<PAGE> 1
As filed with the Securities and Exchange Commission on October 11, 1995
Registration No. 33-________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CISCO SYSTEMS, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
----------------
COMBINET, INC.
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
(Full title of the plan)
----------------
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------- ---
<S> <C> <C> <C> <C>
Combinet, Inc.
Incentive and Nonqualified
Stock Option Plan
- -----------------
Options to Purchase 233,447 N/A N/A N/A
Common Stock
Common Stock 233,447 $0.725 $169,249 $100.00
============================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Combinet, Inc. Incentive
and Nonqualified Stock Option Plan by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the receipt of consideration which results in an increase in the
number of outstanding shares of Common Stock of
Combinet, Inc.
(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 of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Cisco 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 July 31, 1994 filed with the Commission pursuant to
Section 13 of the Securities Exchange Act of 1934 (the "1934
Act").
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended October 30, 1994, January 29, 1995 and April 30,
1995.
(c) The Registrant's Registration Statement No. 0-18225 on Form
8-A filed with the Commission on January 11, 1990, together
with Amendment No. 1 on Form 8 filed with the Commission on
February 15, 1990, in which there is described in which there
is described the terms, rights and provisions applicable to
the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of 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 deregisters 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.
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 317 of the California Corporations Code authorizes a
court to award, or a corporation's Board of Directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit indemnification
(including reimbursement of expenses incurred) under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended, (the "1933
Act"). The Registrant's Restated Articles of Incorporation, as amended, and
Amended By-laws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
II-1.
<PAGE> 3
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
5. Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
24. Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Combinet, Inc. Incentive and Nonqualified Stock Option Plan.
99.2 Form of Incentive Stock Option Agreement.
99.3 Form of Nonqualified Stock Option Agreement.
99.4 Form of Stock Option Assumption Agreement.
</TABLE>
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 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, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) 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 1934 Act that are incorporated by reference
into the 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 Combinet, Inc. Incentive and
Nonqualified Stock Option Plan.
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 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
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed 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-2.
<PAGE> 4
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 San Jose, State of California, on this 29th day of
September, 1995.
CISCO SYSTEMS, INC.
By /s/John T. Chambers
-----------------------------------------------
John T. Chambers
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of CISCO SYSTEMS,
INC., a California corporation, do hereby constitute and appoint John T.
Chambers and Larry R. Carter, and each of them, the lawful attorneys 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 1933 Act, as amended, and any rules or regulations or
requirements of the 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 all that said attorneys and agents, or any 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 1933 Act, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/John T. Chambers President, Chief Executive September 29, 1995
- --------------------- Officer and Director (Principal
John T. Chambers Executive Officer)
</TABLE>
II-3.
<PAGE> 5
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/Larry R. Carter Vice President, Finance and Administration, September 25, 1995
- ------------------------------- Chief Financial Officer and Secretary
Larry R. Carter (Principal Financial and Accounting Officer)
/s/John P. Morgridge Chairman of the Board October 5, 1995
- -------------------------------
John P. Morgridge
/s/Donald T. Valentine Vice Chairman of the Board October 4, 1995
- -------------------------------
Donald T. Valentine
/s/Michael S. Frankel Director October 3, 1995
- -------------------------------
Michael S. Frankel
/s/James F. Gibbons Director October 5, 1995
- -------------------------------
James F. Gibbons
/s/Robert L. Puette Director October 5, 1995
- -------------------------------
Robert L. Puette
Director ________________, 1995
- -------------------------------
Masayoshi Son
</TABLE>
II-4.
<PAGE> 6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
5. Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
24. Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Combinet, Inc. Incentive and Nonqualified Stock Option Plan.
99.2 Form of Incentive Stock Option Agreement.
99.3 Form of Nonqualified Stock Option Agreement.
99.4 Form of Stock Option Assumption Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison.
<PAGE> 2
[LETTERHEAD]
October 6, 1995
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 233,447 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 233,447 shares of
the common stock ("Common Stock") of Cisco Systems, Inc. (the "Company")
issuable under the Combinet, Inc. Incentive and Nonqualified Stock Option Plan
(the "Option Plan") as assumed by the Company on September 29, 1995. We advise
you that, in our opinion, when such shares have been issued and sold pursuant to
the applicable provisions of the assumed Option Plan and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/BROBECK, PHLEGER & HARRISON
BROBECK, PHLEGER & HARRISON
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants - Coopers & Lybrand L.L.P.
<PAGE> 2
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our reports dated August 16,
1994, with respect to the financial statements and schedules of Cisco Systems,
Inc. for the years ended July 31, 1994, included in the Annual Report (Form
10-k) for 1994, filed with the Securities and Exchange Commission, in the
Registration Statement on Form S-8 of Cisco Systems, Inc. for the registration
of 233,447 shares of its common stock and 233,447 options to purchase shares
of its common stock.
COOPERS & LYBRAND, L.L.P.
San Jose, California
October 9, 1995
<PAGE> 1
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
<PAGE> 1
EXHIBIT 24
Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
<PAGE> 1
EXHIBIT 99.1
Combinet, Inc. Incentive and Nonqualified Stock Option Plan.
<PAGE> 2
EXHIBIT "C"
COMBINET, INC.
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
As Adopted Effective March 1, 1993
1. Purpose. The purpose of the COMBINET, INC. INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN (the "Plan") is to grant to selected employees of
Combinet, Inc., a California corporation (the "Company") and its subsidiaries
and affiliates, a favorable opportunity to acquire Common Stock of the Company,
thereby encouraging such persons to accept or continue their relationships with
the Company; increasing the interest of such persons in the Company's welfare
through participation in the growth and value of the Common Stock; and
furnishing such persons with an incentive to improve operations and increase
profits of the Company.
To accomplish the foregoing objectives, this Plan provides a
means whereby employees may receive options to purchase Common Stock. Options
granted under this Plan will be either nonstatutory (nonqualified) stock options
or incentive stock options.
2. Administration. The Plan shall be administered by the Board
of Directors of the Company, or, in the discretion of the Board, by a committee
(the Board and the Committee shall be jointly referred to hereafter as the
"Administrator") of not less than two members of the Board each of whom shall
not at any time within one year prior to his service as an administrator of the
Plan have received a grant or award of equity securities pursuant to the Plan or
any other plan of the Company or any of its affiliates. Subject to the
provisions of the Plan, the Administrator shall have the sole authority, in its
discretion:
(a) to determine to which of the eligible individuals, and
the time or times at which, options to purchase Common Stock of the Company
shall be granted;
(b) to determine the number of shares of Common Stock to be
subject to options granted to each eligible individual;
(c) to determine the price to be paid for the shares of
Common Stock upon the exercise of each option;
(d) to determine the term and the exercise schedule of each
option;
<PAGE> 3
(e) to determine the terms and conditions of each stock
option agreement (which need not be identical) entered into between the Company
and any eligible individual to whom the Administrator has granted an option;
(f) to interpret the Plan;
(g) to modify or amend any such option; and
(h) to make all determinations deemed necessary or advisable
for the administration of the Plan.
