<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1998
File No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
CABLETRON SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2797263
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
35 INDUSTRIAL WAY
ROCHESTER, NEW HAMPSHIRE 03867
(Address of principal executive offices, including zip code)
----------------
FLOWPOINT CORP. 1994 STOCK OPTION PLAN
---------------------------------
(Full title of the plan)
David J. Kirkpatrick
Corporate Executive Vice President and
Chief Financial Officer
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
(603) 332-9400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Proposed Proposed
maximum maximum Amount of
Title of securities to be Amount to be offering price per aggregate offering registration
registered registered share (1) price (1) fee
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $0.01
493,970 shares $0.27 $133,371.90 $39.34
- -------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ The maximum aggregate offering price for the shares of Cabletron Systems,
Inc. common stock, par value $0.01, offered hereby is based on the weighted
average per share exercise price of the options pursuant to which such shares
may be issued.
================================================================================
Exhibit Index on page 7.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby incorporates the following documents herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998 (which incorporates by reference certain information from
the Registrant's Proxy Statement relating to the 1998 Annual Meeting of
Shareholders) (File No. 1-10288).
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended May 31,
1998 (File No. 1-10288).
(c) The Registrant's Current Report on Form 8-K filed on July 31, 1998 (File
No. 1-10288).
(d) The Registrant's Current Report on Form 8-K filed on March 31, 1998 (File
No. 1-10288).
(e) The Registrant's Current Report on Form 8-K/A filed on March 4, 1998 (File
No. 1-10288).
(f) All other reports filed by the Registrant with the Securities and Exchange
Commission pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") since the end of the fiscal year
covered by the Registrant's Annual Report referred to above.
(g) The description of the common stock of the Registrant contained in the
Registrant's Registration Statement on Form 8-A (File No. 1-10288) filed on
April 9, 1989, including all amendments and reports 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 offered have been sold
or which deregisters all securities then remaining unsold shall be deemed to be
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 required.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
No material interests.
-2-
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to unlawful payment of dividends and
unlawful stock purchase and redemption), or (iv) for any transaction from which
the director derived an improper personal benefit.
The Registrant's Restated Certificate of Incorporation, as amended,
provides that the Company's Directors shall not be liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liabilities is not
permitted under the Delaware General Corporation Law as in effect at the time
such liability is determined. The Restated Certificate of Incorporation, as
amended, further provides that the Registrant shall indemnify its directors and
officers to the full extent permitted by the law of the State of Delaware.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
-3-
<PAGE>
ITEM 8. EXHIBITS.
4.1. Specimen stock certificate representing Cabletron Common Stock
which is incorporated by reference to Exhibit 4.1 of Cabletron's
Registration Statement on Form S-1 (File No. 33-28055).
5.1. Opinion of Ropes & Gray.
23.1. Consent of KMPG Peat Marwick LLP.
23.2. Consent of Ropes & Gray (contained in the opinion filed as Exhibit
5.1 to this registration statement).
23.3. Consent of PricewaterhouseCoopers LLP.
24.1. Power of Attorney (included in Part II of this registration statement
under the caption "Signatures").
99.1. FlowPoint Corp. 1994 Stock Option Plan.
99.2. Form of Stock Option Agreement used in connection with the
FlowPoint Corp. 1994 Stock Option Plan for Incentive Stock
Options.
99.3. Form of Stock Option Agreement used in connection with the
FlowPoint Corp. 1994 Stock Option Plan for Nonstatutory Stock
Options.
99.4. Form of Stock Option Assumption Agreement used in connection
with the FlowPoint Corp. 1994 Stock Option Plan.
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
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;
(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 this registration statement;
-4-
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above shall not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed 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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
-5-
<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 Rochester, State of New Hampshire on this 15th
day of September, 1998.
