<PAGE> 1
As filed with the Securities and Exchange Commission on November 21, 1996
Registration No. 333-________________
================================================================================
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)
TELEBIT CORPORATION
1995 STOCK OPTION PLAN
(Full title of the plans)
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>
================================================================================================================
Proposed Proposed
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>
1995 Stock Option Plan
Options to Purchase Common Stock 22,350 N/A N/A N/A
Common Stock 22,350 $24 $546,400 $163
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Telebit Corporation 1995
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
the Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price 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 28, 1996 filed filed with the Commission on
October 25, 1996, pursuant to Section 13 of the Securities
Exchange Act of 1934 (the "1934 Act").
(b) The Registrant's report on Form 8-K filed with the Commission
on October 1, 1996, and any amendments thereto.
(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-A filed with the Commission on
February 15, 1990, 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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
<PAGE> 3
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 and
Restated Bylaws 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.
Item 8. Exhibits
Exhibit Number Exhibit
-------------- -------
4.0 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-18225 on
Form 8-A which is incorporated herein by reference
pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand
L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Telebit Corporation 1995 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Exercise Notice.
99.4 Form of Stock Option Assumption Agreement.
99.5 Memorandum re Assumption of Stock Options under the
Telebit Corporation 1995 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 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 Telebit Corporation 1995 Stock Option
Plan.
II-2.
<PAGE> 4
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-3.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant 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 15th day of November, 1996.
CISCO SYSTEMS, INC.
By /s/ John T. Chambers
-------------------------------------
John T. Chambers
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John T. Chambers and Larry R. Carter and each of them
acting individually, as such person's true and lawful attorneys-in-fact and
agents, each with full power of substitution, for such person, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file 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, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitutes, may do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
Signatures Title Date
- ---------- ----- ----
/s/ John T. Chambers President, Chief Executive November 15, 1996
- ---------------------------------- Officer and Director (Principal
John T. Chambers Executive Officer)
/s/ Larry R. Carter Vice President, Finance and November 15, 1996
- ---------------------------------- Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ John P. Morgridge Chairman of the Board November 15, 1996
- ---------------------------------- and Director
John P. Morgridge
</TABLE>
II-4.
<PAGE> 6
Signatures Title Date
- ---------- ----- ----
/s/ Donald T. Valentine Director November 15, 1996
- ----------------------------------
Donald T. Valentine
/s/ James F. Gibbons Director November 15, 1996
- ----------------------------------
James F. Gibbons
/s/ Robert L. Puette Director November 15, 1996
- ----------------------------------
Robert L. Puette
Director , 1996
- ----------------------------------
Masayoshi Son
/s/ Steven M. West Director November 15, 1996
- ----------------------------------
Steven M. West
/s/ Richard M. Moley Director November 15, 1996
- ----------------------------------
Richard M. Moley
/s/ Edward Kozel Director November 15, 1996
- ----------------------------------
Edward Kozel
/s/ Carol Bart Director November 15, 1996
- ----------------------------------
Carol Bart
II-5.
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
II-6.
<PAGE> 8
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4.0 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-18225 on
Form 8-A which is incorporated herein by reference
pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand
L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Telebit Corporation 1995 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Exercise Notice.
99.4 Form of Stock Option Assumption Agreement.
99.5 Memorandum re Assumption of Stock Options under the
Telebit Corporation 1995 Stock Option Plan.
<PAGE> 1
Exhibit 5
November 18, 1996
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 22,350 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 22,350 shares of
the common stock ("Common Stock") of Cisco Systems, Inc. (the "Company")
issuable under the Telebit Corporation 1995 Stock Option Plan (the "Plan"). We
advise you that, in our opinion, when such shares have been issued and sold
pursuant to the applicable provisions of the 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 LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Cisco Systems, Inc. for the registration of 22,350 shares of its
common stock and 22,350 options to purchase shares of its common stock, of our
reports dated August 13, 1996, except for Note 3 for which the date is October
14, 1996, on our audits of the consolidated financial statements and schedule
of Cisco Systems, Inc. as of July 28, 1996 and July 30, 1995, and for the
years ended July 28, 1996, July 30, 1995 and July 31, 1994 which reports are
included in the Company's 1996 Annual Report on Form 10K, filed with the
Securities and Exchange Commission.