3. Eligibility. Every individual who at the date of grant is an
employee of the Company or of any parent or subsidiary of the Company (as
defined in subsection 5.1(c) below) is eligible to receive incentive stock
options and/or nonstatutory stock options under this Plan. The term "employee"
includes an officer or director who is an employee of the Company or a parent or
subsidiary of it, as well as a non-officer, non-director employee of the Company
or a parent or subsidiary of it. Every individual who at the date of grant is a
consultant to or non-employee director of the Company or a parent or subsidiary
of it is eligible to receive nonstatutory stock options under this Plan.
4. Common Stock Subject to Plan.
(a) There shall be reserved for issue upon the exercise of
options granted under the Plan three hundred thousand (300,000) shares of Common
Stock, subject to adjustment as provided in Section 7 hereof. If an option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan.
(b) Notwithstanding any other provisions of this Plan, the
aggregate number of shares of Common Stock subject to outstanding options
granted under this Plan, plus the aggregate number of shares issued upon the
exercise of all options granted under this Plan, shall never be permitted to
exceed the number of shares specified in the first sentence of subsection 4(a)
above.
5. Terms of Options. Each option granted under the Plan shall
be evidenced by a stock option agreement between the individual to whom the
option is granted (the "optionee") and the Company. Each such agreement shall
designate the option thereby granted as an incentive stock option, a
nonstatutory stock option or in part an incentive stock option and in part a
nonstatutory stock option. Each such agreement shall be subject to the terms and
conditions set forth in subsection 5.1, and to such other terms and conditions
not inconsistent herewith as the Administrator may deem appropriate in each
case. Incentive stock options shall be subject also to the terms and conditions
set forth in subsection 5.2.
2.
<PAGE> 4
5.1 Terms and Conditions to Which All Options Are Subject. All
options granted under this Plan shall be subject to the following terms and
conditions:
(a) Term of Options. The period or periods within which an
option may be exercised shall be determined by the Administrator at the time the
option is granted, but in no event shall such period extend beyond ten (10)
years from the date the option is granted in the case of an incentive stock
option, or ten (10) years and one (1) week from the date the option is granted
in the case of a nonstatutory stock option.
(b) Exercise Price. The price to be paid for each share of
Common Stock upon the exercise of an option shall be determined by the
Administrator at the time the option is granted, but shall in no event be less
than eighty-five percent (85%) in the case of a nonstatutory stock option, and
one hundred percent (100%) in the case of an incentive stock option, of the fair
market value of a share of Common Stock on the date the option is granted. For
all purposes of this Plan, the fair market value of the Common Stock on any
particular date shall be the closing price on the trading day next preceding
that date on the principal securities exchange on which the Company's Common
Stock is listed, or, if such Common Stock is not then listed on any securities
exchange, then the fair market value of the Common Stock on such date shall be
the mean of the closing bid and asked prices as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") on
the trading day next preceding such date. In the event that the Company's Common
Stock is neither listed on a securities exchange nor quoted by NASDAQ, then the
Administrator shall determine the fair market value of the Company's Common
Stock on such date.
(c) More than Ten Percent Shareholders. No option shall be
granted to any individual who, at the time such option would be granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of outstanding capital stock of the Company, or of any parent
corporation or subsidiary corporation of the Company, unless the exercise price
(as provided in subsection 5.1(b) hereof) is not less than one hundred ten
percent (110%) of the fair market value of the Common Stock on the date the
option is granted, and in the case of an incentive stock option the period
within which the option may be exercised (as provided in subsection 5.1(a)
hereof) does not exceed five (5) years from the date the option is granted. As
used in this Plan, the terms "parent corporation" and "subsidiary corporation"
shall have the meanings set forth in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the "Code"). For purposes of this
subsection 5.1(c), in determining stock ownership, an optionee shall be
considered as owning the voting capital stock owned, directly or indirectly, by
or for his brothers and sisters, spouse, ancestors and lineal descendants.
Voting capital stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries, as applicable. Common
Stock with respect to which any such optionee holds an option shall not be
counted. Additionally, for purposes of this subsection 5.1(c), outstanding
capital stock shall include all capital stock actually issued and
3.
<PAGE> 5
outstanding immediately after the grant of the option to the optionee.
Outstanding capital stock shall not include capital stock authorized for issue
under outstanding options held by the optionee or by any other person.
(d) Method of Payment for Common Stock. Payment for stock
purchased upon any exercise of an option granted under this Plan shall be made
in full in cash concurrently with such exercise, except that, if and to the
extent the instrument evidencing the option so provides and if the Company is
not then prohibited from purchasing or acquiring shares of such stock, such
payment may be made in whole or in part with shares of the same class of stock
as that then subject to the option, delivered in lieu of cash concurrently with
such exercise, the shares so delivered to be valued on the basis of the fair
market value of the stock (determined in a manner specified in the instrument
evidencing the option) on the day preceding the date of exercise.
(e) Nontransferability. All options shall be
nontransferable, except by will or the laws of descent and distribution, and
shall be exercisable during the lifetime of the optionee only by the optionee.
(f) Withholding and Employment Taxes. At the time of
exercise of an option, the optionee shall remit to the Company in cash the
amount of any and all applicable federal and state withholding and employment
taxes.
5.2 Additional Terms and Conditions to Which Incentive Stock
Options Are Subject. Options granted under this Plan which are designated as
incentive stock options shall be subject to the following additional terms and
conditions:
(a) Annual Limitation. To the extent that the aggregate fair
market value (determined as of the date an incentive stock option is granted) of
the stock with respect to which incentive stock options granted are exercisable
for the first time by an employee during any one (1) calendar year (under this
Plan and under all other incentive stock option plans of the Company and of any
parent or subsidiary corporation) exceeds One Hundred Thousand Dollars
($100,000), such options shall be treated as options which are not incentive
stock options.
(b) Death. Upon the death of an employee, any incentive
stock option which such employee holds may be exercised, within such period
after the date of death as the Administrator shall prescribe in the stock option
agreement, by the employee's representative or by the person entitled thereto
under the employee's will or the laws of intestate succession.
(c) Disability. Upon the permanent and total disability of
an employee (as defined in Section 105(d)(4) of the Code), any incentive stock
option which the employee holds may be exercised by the employee within such
period after the date of termination of employment resulting from such
disability (not to exceed twelve (12) months)
4.
<PAGE> 6
as the Administrator shall prescribe in the stock option agreement. The option
shall terminate upon the expiration of such prescribed period, unless the
employee dies prior thereto, in which event the provisions of subsection 5.2(b)
hereof shall apply.
(d) Retirement. Upon the voluntary retirement of an employee
at or after reaching sixty-five (65) years of age, an incentive stock option may
be exercised by such employee with respect to all or any portion of the balance
of the Common Stock subject thereto within such period after the date of
retirement (not to exceed three (3) months) as the Administrator shall prescribe
in the stock option agreement. The option shall terminate upon the expiration of
such prescribed period, unless the employee dies prior thereto, in which event
the provisions of subsection 5.2(b) hereof shall apply.
(e) Transfer to Related Corporation. In the event that an
employee leaves the employ of the Company to become an employee of any parent or
subsidiary corporation of the Company, or if the employee leaves the employ of
any such parent or subsidiary corporation to become an employee of the Company
or of another parent or subsidiary corporation, such employee shall be deemed to
continue as an employee of the Company for all purposes of this Plan.