By: /s/ David J. Kirkpatrick
--------------------------------------
David J. Kirkpatrick
Corporate Executive Vice President,
Chief Financial Officer and Director
Each person whose signature appears below constitutes and appoints Craig
R. Benson and David J. Kirkpatrick, and each of them individually, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his 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 to be filed by Cabletron Systems,
Inc., and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-8 has been signed below by the following
persons in the capacities shown on the date indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Craig R. Benson Chairman, President, Chief September 15, 1998
- --------------------------- Executive Officer,
Craig R. Benson Treasurer and Director
(principal executive officer)
/s/ David J. Kirkpatrick Corporate Executive Vice September 15, 1998
- --------------------------- President, Chief Financial
David J. Kirkpatrick Officer and Director
(principal financial and
accounting officer)
/s/ Michael D. Myerow Secretary and Director September 15, 1998
- ---------------------------
Michael D. Myerow
/s/ Donald F. McGuinness Director September 15, 1998
- ---------------------------
Donald F. McGuinness
-6-
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Title of Exhibit Number
- ------- ---------------- ------
4.1. Specimen stock certificate representing Cabletron Common
Stock which is incorporated by reference to Exhibit 4.1
of Cabletron's Registration Statement on Form S-1
(File No. 33-28055).
5.1. Opinion of Ropes & Gray.
23.1. Consent of KMPG Peat Marwick LLP.
23.2. Consent of Ropes & Gray (contained in the opinion filed as
Exhibit 5.1 to this registration statement).
23.3. Consent of PricewaterhouseCoopers LLP.
24.1. Power of Attorney (included in Part II of this registration
statement under the caption "Signatures").
99.1. FlowPoint Corp. 1994 Stock Option Plan.
99.2. Form of Stock Option Agreement used in connection with the
FlowPoint Corp. 1994 Stock Option Plan for Incentive
Stock Options.
99.3. Form of Stock Option Agreement used in connection with the
FlowPoint 1994 Stock Option Plan for Nonstatutory
Stock Options.
99.4. Form of Stock Option Assumption Agreement used in connection
with the 1994 Stock Option Plan.
<PAGE>
EXHIBIT 5.1
September 15, 1998
Cabletron Systems, Inc.
35 Industrial Way
Rochester, NH 03867
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of 493,970 shares of common stock,
$0.01 par value per share (the "Shares"), of Cabletron Systems, Inc., a Delaware
corporation (the "Company"), issuable upon exercise of options assumed by the
Company that had previously been issued under the FlowPoint Corp. 1994 Stock
Option Plan (the "Plan").
We have acted as counsel for the Company in connection with the assumption
of the Options and are familiar with the actions taken by the Company in
connection therewith. For purposes of this opinion we have examined the
Registration Statement, the Plan and such other documents as we have deemed
appropriate.
Based upon the foregoing, we are of the opinion that (i) the Shares have
been duly authorized and (ii) the Shares, when issued and sold in accordance
with the terms of the Options and Plan, will have been validly issued and will
be fully paid and non-assessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
EXHIBIT 23.1
The Board of Directors
Cabletron Systems, Inc.:
We consent to the use of our reports incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
September 15, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Cabletron Systems, Inc. ("Cabletron") on Form S-8 (as filed on September 15,
1998) of our report, which includes an explanatory paragraph, dated February 19,
1998, on our audit of the Statement of Assets Sold and Statement of Revenue and
Direct Operating Expenses (the "Statements") of the Network Products Business of
Digital Equipment Corporation (the "Business"), which report is included in the
report on Form 8-K/A. The explanatory paragraph states that the Statements were
prepared to present the assets sold by the Business to Cabletron and the revenue
and direct operating expenses of the Business and are not intended to be a
complete presentation of the Business' financial position or results of
operations.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 15, 1998
<PAGE>
EXHIBIT 99.1
FLOWPOINT CORP.
1994 STOCK OPTION PLAN
ADOPTED ON NOVEMBER 15, 1994
APPROVED BY THE SHAREHOLDERS ON NOVEMBER 16, 1994
AMENDED ON OCTOBER 1, 1997
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of, and Consultants to, the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of, or Consultants to, the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall, in
the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
<PAGE>
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "COMPANY" means FlowPoint Corp., a California corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment or relationship as a Director or Consultant is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their successors.
(h) "COVERED EMPLOYEE" means the Chief Executive Officer and the four (4)
other highest compensated officers of the Company.
(i) "DIRECTOR" means a member of the Board.
(j) "DISINTERESTED PERSON" means a Director who either (i) was not during
the one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
of its affiliates entitling the participants therein to acquire equity
securities of the Company or any of its affiliates except as permitted by Rule
16b-3(c)(2)(i); or (ii) is otherwise considered to be a "disinterested person"
in accordance with Rule 16b-3(c)(2)(i), or any other applicable rules,
regulations or interpretations of the Securities and Exchange Commission.
