker
approved by the Company to sell shares and to deliver all or part
of the sales proceeds to the Company.
(g) Changes in Capital Structure. This subparagraph (g) shall not
apply to a Change of Control if the Option is not assumed by the
surviving corporation or its parent, or the surviving corporation
or its parent does not substitute an option with substantially
the same terms for this Option, in which case the Option shall
terminate as provided in subparagraph (d). Except as provided in
the final sentence of this subparagraph (g), if the outstanding
shares of Stock are increased or decreased or changed into or
exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, plan of exchange,
recapitalization, reclassification,
3
<PAGE> 4
stock split-up, combination of shares or dividend payable in
shares, the Board shall make appropriate adjustment in the number
and kind of shares as to which the Option, or portion thereof
then unexercised, shall be exercisable, the exercise price of the
Option and all other matters deemed appropriate by the Board, so
that the Optionee's proportionate interest shall be maintained as
before the occurrence of such event. Any such adjustment made by
the Board shall be conclusive. Such adjustment in the Option
shall be made without change in the total price applicable to the
unexercised portion of the Option and with a corresponding
adjustment in the option price per share.
2. Conditions. The obligations of the Company under this Agreement shall
be subject to the approval of such state or federal authorities or agencies as
may have jurisdiction in the matter. The Company shall use its best efforts to
take such steps as may be required by state or federal law or applicable
regulations, including rules and regulations of the Securities and Exchange
Commission, any quotation system on which the Stock may then be traded and any
stock exchange on which the Stock may then be listed, in connection with the
issuance or sale of any shares acquired pursuant to this Agreement or the
trading or listing of such shares on any such system or exchange. The Company
shall not be obligated to issue or deliver shares under this Agreement if, upon
advice of its legal counsel, such issuance or delivery would violate state or
federal securities laws.
3. Nontransferability.
(a) Restriction. The Option is not transferable other than by will or
the laws of descent and distribution and, during the Optionee's
lifetime, may be exercised only by the Optionee.
(b) Exercise by Legal Representative or Successor. Whenever the word
"Optionee" is used in any provision of this Agreement under
circumstances when the provision should logically be construed to
apply to the Optionee's guardian, legal representative, executor,
administrator, or the person or persons to whom the Option may be
transferred by testamentary disposition or by the laws of descent
and distribution, the word "Optionee" shall be deemed to include
such person or persons.
4. Legends. Certificates representing the shares subject to this
Agreement shall bear such legends as the Board shall deem appropriate to reflect
any restrictions on transfer imposed by federal or applicable state securities
laws.
4
<PAGE> 5
5. Continuing Relationship. Nothing in this Agreement shall confer upon
Optionee any right to continue as an employee of the Company or interfere in any
way with the right of the Company to terminate Optionee's employment at any time
for any reason, with or without cause.
6. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of any successor of the Company, but, except as provided above,
the Option shall not be assigned or otherwise disposed of by the Optionee.
7. Administration of Agreement by Committee. At such time as a committee
of the Board is appointed to administer this Agreement, all decisions relating
to this Agreement shall be made by such committee and all references in this
Agreement to the Board shall mean and refer to such committee.
8. Notices. Parties to this Agreement shall give all notices to the other
parties concerning this Agreement by personal delivery, by telecopier or by
registered or certified mail, return receipt requested, addressed as follows:
If to the Company: Polaris Communications, Inc.
10200 SW Allen Blvd.
Beaverton, Oregon 97005
Attention: President
If to Optionee: at Optionee's address stated in the caption of this
Agreement, or such other address as Optionee, by
notice to the Company, may designate in writing
from time to time.
5
<PAGE> 1
EXHIBIT 99.3
CROSSROADS SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: _________________,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 21st day of
March, 2000 by Crossroads Systems, Inc., a Delaware corporation ("Crossroads").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Polaris
Communications, Inc., an Oregon corporation ("Polaris"), which were granted to
Optionee (the "Option Agreements").
WHEREAS, Polaris has been acquired by Crossroads through the merger of
Polaris with NorthStar Acquisition Corp., an Oregon corporation ("Merger Sub")
and a wholly-owned subsidiary of Crossroads (the "Merger") pursuant to the
Agreement and Plan of Merger and Reorganization, by and between Crossroads,
Merger Sub and Polaris (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require the
obligations of Polaris under each outstanding option to be assumed by Crossroads
at the consummation of the Merger, and the holder of each such outstanding
option to be issued an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 225 shares of
Crossroads common stock, par value $0.001 par value per share ("Crossroads
Stock"), for each outstanding share of Polaris common stock ("Polaris Stock").