(f) Other Severance. In the event an employee leaves the
employ of the Company for any reason other than as set forth in subsections (b)
through (e), above, any incentive stock option which such employee holds may be
exercised by such employee with respect to all or any portion of the balance of
the Common Stock subject thereto within such period after the date of severance
(not to exceed three (3) months) as the Administrator shall prescribe in the
stock option agreement.
(g) Disqualifying Dispositions. If Common Stock acquired by
exercise of an incentive stock option granted pursuant to this Plan is disposed
of within two (2) years from the date of grant of the option or within one (1)
year after the transfer of the Common Stock to the optionee, the holder of the
Common Stock immediately prior to the disposition shall promptly notify the
Company in writing of the date and terms of the disposition and shall provide
such other information regarding the disposition as the Company may reasonably
require.
6. Stock Issuance and Rights as Shareholder. Notwithstanding
any other provisions of the Plan, no optionee shall have any of the rights of a
shareholder (including the right to vote and receive dividends) of the Company,
by reason of the provisions of this Plan or any action taken hereunder, until
the date such optionee shall both have paid the exercise price for the Common
Stock and shall have been issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) the
stock certificate evidencing such shares.
5.
<PAGE> 7
7. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the Company's
shareholders, the number of shares of Common Stock covered by this Plan as
provided in Section 4, the number of shares covered by each outstanding option
granted hereunder and the exercise price thereof shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of such shares or the
payment of a stock dividend (but only on the Common Stock) or any other increase
or decrease in the number of such outstanding shares of Common Stock effected
without the receipt of consideration by the Company; provided, however, that the
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration."
(b) Subject to any required action by the Company's
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain and apply to the securities
to which a holder of the number of shares subject to the option would have been
entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation shall cause
each outstanding option to terminate, unless the surviving corporation in the
case of a merger or consolidation assumes outstanding options or replaces them
with substitute options having substantially similar terms and conditions.
(c) To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
(d) Except as hereinabove expressly provided in this Section
7, no optionee shall have any rights by reason of any subdivision or
consolidation of shares of the capital stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of any
class or by reason of any dissolution, liquidation, merger or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company
of shares of stock of any class or of securities convertible into shares of
stock of any class shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares subject to any option
granted hereunder.
(e) The grant of an option pursuant to this Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
8. Securities Law Requirements.
(a) The Administrator may require an individual as a
condition of the grant and of the exercise of an option, to represent and
establish to the satisfaction of
6.
<PAGE> 8
the Administrator that all shares of Common Stock to be acquired upon the
exercise of such option will be acquired for investment and not for resale. The
Administrator shall cause such legends to be placed on certificates evidencing
shares of Common Stock issued upon exercise of an option as, in the opinion of
the Company's counsel, may be required by federal and applicable state
securities laws.
(b) No shares of Common Stock shall be issued upon the
exercise of any option unless and until counsel for the Company determines that:
(i) the Company and the optionee have satisfied all applicable requirements
under the Securities Act of 1933 and the Securities Exchange Act of 1934; (ii)
any applicable listing requirement of any stock exchange on which the Company's
Common Stock is listed has been satisfied; and (iii) all other applicable
provisions of state and federal law have been satisfied.
9. Financial Assistance. The Company is vested with authority
under this Plan to assist any employee to whom an option is granted hereunder
(including any consultant to, director or officer of the Company or any of its
subsidiaries who is also an employee) in the payment of the purchase price
payable on exercise of that option, by lending the amount of such purchase price
to such employee on such terms and at such rates of interest and upon such
security as shall have been authorized by or under authority of the Board.
10. Amendment. The Board may terminate the Plan or amend the
Plan from time to time in such respects as the Board may deem advisable, except
that, without the approval of the Company's shareholders in compliance with the
requirements of applicable law, no such revision or amendment shall:
(a) increase the number of shares of Common Stock reserved
under Section 4 hereof for issue under the Plan, except as provided in Section 7
hereof;
(b) change the class of persons eligible to participate in
the Plan under Section 3 hereof;
(c) extend the term of the Plan under Section 10 hereof; or
(d) amend this Section 10 to defeat its purpose.
11. Termination. The Plan shall terminate automatically on
March 1, 2003, and may be terminated at any earlier date by the Board. No option
shall be granted hereunder after termination of the Plan, but such termination
shall not affect the validity of any option then outstanding.
12. Time of Granting Options. The date of grant of an option
hereunder shall, for all purposes, be the date on which the Administrator makes
the determination granting such option.
7.
<PAGE> 9
13. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number of shares of
its Common Stock as shall be sufficient to satisfy the requirements of the Plan.
14. Effective Date. This Plan was adopted by the Board of
Directors of the Company on March 1, 1993, and shall be effective on said date,
provided the Plan is approved within twelve (12) months of said date by the
shareholders of the Company in accordance with the requirements of the Code and
the California Corporate Securities Laws. Options may be granted, but may not be
exercised, prior to the date of such shareholder approval.
15. Financial Reports. The Company shall deliver financial and
other information regarding the Company, on an annual or more frequent basis, to
each individual holding an outstanding option under the Plan; provided, however,
that financial statements will not be furnished to key employees whose duties in
connection with the issuer assure them access to equivalent information.
8.
<PAGE> 1
EXHIBIT 99.2
Form of Incentive Stock Option Agreement.
<PAGE> 2
COMBINET, INC.
INCENTIVE STOCK OPTION AGREEMENT
_______________, 199_
(Date of Grant)
Combinet, Inc., a California corporation (the "Company"), does
hereby grant to _______________ (the "Employee") a nontransferable option to
purchase an aggregate of _______________ (_____) shares of the Company's Common
Stock (the "Optioned Shares"), without par value, at the option price of
($_____) per share, upon the following terms and conditions:
1. Term of Option. Notwithstanding any other provision of this
Agreement, the option granted hereby and all rights of the Optionee to purchase
the Optioned Shares hereunder shall expire with respect to all of the shares
subject hereto ten (10) years from the date of grant of the option as set forth
above (the "Expiration Date"); provided, however, that this option shall be
subject to termination prior to the Expiration Date in accordance with the
provisions of Sections 3, 4, and 10 hereof.
2. Exercise Schedule. Subject to the remaining provisions of
this Agreement, the option shall be exercisable as follows: (a) twenty-five
percent after the expiration of one full year from Employee's Initial Vest Date;
and (b) the remaining seventy-five percent in equal monthly installments
thereafter until the expiration of four years from Employee's Initial Vest Date.
Employee's Initial Vest Date shall be (a) with respect to the first grant of an
option to Employee, Employee's date of employment by the Company, or (b) with
respect to all subsequent option grants to Employee, the date the option was
granted by the Company (the Date of Grant set forth above). For purposes of this
Option, Employee's Initial Vest Date shall be __________, 19__.
3. Rights on Termination. If the Employee ceases to be an
employee of the Company or of any affiliate of the Company prior to exercise in
full, lapse or termination of this option, the Employee's right to exercise this
option, to the extent it is otherwise then exercisable pursuant to Section 2
hereof, shall be limited in the following manner:
(a) Death. If the Employee ceases to be an employee because
of the Employee's death, the Employee's estate shall have the right, for a
period of twelve (12) months following the date of the Employee's death, to
exercise the option to the extent it was exercisable by the Employee on the date
of death. The Employee's estate shall mean the Employee's legal representative
upon death or any person who acquires the right to
<PAGE> 3
exercise the option by reason of such death under the Employee's will or the
laws of intestate succession.