-2-
<PAGE>
(k) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(m) "FAIR MARKET VALUE" means the value of the common stock as determined
in good faith by the Board and in a manner consistent with Section 260.140.50 of
Title 10 of the California Code of Regulations.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
(r) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (as defined in the
Treasury regulations promulgated under
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<PAGE>
Section 162(m) of the Code), is not a former employee of the Company or an
affiliated corporation receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an affiliated corporation at any time, and is not currently receiving
compensation for personal services in any capacity other than as a Director, or
(ii) is otherwise considered an "outside director" for purposes of Section
162(m) of the Code.
(u) "PLAN" means this FlowPoint Corp. 1994 Stock Option Plan.
(v) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(c) To determine from time to time which of the persons eligible under the
Plan shall be granted Options; when and how each Option shall be granted;
whether an Option will be an Incentive Stock Option or a Nonstatutory Stock
Option; the provisions of each Option granted (which need not be identical),
including the time or times such Option may be exercised in whole or in part;
and the number of shares for which an Option shall be granted to each such
person.
(d) To construe and interpret the Plan and Options granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(e) To amend the Plan as provided in Section 11.
-4-
<PAGE>
(f) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons and may also be, in the
discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Additionally,
prior to the date of the first registration of an equity security of the Company
under Section 12 of the Exchange Act, and notwithstanding anything to the
contrary contained herein, the Board may delegate administration of the Plan to
any person or persons and the term "Committee" shall apply to any person or
persons to whom such authority has been delegated. Notwithstanding anything in
this Section 3 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant Options to
eligible persons who (1) are not then subject to Section 16 of the Exchange Act
and/or (2) are either (i) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such
Option, or (ii) not persons with respect to whom the Company wishes to comply
with Section 162(m) of the Code.
(g) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply (i) prior to the date of the first registration of an
equity security of the Company under Section 12 of the Exchange Act, or (ii) if
the Board or the Committee expressly declares that such requirement shall not
apply. Any Disinterested Person shall otherwise comply with the requirements of
Rule 16b-3.
-5-
<PAGE>
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate six hundred thousand (600,000) shares of the Company's
common stock. If any Option shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the stock not
purchased under such Option shall revert to and again become available for
issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Nonstatutory
Stock Options may be granted only to Employees, Directors or Consultants.
(b) A Director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of the Director as a
person to whom Options may be granted, or in the determination of the number of
shares which may be covered by Options granted to the Director: (i) the Board
has delegated its discretionary authority over the Plan to a Committee which
consists solely of Disinterested Persons; or (ii) the Plan otherwise complies
with the requirements of Rule 16b-3. The Board shall otherwise comply with the
requirements of Rule 16b-3. This subsection 5(b) shall not apply (i) prior to
the date of the first registration of an equity security of the Company under
Section 12 of the Exchange Act, or (ii) if the Board or Committee expressly
declares that it shall not apply.
(c) No person shall be eligible for the grant of an Option if, at the time
of grant, such person owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more
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<PAGE>
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any of its Affiliates unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of such stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
6. OPTION PROVISIONS.
(a) Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(b) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(c) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted.
(d) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant or
exercise of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
-7-
<PAGE>
(e) In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(f) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order satisfying the requirements of
Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a QDRO. The person to whom the Option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(g) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on
-8-
<PAGE>
performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary but in each case will provide for
vesting of at least twenty percent (20%) per year of the total number of shares
subject to the Option. The provisions of this subsection 6(e) are subject to any
Option provisions governing the minimum number of shares as to which an Option
may be exercised.
(h) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise of the Option has been registered under
a then currently effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
-9-
<PAGE>
(i) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) the date three (3) months after the
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (or such longer or shorter period, which in no event shall be less
than thirty (30) days, specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionee does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(j) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period, which in no
event shall be less than six (6) months, specified in the Option Agreement), or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
-10-
<PAGE>
(k) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option at the
date of death) by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d), but
only within the period ending on the earlier of (i) the date eighteen (18)
months following the date of death (or such longer or shorter period, which in
no event shall be less than six (6) months, specified in the Option Agreement),
or (ii) the expiration of the term of such Option as set forth in the Option
Agreement. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the Plan.