/s/ COOPERS & LYBRAND L.L.P.
San Jose, California
November 20, 1996
<PAGE> 1
Exhibit 99.1
TELEBIT CORPORATION
1995 STOCK OPTION PLAN
1. Purpose. This 1995 Stock Option Plan (the "Plan") is
intended to provide incentives: (a) to the officers and other employees of
Telebit Corporation (the "Company"), and of any present or future parent or
subsidiary of the Company (collectively, "Related Corporations"), by providing
them with opportunities to purchase stock in the Company pursuant to options
granted hereunder which qualify as "incentive stock options" ("ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
and (b) to directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to purchase stock in
the Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation," respectively, as those terms are defined in Section
424 of the Code.
2. Administration of the Plan.
a. Board or Committee Administration. The Plan shall be
administered by the Board of Directors of the Company (the "Board") or by a
committee appointed by the Board (the "Committee"); provided that, to the extent
required by applicable regulations under Section 162(m) of the Code, the Plan is
established and administered by two or more outside directors as defined in
Proposed Treasury Regulation Section 1.162-27 and, to the extent required by
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any
successor provision ("Rule 16b-3"), the Plan is administered by disinterested
administrators. Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if no Committee has been appointed. Subject to ratification
of the grant or authorization of each Option by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee shall
have the authority to (i) determine the employees of the Company and Related
Corporations (from among the class of employees eligible under paragraph 3 to
receive ISOs) to whom ISOs shall be granted, and determine (from among the class
of individuals and entities eligible under paragraph 3 to receive Non-Qualified
Options) to whom Non-Qualified Options may be granted; (ii) determine the time
or times at which Options shall be granted; (iii) determine the option price of
shares subject to each Option, which price shall not be less than the minimum
price specified in paragraph 6; (iv) determine whether each Option granted shall
be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the
time or times when each Option shall become exercisable and the duration of the
exercise period; (vi) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options and the nature of such
restrictions, if any; and (vii) interpret the Plan and prescribe and rescind
rules and regulations relating to it. If the Committee determines to issue a
Non-Qualified Option, it shall take whatever actions it deems necessary, under
Section 422 of the Code and the regulations
<PAGE> 2
promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Option granted under it shall be final unless otherwise determined by
the Board. The Committee may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem best. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
b. Committee Actions. The Committee may select one of its
members as its chairman, and shall hold meetings at such time and places as it
may determine. Acts by a majority of the members of the Committee, or acts
reduced to or approved in writing by a majority of the members of the Committee
(if consistent with applicable state law), shall constitute the valid acts of
the Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
c. Grant of Options to Board Members. Options may be
granted to members of the Board consistent with the provisions of the first
sentence of paragraph 2(A) above, if applicable. All grants of Options to
members of the Board shall in all other respects be made in accordance with the
provisions of this Plan applicable to other eligible persons. Consistent with
the provisions of the first sentence of paragraph 2(A) above, members of the
Board who either (i) are eligible to receive grants of Options pursuant to the
Plan or (ii) have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan,
except that no such member shall act upon the granting to himself of Options,
but any such member may be counted in determining the existence of a quorum at
any meeting of the Board during which action is taken with respect to the
granting to him of Options.
3. Eligible Employees and Others. ISOs may be granted only to
employees of the Company or any Related Corporation. Non-Qualified Options may
be granted to any employee, officer or director (whether or not also an
employee) or consultant of the Company or any Related Corporation. The Committee
may take into consideration a recipient's individual circumstances in
determining whether to grant an ISO or a Non-Qualified Option. The granting of
any Option to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Options.
4. Stock. The stock subject to Options shall be authorized but
unissued shares of Common Stock of the Company, no par value per share (the
"Common Stock"), or shares of Common Stock re-acquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 400,000, subject to adjustment as provided in paragraph 13. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part, the unpurchased shares subject to such Option shall again be
available for grants of Options under the Plan. No employee of the Company or
any Related Corporation may be
2.
<PAGE> 3
granted, during the term of the Plan, Options to acquire, in the aggregate, more
than 100,000 shares of Common Stock under the Plan. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject to such Option shall be included in the determination
of the aggregate number of shares of Common Stock deemed to have been granted to
such employee under the Plan.