(b) Retirement. If the Employee's employment is terminated
by voluntary retirement at or after reaching sixty-five (65) years of age, the
Employee may, within three (3) months following such termination, exercise the
option to the extent it was exercisable by the Employee on the date of such
termination. The option shall terminate upon the expiration of such three (3)
month period unless the Employee dies prior thereto, in which event the Employee
shall be treated as though the Employee had died on the date of retirement and
the provisions of Section 4(a) shall apply.
(c) Disability. If the Employee ceases to be an employee
because of a permanent and total disability (as defined in Internal Revenue Code
Section 22(e)(3)), the Employee or the Employee's estate may, within twelve (12)
months following such termination, exercise the option to the extent it was
exercisable by the Employee on the date of such termination.
(d) Other Termination. If the Employee ceases to be an
employee for any reason other than those provided in Subsections (a), (b) and
(c) above, the option shall terminate thirty (30) days from the date the
Employee ceases to be an employee.
(e) Transfer to Related Corporation. In the event the
Employee ceases to be an employee of the Company in order to become an employee
of any parent or subsidiary corporation of the Company or if the Employee ceases
to be an employee of any such parent or subsidiary corporation in order to
become an employee of the Company or of another parent or subsidiary
corporation, the Employee shall be deemed to continue as an employee of the
Company for all purposes of this Agreement.
4. Adjustments upon Changes in Capitalization or Merger.
(a) Subject to any required action by the Company's
shareholders, the number of shares of Common Stock covered by the option granted
hereby and the exercise price thereof shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of such shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such outstanding shares of Common Stock effected without the receipt
of consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."
(b) Subject to any required action by the Company's
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, the option granted hereby shall pertain and apply to the
securities to which a holder of the number of shares subject to the unexercised
portion of this option would have been entitled. A
2
<PAGE> 4
dissolution or liquidation of the Company or a merger or consolidation involving
the Company in which the Company is not the surviving corporation shall cause
this option to terminate on the effective date of any such event, unless the
surviving corporation in the case of a merger or consolidation assumes
outstanding options or replaces them with substitute options having
substantially similar terms and conditions.
(c) To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by the
Company's Board of Directors ("Board"), whose determination in that respect
shall be final, binding and conclusive. The Company agrees to give notice of any
such adjustment to the Employee, provided, however, that any such adjustment
shall be effective and binding for all purposes hereof whether or not such
notice is given or received.
(d) Except as hereinabove expressly provided in this Section
4, the Employee shall have no rights by reason of any subdivision or
consolidation of shares of the capital stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of any
class or by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company
of shares of stock of any class or of securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of shares subject to the
option granted hereunder.
(e) The grant of the option hereby shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
5. Manner of Exercise. The option granted hereby shall be
exercised by the Employee by (a) giving written notice to the Company, in
substantially the form attached hereto as Exhibit A, which notice shall specify
the number of shares of Common Stock which the Employee elects to purchase, and
(b) delivering to the Company an Investment Representation Letter in the form of
Exhibit B attached hereto. Upon receipt of such notice of exercise and of
payment of the purchase price and any applicable withholding and employment
taxes, the Company shall, as soon as reasonably possible and subject to all
other provisions hereof, deliver certificates for the shares of Common Stock so
purchased, registered in the Employee's name or in the name of his legal
representative. Payment of the purchase price upon any exercise of the option
granted hereby shall be made by check or in cash.
6. Alternative Payment with Stock. Notwithstanding the
foregoing provisions requiring payment by check or in cash, payment of such
purchase price or any portion thereof may be made with shares of stock of the
same class as the shares then subject to this Option, if shares of that class
are then publicly traded (as defined below). Such shares shall be credited
toward such purchase price on the valuation basis set forth
3
<PAGE> 5
below. The stock certificates evidencing the shares to be used as payment
hereunder shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company.
Notwithstanding the foregoing, payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock being
offered as payment, or (ii) the right of the person exercising the Option to
deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (except the Company), as indicated by legends on
the certificates or as known to the Company. For purposes of this paragraph: (a)
"publicly traded" shares are those which are listed or admitted to unlisted
trading privileges on a national securities exchange or as to which sales or bid
and offer quotations are reported in the automated quotation system ("NASDAQ")
operated by the National Association of Securities Dealers, Inc. ("NASD"); and
(b) for credit toward the purchase price, shares so surrendered shall be valued
as of the day immediately preceding the delivery to the Company of the
certificate(s) evidencing such shares (or if such day is not a trading day in
the U.S. securities markets, on the nearest preceding trading day), on the basis
of the closing price of stock of that class as reported with respect to the
market (or the composite of the markets, if more than one) in which such shares
are then traded, or if no such closing prices are reported the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company. If the company rejects the payment
in stock, the tendered notice of exercise shall not be effective hereunder
unless promptly after being notified of such rejection the person exercising the
Option pays the purchase price in another acceptable form.
7. Non-Transferable. During the lifetime of the Employee, the
option granted to the Employee hereunder shall be exercisable only by the
Employee and shall not be transferable or assignable by the Employee in whole or
in part other than by will or the laws of descent and distribution. If the
Employee shall make any purported transfer or assignment of the Employee's
option hereunder, such assignment shall be null and void and of no force or
effect whatsoever and the Company shall have the right to terminate this
Agreement as of the date of any such purported transfer or assignment.
8. Compliance with Securities and other Laws. As a condition to
the exercise in whole or in part of the option granted hereby, each notice of
exercise shall include a representation by the purchaser that such purchaser
intends to acquire the shares of Common Stock specified therein for investment,
for such purchaser's own account and not with a view to, or for sale in
connection with, any distribution of such shares. The Company shall not be
obligated to deliver any shares of Common Stock hereunder for such period as may
reasonably be required for it to comply with any applicable requirements of: (i)
the Securities Act of 1933; (ii) the Securities Exchange Act of 1934; (iii)
applicable state securities laws; (iv) any applicable listing requirement of any
stock exchange on which the Company's Common Stock is then listed; and (v) any
other law or regulation applicable to the issuance of such shares. Shares of
Common Stock issued pursuant to exercise of this
4
<PAGE> 6
option shall include the following legends and such other legends as in the
opinion of the Company's counsel may be required by the securities laws of any
state in which the Employee resides:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE AS PROVIDED IN THE COMPANY'S BYLAWS.
9. No Right to Continue As Employee. Nothing contained in
this Agreement shall: (i) confer upon the Employee any right to continue as an
employee of the Company or of any affiliate; or (ii) limit in any way the right
of the Company or of any affiliate to terminate the Employee's position as an
employee at any time.
10. Option Subject to Terms of Plan. In addition to the
provisions hereof, this Agreement and the option granted hereby are governed by,
and subject to the terms and conditions of, the Combinet, Inc. Incentive and
Nonqualified Stock Option Plan, as adopted effective _______________, 1993, (the
"Plan"). The Employee acknowledges receipt of a copy of the Plan (which is
attached hereto as Exhibit C). The Employee represents that he is familiar with
the terms and conditions of the Plan, and hereby accepts the option granted
hereby subject to all of the terms and conditions thereof, which terms and
conditions shall control to the extent inconsistent in any respect with the
provisions of this Agreement. The Employee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Board, or other
administrator of the Plan, as to any questions arising under the Plan or under
this Agreement. This Agreement, as supplemented by the Plan, shall bind and
inure to the benefit of the Company and its successors and assigns, and the
Employee and the Employee's estate in the event of death.