If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company, with
the repurchase price to be equal to the original purchase price of the stock, or
to any other restriction the Board determines to be appropriate; provided,
however, that (i) the right to repurchase at the original purchase price shall
lapse at a minimum rate of twenty percent (20%) per year over five (5) years
from the date the Option was granted, and (ii) such right shall be exercisable
only within (A) the ninety (90) day period following the termination of
employment or the relationship as a Director
-11-
<PAGE>
or Consultant, or (B) such longer period as may be agreed to by the Company and
the Optionee (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code (regarding "qualified small business stock")),
and (iii) such right shall be exercisable only for cash or cancellation of
purchase money indebtedness for the shares. Should the right of repurchase be
assigned by the Company, the assignee shall pay the Company cash equal to the
difference between the original purchase price and the stock's Fair Market Value
if the original purchase price is less than the stock's Fair Market Value.
(m) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold shares from the shares of the common stock
otherwise issuable to the participant as a result of the exercise of the Option;
or (3) delivering to the Company owned and unencumbered shares of the common
stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
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<PAGE>
8. USE OF PROCEEDS FROM STOCK.
(a) Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(b) Throughout the term of any Option, the Company shall deliver to the
holder of such Option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the Option term, a balance
sheet and an income statement. This section shall not apply when issuance is
limited to key employees whose duties in connection with the Company assure them
access to equivalent information.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a
Director or Consultant of any Employee, Director, Consultant or Optionee with or
without cause.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options granted
after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates
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<PAGE>
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
(e) The Board or the Committee shall have the authority to effect, at any
time and from time to time (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of the affected holders of Options, the
cancellation of any outstanding Options and the grant in substitution therefor
of new Options under the Plan covering the same or different numbers of shares
of Common Stock, but having an exercise price per share not less than eighty-
five percent (85%) of the Fair Market Value (one hundred percent (100%) of the
Fair Market Value in the case of an Incentive Stock Option or, in the case of a
ten percent (10%) stockholder (as defined in subsection 5(c)), not less than one
hundred and ten percent (110%) of the Fair Market Value) per share of Common
Stock on the new grant date.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a), and the outstanding Options will be appropriately adjusted in
the class(es) and number of shares and price per share of stock subject to such
outstanding Options.
(b) In the event of: (1) a merger or consolidation in which the Company is
not the surviving corporation or (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are
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<PAGE>
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise then to the extent permitted by applicable law:
(i) any surviving corporation shall assume any Options outstanding under the
Plan or shall substitute similar Options for those outstanding under the Plan,
or (ii) such Options shall continue in full force and effect. In the event any
surviving corporation refuses to assume or continue such Options, or to
substitute similar options for those outstanding under the Plan, then such
Options shall be terminated if not exercised prior to such event. In the event
of a dissolution or liquidation of the Company, any Options outstanding under
the Plan shall terminate if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under the Plan;
(2) Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order for
the Plan to satisfy the requirements of Section 422 of the Code); or
(3) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
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<PAGE>
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(d) Rights and obligations under any Option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless (i)
the Company requests the consent of the person to whom the Option was granted
and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on November 14, 2004, which shall be within
ten (10) years from the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board,
and, if required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.
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EXHIBIT 99.2
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF
THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
INCENTIVE STOCK OPTION
1, OPTIONEE:
FlowPoint Corp. (the "Company"), pursuant to its FlowPoint Corp. 1994 Stock
Option Plan (the "Plan") has this day granted to you, the optionee named above,
an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
2. The date that vesting begins on this option is 3. Subject to the limitations
herein, 6/48ths of the shares will vest (become exercisable) on 4 and 1/48 of
the shares will then vest each month thereafter until either (i) you cease to
provide services for the Company for any reason, or (ii) this option becomes
fully vested. This option may be exercised only with respect to those shares
which are vested.
2. (a) The exercise price of this option is 5 per share, being not less
than the fair market value of the Common Stock on the date of grant of this
option.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
<PAGE>
(ii) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of Common Stock;
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 2(b)(i) through 2(b)(iii) above.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Act or, if such shares are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the
registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on 6 (which date
shall be no more than ten (10) years from the date this option is granted). In
no event may this option be exercised on or after the date on which it
terminates. This option shall terminate prior to the expiration of its term as
follows: three (3) months after the termination of your employment with the
Company or an affiliate of the Company (as defined in the Plan) for any reason
or for no reason unless:
(a) such termination of employment is due to your disability, in which
event the option shall terminate on the earlier of the termination date set
forth above or twelve (12) months following such termination of employment; or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or twelve (12) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment with the Company or an affiliate.