WHEREAS, the purpose of this Agreement is to evidence the assumption
by Crossroads of the outstanding options held by Optionee at the time of the
consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to Optionee's outstanding options which have become necessary in
connection with their assumption by Crossroads.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Polaris Stock subject to the options held
by Optionee immediately prior to the Effective Time (the "Polaris Options") and
the exercise price payable per share are set forth below. Crossroads hereby
assumes, as of the Effective Time, all the duties and obligations of Polaris
under each of the Polaris Options. In connection with such assumption, the
number of shares of Crossroads Stock purchasable under each Polaris Option
hereby assumed and the exercise price payable thereunder have been adjusted to
reflect the
<PAGE> 2
Exchange Ratio. Accordingly, the number of shares of Crossroads Stock subject to
each Polaris Option hereby assumed shall be as specified for that option below,
and the adjusted exercise price payable per share of Crossroads Stock under the
assumed Polaris Option shall also be as indicated for that option below.
<TABLE>
<CAPTION>
POLARIS STOCK OPTIONS CROSSROADS ASSUMED OPTIONS
--------------------- --------------------------
<S> <C> <C> <C>
# of Shares of Polaris Exercise Price # of Shares of Adjusted Exercise
Common Stock per Share Crossroads Common Price per Share
Stock
Polaris Shares $1,125 Crossroads Shares $5.00
</TABLE>
2. The intent of the foregoing adjustments to each assumed Polaris
Option is to assure that the spread between the aggregate fair market value of
the shares of Crossroads Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, be substantially the same as
(and in no event greater than) than the spread which existed, immediately prior
to the Merger, between the then aggregate fair market value of the Polaris Stock
subject to the Polaris Option and the aggregate exercise price in effect at such
time under the Option Agreement. Such adjustments are also intended to preserve,
immediately after the Merger, on a per share basis, the same ratio of exercise
price per option share to fair market value per share which existed under the
Polaris Option immediately prior to the Merger.
3. The following provisions shall govern each Polaris Option hereby
assumed by Crossroads:
(a) Unless the context otherwise requires, all references in the
Option Agreements shall be adjusted as follows; (i) all references to the
"Company" shall mean Crossroads, (ii) all references to "Share" shall mean
shares of Crossroads Stock, (iii) all references to "Common Stock" shall
mean Crossroads Stock, (iv) all references to the "Board" shall mean the
Board of Directors of Crossroads and (v) all references to the "Committee"
shall mean the Compensation Committee of the Crossroads Board of Directors.
(b) The grant date and the expiration date of each assumed
Polaris Option and all other provisions which govern either the exercise or
the termination of the assumed Polaris Option shall remain the same as set
forth in the Option Agreements applicable to that option, and the
provisions of the Option Agreements shall accordingly govern and control
Optionee's rights to purchase Crossroads Stock under the assumed Polaris
Option.
(c) For purposes of applying any and all provisions of the Option
Agreements relating to Optionee's status as an employee or a consultant of
Polaris, Optionee shall be deemed to continue in such status as an employee
or a consultant for so long as Optionee renders services as an employee or
a consultant to Crossroads or any present or future majority-owned
Crossroads subsidiary.
2
<PAGE> 3
Accordingly, the provisions of the Option Agreements governing the
termination of the assumed Polaris Options shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Crossroads and its majority-owned subsidiaries. Each assumed Polaris Option
shall accordingly terminate, within the designated time period in effect
under the Option Agreements for that option following such cessation of
service as an employee or a consultant of Crossroads and its majority-owned
subsidiaries.
(d) The adjusted exercise price payable for the Crossroads Stock
subject to each assumed Polaris Option shall be payable in any of the forms
authorized under the Option Agreement. For purposes of determining the
holding period of any shares of Crossroads Stock delivered in payment of
such adjusted exercise price, the period for which such shares were held as
Polaris Stock prior to the Merger shall be taken into account.
(e) In order to exercise each assumed Polaris Option, Optionee
must deliver to Crossroads a written notice of exercise in which the number
of shares of Crossroads Stock to be purchased thereunder must be indicated.
The exercise notice must be accompanied by payment of the adjusted exercise
price payable for the purchased shares of Crossroads Stock and should be
delivered to Crossroads at the following address:
Crossroads Systems, Inc.
8300 North MoPac Expressway
Austin, Texas 78759
Attention: Robert Alvarez
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, Crossroads Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 21st day of March, 2000.
CROSSROADS SYSTEMS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Polaris Options hereby assumed by Crossroads are
as set forth in the Option Agreement and this Stock Option Assumption Agreement.
----------------------------------
, OPTIONEE
--------------------
DATED: , 2000
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