11. Board Determinations. The Employee hereby agrees to accept
as binding, conclusive and final all decisions and interpretations of the Board
as to any questions arising under this Agreement. This Agreement shall bind and
inure to the benefit
5
<PAGE> 7
of the Company and its successors and assigns, and the Employee and the
Employee's estate in the event of death.
12. Notices. All notices and other communications of any kind
which either party to this Agreement may be required or may desire to serve on
the other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the parties at the addresses indicated on the
signature page hereof. Service of any such notice or other communication so made
by mail shall be deemed complete on the date of actual delivery as shown by the
addressee's registry or certification receipt or at the expiration of the third
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to which
such notices or other communications are thereafter to be addressed or
delivered.
13. Withholding and Employment Taxes. Upon exercise of any
option granted hereunder, the Employee shall remit to the Company in cash the
amount of any and all applicable federal and state withholding and employment
taxes.
14. Independent Tax Advice. The Employee agrees that Employee
has or will obtain the advice of independent tax counsel regarding the federal
and state income tax consequences of the receipt and exercise of the option
granted hereby and of the disposition of Common Stock acquired upon exercise
hereof. The Employee acknowledges that he has not relied and will not rely upon
any advice or representations by the Company or by its employees or
representatives with respect to the tax treatment of options granted hereunder.
6
<PAGE> 8
15. Miscellaneous.
(a) This option shall be treated as an Incentive Stock
Option.
(b) The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of California.
Date of Grant
____________________, 199__
Combinet, Inc.
a California corporation
333 West El Camino Real, Suite 320
Sunnyvale, CA 94087
By: _______________________________
Thomas M. Williams, President
AGREED TO AND ACCEPTED: ____________________________________
Employee Signature
____________________________________
____________________________________
(printed name and address)
7
<PAGE> 9
EXHIBIT A
Form of Notice of Exercise
of Combinet Inc.
Incentive Stock Option
Combinet, Inc.
333 West El Camino Real, Suite 320
Sunnyvale, CA 94087
Gentlemen:
I hereby exercise the right to purchase __________ shares of
Common Stock, without par value, of Combinet, Inc., under the terms of the
option granted to me on __________, 19 __, pursuant to the Incentive Stock
Option Agreement, dated as of said grant date. This exercise of said option and
the purchase and delivery of said shares shall be subject to all the terms and
conditions of such Incentive Stock Option Agreement.
_____ I enclose my check for $__________ in full payment of the
purchase price of said shares ($_____) and applicable withholding and employment
taxes ($__________). Please register said shares in my name.
OR
_____ I enclose stock certificates evidencing the shares to be
used as payment hereunder, which certificates are duly endorsed or accompanied
by duly executed stock powers transferring them to the Company. I also enclose
my check for applicable withholding employment taxes of ($_____). Please
register said shares in my name.
_____ I hereby represent and agree that I am purchasing the
shares for my own account and not with a view to, or for sale in connection
with, any distribution of the shares, and that I will not sell the shares
without registration under the Securities Act of 1933 or an exemption therefrom
and in compliance with applicable state securities laws.
Dated: _______________, 19__
_______________________________
(signature)
_______________________________
_______________________________
(print name and home address)
8
<PAGE> 10
EXHIBIT B
INVESTOR REPRESENTATION LETTER
Gentlemen:
In connection with the exercise by me of a stock option to
purchase __________ shares of the Common Stock (the "Shares") of Combinet, Inc.
(the "Company"), I hereby represent to you the following:
1. I understand that the Shares are highly speculative and that
there can be no assurance as to what return, if any, there may be on my
investment. I have evaluated the risks of making this investment in the Shares,
have determined that such investment is consistent with my investment
objectives, have the ability to bear the economic risk of such investment and
can afford a complete loss of the purchase price of the Shares.
2. I have made an informed, independent judgment with respect
to the desirability of purchasing the Shares from the Company. I have,
independently and without reliance upon the Company or any representations or
statements made by the Company or its representatives, made my own analysis and
decision to purchase the Shares. Neither the Company nor any of its
representatives have made any representations or warranties to me, and no prior
or future acts by the Company or its representatives shall be deemed to
constitute representations or warranties by the Company.
3. I am acquiring the Shares for my own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
4. I understand that the Shares must be held indefinitely
unless subsequently registered under the Act and qualified under applicable
state securities laws or unless an exemption from such registration and
qualification is applicable to any subsequent transfer. I hereby agree that the
Shares will not be sold without registration under the Act and qualification
under applicable state securities laws or exemption therefrom. I understand that
the Company has no present plans for registration or qualification of the Shares
and that it has no obligation to register or to qualify the Shares for any
future sale thereof by me.
5. I understand that the certificates evidencing the Shares to
be held by me will bear the legend set forth below and may bear certain
additional legends required under applicable state securities law:
9
<PAGE> 11
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE(S) AS PROVIDED IN THE COMPANY'S BYLAWS.
6. I further understand that there is no market for the Shares
and there may never be a market for the Shares, and that even if a market
develops for the Shares, as a result of the foregoing restrictions on transfer
and the representations and warranties hereunder, I may not be able to sell or
dispose of the Shares, and that I may thus have to bear the risk of my
investment in the Shares for a substantial period of time, or forever.
7. I acknowledge that no one is acting as my representative in
this purchase.
8. I agree that the Company may note upon its stock transfer
records a "stop transfer order" with respect to the Shares in order to enforce
the restrictions on transfer hereinabove described. I understand and agree that
any and all share certificates issued by the Company to me in connection with
the proposed purchase may bear the restrictive legends hereinabove described. I
further agree that the Company shall not be liable for any refusal to transfer
the Shares upon the books of the Company, except in compliance with the terms
and conditions of such restrictions.
9. I agree to indemnify and save and hold harmless the Company,
its successors and assigns, and their officers, directors and controlling
persons, if any, against any loss, claim, damage, liability, cost and expense
arising out of a breach by the undersigned of any of the foregoing
representations, warranties and covenants, whether under the Act, as the same
may be amended from time to time, the securities laws of any state, or
otherwise. Finally, I agree that the terms and conditions of this letter shall
also bind my heirs, assigns and legal representatives.
10
<PAGE> 12
10. I am a resident of the State of California and am
purchasing the Shares in the State of California.
Executed this ___ day of _______________, 19__
at ____________________
____________________________
Address:
_________________________
_________________________
_________________________
11
<PAGE> 13
EXHIBIT C
COMBINET, INC.
STOCK OPTION PLAN
As Adopted Effective _______________, 199__
12
<PAGE> 1
EXHIBIT 99.3
Form of Nonqualified Stock Option Agreement.