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<PAGE>
However, this option may be exercised following termination of employment
only as to that number of shares as to which it was exercisable on the date of
termination of employment under the provisions of paragraph 1 of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an arrangement providing
for the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of this option; (2) the lapse of
any substantial risk of forfeiture to which the shares are subject at the time
of exercise; or (3) the disposition of shares acquired upon such exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and
(iii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for your brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or beneficiary, but only
to the extent of your proportionate interest therein as a shareholder, partner
or beneficiary thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise this option.
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<PAGE>
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the day of , 19 .
---------- ---------------- --
Very truly yours,
FLOWPOINT CORP.
By:
---------------------------------
Duly authorized on behalf of
the Board of Directors
ATTACHMENTS:
FlowPoint Corp. 1994 Stock Option Plan
Regulation 260.141.11
Notice of Exercise
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<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets forth
the entire understanding between the undersigned optionee and the Company and
its affiliates regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the exception of (i)
the options previously granted and delivered to the undersigned under stock
option plans of the Company, and (ii) the following agreements only:
NONE
----------------------
(Initial)
OTHER
---------------------------------
---------------------------------
---------------------------------
(c) Acknowledges receipt of a copy of Section 260.141.11 of Title 10 of the
California Code of Regulations.
---------------------------------
FIELD(1), OPTIONEE
Address:
---------------------------------
-----------------------------------------
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NOTICE OF EXERCISE
FLOWPOINT CORP.
180 Knowles Drive, Suite 100
Los Gatos, CA 95030 Date of Exercise: ____________________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated:
----------------------
Number of shares as
to which option is
exercised:
----------------------
Certificates to be
issued in name of:
----------------------
Total exercise price: $
----------------------
Cash payment delivered
herewith: $
----------------------
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the FlowPoint Corp. 1994 Stock Option Plan,
(ii) to provide for the payment by me to you (in the manner designated by you)
of your withholding obligation, if any, relating to the exercise of this option,
and (iii) if this exercise relates to an incentive stock option, to notify you
in writing within fifteen (15) days after the date of any disposition of any
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year
after such shares of Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with respect
to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the Securities
Act of 1933, as amended (the "Act"), and are deemed to constitute "restricted
securities" under Rule 701 and
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<PAGE>
"control securities" under Rule 144 promulgated under the Act. I warrant and
represent to the Company that I have no present intention of distributing or
selling said Shares, except as permitted under the Act and any applicable state
securities laws.
I further acknowledge that I will not be able to resell the Shares for at
least ninety days after the stock of the Company becomes publicly traded (i.e.,
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply
to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or
applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act (the "Effective Date") as may be requested by the Company or the
representative of the underwriters. For purposes of this restriction I will be
deemed to own securities that (i) are owned directly or indirectly by me,
including securities held for my benefit by nominees, custodians, brokers or
pledgees; (ii) may be acquired by me within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for my brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which I am a shareholder, partner or beneficiary, but only to
the extent of my proportionate interest therein as a shareholder, partner or
beneficiary thereof. I further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
Very truly yours,
---------------------------------
FIELD(1)
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EXHIBIT 99.3
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF
THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
NONSTATUTORY STOCK OPTION
FIELD(1), OPTIONEE:
FlowPoint Corp. (the "Company"), pursuant to its FlowPoint Corp. 1994 Stock
Option Plan (the "Plan") has this day granted to you, the optionee named above,
an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is not intended to qualify and will not be treated as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
FIELD(2). The date that vesting begins on this option is FIELD(3). Subject to
the limitations herein, 6/48ths of the shares will vest (become exercisable) on
FIELD(4) and 1/48 of the shares will then vest each month thereafter until
either (i) you cease to provide services for the Company for any reason, or (ii)
this option becomes fully vested. This option may be exercised only with respect
to those shares which are vested.