<PAGE> 2
COMBINET, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
_______________, 199_
(Date of Grant)
Combinet, Inc., a California corporation (the "Company"), does
hereby grant to _______________ (the "Optionee") a nontransferable option to
purchase an aggregate of _______________ (_____) shares of the Company's Common
Stock (the "Optioned Shares"), without par value, at the option price of
($_____) per share, upon the following terms and conditions:
1. Term of Option. Notwithstanding any other provision of this
Agreement, the option granted hereby and all rights of the Optionee to purchase
the Optioned Shares hereunder shall expire with respect to all of the shares
subject hereto ten (10) years and one (1) week from the date of grant of the
option as set forth above (the "Expiration Date"); provided, however, that this
option shall be subject to termination prior to the Expiration Date in
accordance with the provisions of Sections 3, 4, and 10 hereof.
2. Exercise Schedule. Subject to the remaining provisions of
this Agreement, the option shall be exercisable as follows: (a) twenty-five
percent after the expiration of one full year from Optionee's Initial Vest Date;
and (b) the remaining seventy-five percent in equal monthly installments
thereafter until the expiration of four years from Optionee's Initial Vest Date.
Optionee's Initial Vest Date shall be (a) with respect to the first grant of an
option to Optionee, Optionee's date of employment by the Company, or (b) with
respect to all subsequent option grants to Optionee, the date the option was
granted by the Company (the Date of Grant set forth above). For purposes of this
Option, Optionee's Initial Vest Date shall be __________, 19__.
3. Rights on Termination. If the Optionee ceases to be an
employee of the Company or of any affiliate of the Company prior to exercise in
full, lapse or termination of this option, the Optionee's right to exercise this
option, to the extent it is otherwise then exercisable pursuant to Section 2
hereof, shall be limited in the following manner:
(a) Death. If the Optionee ceases to be an employee because
of the Optionee's death, the Optionee's estate shall have the right, for a
period of twelve (12) months following the date of the Optionee's death, to
exercise the option to the extent it was exercisable by the Optionee on the date
of death. The Optionee's estate shall mean the Optionee's legal representative
upon death or any person who acquires the right to
<PAGE> 3
exercise the option by reason of such death under the Optionee's will or the
laws of intestate succession.
(b) Retirement. If the Optionee's employment is terminated
by voluntary retirement at or after reaching sixty-five (65) years of age, the
Optionee may, within three (3) months following such termination, exercise the
option to the extent it was exercisable by the Optionee on the date of such
termination. The option shall terminate upon the expiration of such three (3)
month period unless the Optionee dies prior thereto, in which event the Optionee
shall be treated as though the Optionee had died on the date of retirement and
the provisions of Section 4(a) shall apply.
(c) Disability. If the Optionee ceases to be an employee
because of a permanent and total disability (as defined in Internal Revenue Code
Section 22(e)(3)), the Optionee or the Optionee's estate may, within twelve (12)
months following such termination, exercise the option to the extent it was
exercisable by the Optionee on the date of such termination.
(d) Other Termination. If the Optionee ceases to be an
employee for any reason other than those provided in Subsections (a), (b) and
(c) above, the option shall terminate thirty (30) days from the date the
Optionee ceases to be an employee.
(e) Transfer to Related Corporation. In the event the
Optionee ceases to be an employee of the Company in order to become an employee
of any parent or subsidiary corporation of the Company or if the Optionee ceases
to be an employee of any such parent or subsidiary corporation in order to
become an employee of the Company or of another parent or subsidiary
corporation, the Optionee shall be deemed to continue as an employee of the
Company for all purposes of this Agreement.
4. Adjustments upon Changes in Capitalization or Merger.
(a) Subject to any required action by the Company's
shareholders, the number of shares of Common Stock covered by the option granted
hereby and the exercise price thereof shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of such shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such outstanding shares of Common Stock effected without the receipt
of consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."
(b) Subject to any required action by the Company's
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, the option granted hereby shall pertain and apply to the
securities to which a holder of the number of shares subject to the unexercised
portion of this option would have been entitled. A
2
<PAGE> 4
dissolution or liquidation of the Company or a merger or consolidation involving
the Company in which the Company is not the surviving corporation shall cause
this option to terminate on the effective date of any such event, unless the
surviving corporation in the case of a merger or consolidation assumes
outstanding options or replaces them with substitute options having
substantially similar terms and conditions.
(c) To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjustments shall be made by the
Company's Board of Directors ("Board"), whose determination in that respect
shall be final, binding and conclusive. The Company agrees to give notice of any
such adjustment to the Optionee, provided, however, that any such adjustment
shall be effective and binding for all purposes hereof whether or not such
notice is given or received.
(d) Except as hereinabove expressly provided in this Section
4, the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of the capital stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of any
class or by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company
of shares of stock of any class or of securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of shares subject to the
option granted hereunder.
(e) The grant of the option hereby shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
5. Manner of Exercise. The option granted hereby shall be
exercised by the Optionee by giving written notice to the Company, in
substantially the form attached hereto as Exhibit A, which notice shall specify
the number of shares of Common Stock which the Optionee elects to purchase.
Additionally, the Optionee shall execute and deliver an Investment
Representation Statement in the form of Exhibit B attached hereto. Upon receipt
of such notice of exercise and of payment of the purchase price and any
applicable withholding and employment taxes, the Company shall, as soon as
reasonably possible and subject to all other provisions hereof, deliver
certificates for the shares of Common Stock so purchased, registered in the
Optionee's name or in the name of his legal representative. Payment of the
purchase price upon any exercise of the option granted hereby shall be made by
check or in cash.
6. Alternative Payment with Stock. Notwithstanding the
foregoing provisions requiring payment by check or in cash, payment of such
purchase price or any portion thereof may be made with shares of stock of the
same class as the shares then subject to this Option, if shares of that class
are then publicly traded (as defined below) and the shares to be used to pay the
purchase price have been held for at least one year. Such
3
<PAGE> 5
shares shall be credited toward such purchase price on the valuation basis set
forth below. The stock certificates evidencing the shares to be used as payment
hereunder shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company.
Notwithstanding the foregoing, payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock being
offered as payment, or (ii) the right of the person exercising the Option to
deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (except the Company), as indicated by legends on
the certificates or as known to the Company. For purposes of this paragraph: (a)
"publicly traded" shares are those which are listed or admitted to unlisted
trading privileges on a national securities exchange or as to which sales or bid
and offer quotations are reported in the automated quotation system ("NASDAQ")
operated by the National Association of Securities Dealers, Inc. ("NASD"); and
(b) for credit toward the purchase price, shares so surrendered shall be valued
as of the day immediately preceding the delivery to the Company of the
certificate(s) evidencing such shares (or if such day is not a trading day in
the U.S. securities markets, on the nearest preceding trading day), on the basis
of the closing price of stock of that class as reported with respect to the
market (or the composite of the markets, if more than one) in which such shares
are then traded, or if no such closing prices are reported the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company. If the company rejects the payment
in stock, the tendered notice of exercise shall not be effective hereunder
unless promptly after being notified of such rejection the person exercising the
Option pays the purchase price in another acceptable form.
7. Non-Transferable. During the lifetime of the Optionee, the
option granted to the Optionee hereunder shall be exercisable only by the
Optionee and shall not be transferable or assignable by the Optionee in whole or
in part other than by will or the laws of descent and distribution. If the
Optionee shall make any purported transfer or assignment of the Optionee's
option hereunder, such assignment shall be null and void and of no force or
effect whatsoever and the Company shall have the right to terminate this
Agreement as of the date of any such purported transfer or assignment.
8. Compliance with Securities and other Laws. As a condition to
the exercise in whole or in part of the option granted hereby, each notice of
exercise shall include a representation by the purchaser that such purchaser
intends to acquire the shares of Common Stock specified therein for investment,
for such purchaser's own account and not with a view to, or for sale in
connection with, any distribution of such shares. The Company shall not be
obligated to deliver any shares of Common Stock hereunder for such period as may
reasonably be required for it to comply with any applicable requirements of: (i)
the Securities Act of 1933; (ii) the Securities Exchange Act of 1934; (iii)
applicable state securities laws; (iv) any applicable listing requirement of any
stock exchange on which the Company's Common Stock is then listed; and (v) any
other law or regulation applicable to
4
<PAGE> 6
the issuance of such shares. Shares of Common Stock issued pursuant to exercise
of this option shall include the following legends and such other legends as in
the opinion of the Company's counsel may be required by the securities laws of
any state in which the Optionee resides:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE AS PROVIDED IN THE COMPANY'S BYLAWS.
9. No Right to Continue As Employee. Nothing contained in
this Agreement shall: (i) confer upon the Optionee any right to continue as an
employee of the Company or of any affiliate; or (ii) limit in any way the right
of the Company or of any affiliate to terminate the Optionee's position as an
employee at any time.
10. Option Subject to Terms of Plan. In addition to the
provisions hereof, this Agreement and the option granted hereby are governed by,
and subject to the terms and conditions of, the Combinet, Inc. Incentive and
Nonqualified Stock Option Plan, as adopted effective _______________, 1993, (the
"Plan"). The Optionee acknowledges receipt of a copy of the Plan (which is
attached hereto as Exhibit C). The Optionee represents that he is familiar with
the terms and conditions of the Plan, and hereby accepts the option granted
hereby subject to all of the terms and conditions thereof, which terms and
conditions shall control to the extent inconsistent in any respect with the
provisions of this Agreement. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Board, or other
administrator of the Plan, as to any questions arising under the Plan or under
this Agreement. This Agreement, as supplemented by the Plan, shall bind and
inure to the benefit of the Company and its successors and assigns, and the
Optionee and the Optionee's estate in the event of death.
11. Board Determinations. The Optionee hereby agrees to accept
as binding, conclusive and final all decisions and interpretations of the Board
as to any questions arising under this Agreement. This Agreement shall bind and
inure to the benefit
5
<PAGE> 7
of the Company and its successors and assigns, and the Optionee and the
Optionee's estate in the event of death.
12. Notices. All notices and other communications of any kind
which either party to this Agreement may be required or may desire to serve on
the other party hereto in connection with this Agreement shall be in writing and
may be delivered by personal service or by registered or certified mail, return
receipt requested, deposited in the United States mail with postage thereon
fully prepaid, addressed to the parties at the addresses indicated on the
signature page hereof. Service of any such notice or other communication so made
by mail shall be deemed complete on the date of actual delivery as shown by the
addressee's registry or certification receipt or at the expiration of the third
business day after the date of mailing, whichever is earlier in time. Either
party may from time to time by notice in writing served upon the other as
aforesaid, designate a different mailing address or a different person to which
such notices or other communications are thereafter to be addressed or
delivered.
13. Withholding and Employment Taxes. Upon exercise of any
option granted hereunder, the Optionee shall remit to the Company in cash the
amount of any and all applicable federal and state withholding and employment
taxes.
14. Independent Tax Advice. The Optionee agrees that Optionee
has or will obtain the advice of independent tax counsel regarding the federal
and state income tax consequences of the receipt and exercise of the option
granted hereby and of the disposition of Common Stock acquired upon exercise
hereof. The Optionee acknowledges that he has not relied and will not rely upon
any advice or representations by the Company or by its employees or
representatives with respect to the tax treatment of options granted hereunder.
6
<PAGE> 8
15. Miscellaneous. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California.
Date of Grant
____________________, 199__
Combinet, Inc.
a California corporation
333 West El Camino Real, Suite 320
Sunnyvale, CA 94087
By: _______________________________
Thomas M. Williams, President
AGREED TO AND ACCEPTED: ____________________________________
Optionee Signature
____________________________________
____________________________________
(printed name and address)
7
<PAGE> 9
EXHIBIT A
Form of Notice of Exercise
of Combinet Inc.
Nonqualified Stock Option
Combinet, Inc.
333 West El Camino Real, Suite 320
Sunnyvale, CA 94087
Gentlemen:
I hereby exercise the right to purchase __________ shares of
Common Stock, without par value, of Combinet, Inc., under the terms of the
option granted to me on __________, 19 __, pursuant to the Nonqualified Stock
Option Agreement, dated as of said grant date. This exercise of said option and
the purchase and delivery of said shares shall be subject to all the terms and
conditions of such Nonqualified Stock Option Agreement.
_____ I enclose my check for $__________ in full payment of the
purchase price of said shares ($_____) and applicable withholding and employment
taxes ($__________). Please register said shares in my name.
OR
_____ I enclose stock certificates evidencing the shares to be
used as payment hereunder, which certificates are duly endorsed or accompanied
by duly executed stock powers transferring them to the Company. I also enclose
my check for applicable withholding employment taxes of ($_____). Please
register said shares in my name.
_____ I hereby represent and agree that I am purchasing the
shares for my own account and not with a view to, or for sale in connection
with, any distribution of the shares, and that I will not sell the shares
without registration under the Securities Act of 1933 or an exemption therefrom
and in compliance with applicable state securities laws.
Dated: _______________, 19__
_________________________
(signature)
_________________________
_________________________
(print name and home address)
8
<PAGE> 10
EXHIBIT B
INVESTOR REPRESENTATION LETTER
Gentlemen:
In connection with the exercise by me of a stock option to
purchase __________ shares of the Common Stock (the "Shares") of Combinet, Inc.
(the "Company"), I hereby represent to you the following:
1. I understand that the Shares are highly speculative and that
there can be no assurance as to what return, if any, there may be on my
investment. I have evaluated the risks of making this investment in the Shares,
have determined that such investment is consistent with my investment
objectives, have the ability to bear the economic risk of such investment and
can afford a complete loss of the purchase price of the Shares.
2. I have made an informed, independent judgment with respect
to the desirability of purchasing the Shares from the Company. I have,
independently and without reliance upon the Company or any representations or
statements made by the Company or its representatives, made my own analysis and
decision to purchase the Shares. Neither the Company nor any of its
representatives have made any representations or warranties to me, and no prior
or future acts by the Company or its representatives shall be deemed to
constitute representations or warranties by the Company.
3. I am acquiring the Shares for my own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
4. I understand that the Shares must be held indefinitely
unless subsequently registered under the Act and qualified under applicable
state securities laws or unless an exemption from such registration and
qualification is applicable to any subsequent transfer. I hereby agree that the
Shares will not be sold without registration under the Act and qualification
under applicable state securities laws or exemption therefrom. I understand that
the Company has no present plans for registration or qualification of the Shares
and that it has no obligation to register or to qualify the Shares for any
future sale thereof by me.