2. (a) The exercise price of this option is 5 per share, being not less
than eighty-five percent (85%) of the fair market value of the Common Stock on
the date of grant of this option.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
<PAGE>
(i) Payment of the exercise price per share in cash (including check)
at the time of exercise;
(ii) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of Common Stock;
(iii) Provided that at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of already-owned shares of Common Stock, held for the period required
to avoid a charge to the Company's reported earnings, and owned free and clear
of any liens, claims, encumbrances or security interests, which Common Stock
shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment permitted by
subparagraph 2(b)(i) through 2(b)(iii) above.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Act or, if such shares are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the
registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on FIELD(6)
(which date shall be no more than ten (10) years from the date this option is
granted). In no event may this option be exercised on or after the date on which
it terminates. This option shall terminate prior to the expiration of its term
as follows: three (3) months after the termination of your employment with the
Company or an affiliate of the Company (as defined in the Plan) for any reason
or for no reason unless:
(a) such termination of employment is due to your disability, in which
event the option shall terminate on the earlier of the termination date set
forth above or twelve (12) months following such termination of employment; or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or twelve (12) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or
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<PAGE>
(d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of employment
only as to that number of shares as to which it was exercisable on the date of
termination of employment under the provisions of paragraph 1 of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an arrangement providing
for the cash payment by you to the Company of any tax withholding obligation of
the Company arising by reason of: (1) the exercise of this option; (2) the lapse
of any substantial risk of forfeiture to which the shares are subject at the
time of exercise; or (3) the disposition of shares acquired upon such exercise;
and
(ii) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Act, require that you not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for your brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or beneficiary, but only
to the extent of your proportionate interest therein as a shareholder, partner
or beneficiary thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security Act (a
"QDRO"), and is exercisable during your life only by you or a transferee
pursuant to a QDRO. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
-3-
<PAGE>
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company. In the event that this option is granted to you in
connection with the performance of services as a consultant or director,
references to employment, employee and similar terms shall be deemed to include
the performance of services as a consultant or a director, as the case may be,
provided, however, that no rights as an employee shall arise by reason of the
use of such terms.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the day of , 19 .
----- ----------- --
Very truly yours,
FLOWPOINT CORP.
By:
---------------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
FlowPoint Corp. 1994 Stock Option Plan
Regulation 260.141.11
Notice of Exercise
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<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets forth
the entire understanding between the undersigned optionee and the Company and
its affiliates regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the exception of (i)
the options previously granted and delivered to the undersigned under stock
option plans of the Company, and (ii) the following agreements only:
NONE
----------------------
(Initial)
OTHER
---------------------------------
---------------------------------
---------------------------------
(c) Acknowledges receipt of a copy of Section 260.141.11 of Title 10 of the
California Code of Regulations.
---------------------------------
FIELD(1), OPTIONEE
Address:
---------------------------------
-----------------------------------------
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<PAGE>
Exhibit 99.4
------------
Form of Stock Option Assumption Agreement used in connection
with the FlowPoint Corp. 1994 Stock Option Plan
1994 STOCK OPTION PLAN
CABLETRON SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 8th day of September,
1998 by Cabletron Systems, Inc., a Delaware corporation ("Cabletron").
WHEREAS, _____________ ("Optionee") holds one or more outstanding options
to purchase shares of the common stock of FlowPoint Corp., a California
corporation ("FlowPoint"), which were granted to Optionee under FlowPoint's 1994
Stock Option Plan (the "Plan"), and are evidenced by a Stock Option Agreement
(the "Option Agreement") between FlowPoint and Optionee.
WHEREAS, FlowPoint has this day been acquired by Cabletron through merger
of a wholly-owned Cabletron subsidiary, Catfish Acquisition, Inc. ("Merger
Sub"), with and into FlowPoint (the "Merger") pursuant to the Agreement and Plan
of Merger dated as of June 10, 1998, as amended as of August 7, 1998, by and
among Cabletron, FlowPoint and Merger Sub (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cabletron to assume
all obligations of FlowPoint under all options outstanding under the Plan at the
consummation of the Merger (the "FlowPoint Options") and to issue to the holder
of each outstanding FlowPoint Option a notice setting forth such holder's rights
after consummation of the Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, Optionee's
FlowPoint Options now represent an option (a "Cabletron Option") to purchase
shares of common stock, $.01 par value, of Cabletron ("Cabletron Stock").
WHEREAS, the number of shares of Cabletron Stock which are subject to
Optionee's Cabletron Options is equal to the number of shares of FlowPoint
common stock otherwise purchasable pursuant to such options multiplied by the
exchange ratio of 1.033 (the "Exchange Ratio").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to
<PAGE>
Optionee's outstanding options under the Plan which have become necessary by
reason of the assumption of those options by Cabletron in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of FlowPoint common stock subject to the FlowPoint
Options held by Optionee under the Plan immediately prior to the Effective Time
and the exercise price payable per share are set forth in Exhibit A hereto.
---------
Cabletron hereby assumes, as of the Effective Time, all the duties and
obligations of FlowPoint under each of the FlowPoint Options. In connection
with such assumption, the number of shares of Cabletron Stock purchasable under
each FlowPoint Option hereby assumed and the exercise price payable thereunder
have been adjusted to reflect the Exchange Ratio at which shares of FlowPoint
common stock purchasable under Optionee's FlowPoint Options were converted into
shares of Cabletron Stock purchasable under Optionee's Cabletron Options in
consummation of the Merger. Accordingly, the number of shares of Cabletron
Stock subject to each FlowPoint Option hereby assumed, and the adjusted exercise
price payable per share of Cabletron Stock under the assumed FlowPoint Option,
shall be as indicated for that option in attached Exhibit B.
---------
2. The intent of the foregoing adjustments to each assumed FlowPoint
Option is to assure that the spread between the aggregate fair market value of
the shares of Cabletron Stock purchasable under that option and the aggregate
exercise price as adjusted hereunder will, immediately after the consummation of
the Merger, equal the spread which existed, immediately prior to the Merger,
between the then aggregate fair market value of the FlowPoint common stock
subject to the FlowPoint Option and the aggregate exercise price in effect at
such time under the Option Agreement. Such adjustments are also designed to
preserve, on a per share basis immediately after the Merger, the same ratio of
exercise price per option share to fair market value per share which existed
under the FlowPoint Option immediately prior to the Merger.
3. The following provisions shall govern each FlowPoint Option hereby
assumed by Cabletron:
- Unless the context otherwise requires, all references to the "Company"
in each Option Agreement and in the Plan (as incorporated into such Option
Agreement) shall mean Cabletron, all references to "Common Stock" shall mean
shares of Cabletron Stock, and all references to the "Committee" shall mean the
Incentive Compensation Committee of the Board of Directors of Cabletron.
- The grant date and the expiration date of each assumed FlowPoint Option
and all other provisions which govern either the exercisability or the
termination of the assumed FlowPoint Option shall remain the same as set forth
in the Option Agreement applicable to that option and shall accordingly govern
and control Optionee's rights under this Agreement to purchase Cabletron Stock.
-2-
<PAGE>
- Each assumed FlowPoint Option shall remain exercisable in accordance
with the same installment exercise schedule in effect under the applicable
Option Agreement immediately prior to the Effective Time, with the number of
shares of Cabletron Stock subject to each such installment adjusted to reflect
the Exchange Rate. Accordingly, no accelerated vesting of the FlowPoint Options
shall be deemed to occur by reason of the Merger, and the grant date for each
assumed FlowPoint Option shall accordingly remain the same as in effect under
the applicable Option Agreement immediately prior to the Merger.
- For purposes of applying any and all provisions of the Option Agreement
relating to Optionee's status as an employee with the Company, Optionee shall be
deemed to continue in such employee status for so long as Optionee renders
services as an employee to Cabletron or any present or future Cabletron
subsidiary, including (without limitation) FlowPoint. Accordingly, the
provisions of the Option Agreement governing the termination of the assumed
FlowPoint Option upon the Optionee's cessation of employee status with FlowPoint
shall hereafter be applied on the basis of the Optionee's cessation of employee
status with Cabletron and its subsidiaries, and each assumed FlowPoint Option
shall accordingly terminate, within the designated time period in effect under
the Option Agreement for that option, following such cessation of employment
with Cabletron and its subsidiaries.
- The adjusted exercise price payable for the Cabletron Stock subject to
each assumed FlowPoint Option shall be payable in any of the forms authorized
under the Option Agreement applicable to that option. For purposes of
determining the holding period of any shares of Cabletron Stock delivered in
payment of such adjusted exercise price, the period for which such shares were
held as FlowPoint common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed FlowPoint Option, Optionee must
deliver to Cabletron a written notice of exercise in which the number of shares
of Cabletron Stock to be purchased thereunder must be indicated. The exercise
notice should be delivered to Cabletron at the following address:
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
Attention: Edward Cortes
4. Except to the extent specifically modified by this Stock 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>
IN WITNESS WHEREOF, Cabletron Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ____ day of September, 1998.
CABLETRON SYSTEMS, INC.
By:______________________________
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<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of FlowPoint Corp.
Common Stock (Pre-Merger)
-5-
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of Cabletron Systems, Inc.
Common Stock (Post-Merger)
-6-