5. I understand that the certificates evidencing the Shares to
be held by me will bear the legend set forth below and may bear certain
additional legends required under applicable state securities law:
9
<PAGE> 11
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
TRANSACTION REGISTERED UNDER SAID ACT OR (ii) IF AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE AND IS
ESTABLISHED TO THE SATISFACTION OF THE ISSUER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE(S) AS PROVIDED IN THE COMPANY'S BYLAWS.
6. I further understand that there is no market for the Shares
and there may never be a market for the Shares, and that even if a market
develops for the Shares, as a result of the foregoing restrictions on transfer
and the representations and warranties hereunder, I may not be able to sell or
dispose of the Shares, and that I may thus have to bear the risk of my
investment in the Shares for a substantial period of time, or forever.
7. I acknowledge that no one is acting as my representative in
this purchase.
8. I agree that the Company may note upon its stock transfer
records a "stop transfer order" with respect to the Shares in order to enforce
the restrictions on transfer hereinabove described. I understand and agree that
any and all share certificates issued by the Company to me in connection with
the proposed purchase may bear the restrictive legends hereinabove described. I
further agree that the Company shall not be liable for any refusal to transfer
the Shares upon the books of the Company, except in compliance with the terms
and conditions of such restrictions.
9. I agree to indemnify and save and hold harmless the Company,
its successors and assigns, and their officers, directors and controlling
persons, if any, against any loss, claim, damage, liability, cost and expense
arising out of a breach by the undersigned of any of the foregoing
representations, warranties and covenants, whether under the Act, as the same
may be amended from time to time, the securities laws of any state, or
otherwise. Finally, I agree that the terms and conditions of this letter shall
also bind my heirs, assigns and legal representatives.
10
<PAGE> 12
10. I am a resident of the State of California and am
purchasing the Shares in the State of California.
Executed this ___ day of _______________, 19__
at ____________________
________________________
Address:
________________________
________________________
________________________
11
<PAGE> 13
EXHIBIT C
COMBINET, INC.
STOCK OPTION PLAN
As Adopted Effective _______________, 199__
12
<PAGE> 1
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF COMBINET SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
OPTION ASSUMPTION AGREEMENT issued as of the 29th day of
September 1995 by Cisco Systems, Inc., a Delaware corporation ("Cisco").
WHEREAS, the undersigned Optionee is the holder of one or more
outstanding options to purchase shares of the common stock of Combinet, Inc., a
California corporation ("Combinet"), which were granted to Optionee pursuant to
the Combinet Incentive and Nonqualified Stock Option Plan (the "Option Plan"),
and Optionee and Combinet have, in order to evidence each such option, entered
into either a formal Incentive Stock Option Agreement or a Nonqualified Stock
Option Agreement (hereinafter, an "Option Agreement").
WHEREAS, Combinet has this day been acquired by Cisco through
merger of Mathilda Acquisition Corporation, a wholly-owned Cisco subsidiary,
with Combinet (the "Merger") pursuant to the Agreement and Plan of Merger dated
August 9, 1995 (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume the obligations of Combinet under the options outstanding under the
Option Plan at the time of the Merger and to issue an agreement evidencing the
assumption of each such option (the "Assumption Agreement").
WHEREAS, pursuant to the provisions of the Merger Agreement,
the exchange ratio (the "Exchange Rate") in effect for the Merger is 0.1380976
shares of Cisco common stock ("Cisco Stock") for each outstanding share of
Combinet common stock ("Combinet Stock").
WHEREAS, this Agreement is to be effective immediately upon the
consummation of the Merger (the "Effective Time") and shall reflect certain
adjustments to Optionee's outstanding options under the Option Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
<PAGE> 2
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Combinet Stock subject to the stock
options held by Optionee under the Option Plan immediately prior to the
Effective Time (the "Combinet Options") and the exercise price payable per share
are set forth below. Cisco hereby assumes, as of the Effective Time, all the
duties and obligations of Combinet under each of the Combinet Options and hereby
agrees to issue up to the number of shares of Cisco Stock indicated below for
each such assumed option upon (i) exercise of that option in accordance with the
provisions of the Option Agreement applicable thereto (as supplemented hereby)
and (ii) payment of the adjusted exercise price per share set forth below.
<TABLE>
<CAPTION>
COMBINET CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# of Shares # of Shares Adjusted
Common Stock Exercise Common Stock Exercise
Combinet Price/Share Cisco Price/Share
-------- ----------- ----- -----------
<S> <C> <C> <C>
2~ $4~ 6~ $7~
</TABLE>
2. The number of shares of Cisco Stock purchasable under each
Combinet Option hereby assumed and the exercise price payable thereunder reflect
the Exchange Rate at which shares of Combinet Stock were converted into shares
of Cisco Stock in consummation of the Merger. The intent of such adjustments is
to assure that the spread between the aggregate fair market value of the shares
of Cisco Stock purchasable under each assumed Combinet 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 Combinet Stock subject to
the Combinet 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 Combinet
Option immediately prior to the Merger.
3. The following provisions shall govern each Combinet Option
hereby assumed by Cisco:
- Unless the context otherwise requires, all references to the
"Company" in each Option Agreement shall mean Cisco, all references to "Common
Stock" or "Optioned Shares" shall mean shares of Cisco Stock, all references to
"Board" or "Administrator" shall mean the Compensation Committee of the Cisco
Board of Directors.
2.
<PAGE> 3
- The grant date and the expiration date of each assumed
Combinet Option and all other provisions which govern the termination of each
such assumed Combinet Option shall remain the same as set forth in the Option
Agreement applicable to such option and shall accordingly govern and control the
Optionee's rights under this Assumption Agreement to purchase Cisco Stock.
- Each assumed Combinet Option shall remain exercisable in
accordance with the same installment vesting schedule in effect under the
applicable Option Agreement immediately prior to the Effective Time, with the
number of shares of Cisco Stock subject to each such installment adjusted to
reflect the Exchange Rate. Accordingly, no acceleration of exercisability or
vesting of the Combinet Options shall be deemed to occur by reason of the
Merger, and the vesting and exercise dates under each applicable Option
Agreement shall remain the same.
- The adjusted exercise price payable for the Cisco Stock
subject to each assumed Combinet Option shall be payable in any of the forms
authorized under the Option Agreement applicable to that option and the
provisions of the Option Plan incorporated by reference into that Option
Agreement. For purposes of determining the applicable holding period for any
shares of Cisco Stock delivered in payment of the exercise price of each assumed
Combinet Option, the period for which such shares were held as Combinet Stock
prior to the Merger shall be taken into account.
- In order to exercise each assumed Combinet Option, the
Optionee must deliver to Cisco a written notice of exercise in which the number
of shares of Cisco 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 Cisco Stock and should be delivered to Cisco
at the following address:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attention: Option Plan Administrator
- For purposes of applying the termination of employment
provisions of the Option Agreement, the Optionee shall be deemed to continue in
employment and remain an employee for so long as the Optionee remains employed
by Cisco or any present or future parent or subsidiary of Cisco, including
(without limitation) Combinet.
4. Except to the extent specifically modified by this
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 Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 29th day of September, 1995.
CISCO SYSTEMS, INC.
By:______________________________
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 Combinet Options hereby assumed by Cisco Systems,
Inc. are as set forth in the Option Agreement, the Option Plan and such Stock
Option Assumption Agreement.
_________________________________
1~, OPTIONEE
DATED: __________________, 1995
4.