5. Granting of Options. Options may be granted under the Plan
at any time after February 24, 1995 and prior to February 24, 2005. The date of
grant of an Option under the Plan will be the date specified by the Committee at
the time it grants the Option; provided, however, that such date shall not be
prior to the date on which the Committee acts to approve the grant. Options
granted under the Plan are intended to qualify as performance-based compensation
under Proposed Treasury Regulation Section 1.162-27.
6. Minimum Option Price; ISO Limitations.
a. Price for Non-Qualified Options. The exercise price per
share specified in the agreement relating to each Non-Qualified Option granted
under the Plan shall in no event be less than the minimum legal consideration
required therefor under the laws of the State of California or the laws of any
jurisdiction in which the Company or its successors in interest may be
organized.
b. Price for ISOs. The exercise price per share specified
in the agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such grant.
In the case of an ISO to be granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, the price per share specified
in the agreement relating to such ISO shall not be less than one hundred ten
percent (110%) of the fair market value per share of Common Stock on the date of
grant. For purposes of determining stock ownership under this paragraph, the
rules of Section 424(d) of the Code shall apply.
c. $100,000 Annual Limitation ISO Vesting. Each eligible
employee may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the Company
and any Related Corporation, ISOs do not become exercisable for the first time
by such employee during any calendar year with respect to stock having a fair
market value (determined at the time the ISOs were granted) in excess of
$100,000. The Company intends to designate any Options granted in excess of such
limitation as Non-Qualified Options.
d. Determination of Fair Market Value. If, at the time an
Option is granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date, the
last business day for which such prices or quotes are available
3.
<PAGE> 4
prior to the date of grant, and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then traded
on a national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market, if the Common Stock is
not then traded on a national securities exchange; or (iii) the closing bid
price (or average of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the Nasdaq National Market. However, if the Common Stock is not
publicly traded at the time an Option is granted under the Plan, "fair market
value" shall be deemed to be the fair value of the Common Stock as determined by
the Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided
in paragraphs 9 and 10 hereof or in the agreement relating to such Option, each
Option shall expire on the date specified by the Committee, but not more than
(i) ten years from the date of grant in the case of Options generally and (ii)
five years from the date of grant in the case of ISOs granted to an employee
owning stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Related Corporation, as
determined under paragraph 6(B). Subject to earlier termination as provided in
paragraphs 9 and 10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of such
ISO that is converted into a Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs
9 through 12, each Option granted under the Plan shall be exercisable as
follows:
a. Vesting. The Option shall either be fully exercisable on
the date of grant or shall become exercisable thereafter in such installments as
the Committee may specify.
b. Full Vesting of Installments. Once an installment
becomes exercisable it shall remain exercisable until expiration or termination
of the Option, unless otherwise specified by the Committee.
c. Partial Exercise. Each Option or installment may be
exercised at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.
d. Acceleration of Vesting. The Committee shall have the
right to accelerate the date on which any installment of any Option becomes
exercisable; provided that the Committee shall not, without the consent of an
optionee, accelerate the permitted exercise date of any installment of any
Option granted to any employee as an ISO (and not previously
4.
<PAGE> 5
converted into a Non-Qualified Option pursuant to paragraph 16) if such
acceleration would violate the annual vesting limitation contained in Section
422(d) of the Code, as described in paragraph 6(C).
9. Termination of Employment. Unless otherwise specified in
the agreement relating to such ISO, if an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of three
months from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. For purposes of this paragraph 9, employment
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
re-employment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. Nothing in the Plan shall be
deemed to give any optionee the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. Death; Disability.
a. Death. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his death, any ISO of his may
be exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the earlier of the specified
expiration date of the ISO or 180 days from the date of the optionee's death.
b. Disability. If an ISO optionee ceases to be employed by
the Company and all Related Corporations by reason of his disability, he shall
have the right to exercise any ISO held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he could
have exercised it on that date, at any time prior to the earlier of the
specified expiration date of the ISO or 180 days from the date of the
termination of the optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22(e)(3) of the Code or any successor statute.
11. Assignability. No Option shall be assignable or
transferable by the optionee except by will, by the laws of descent and
distribution or, in the case of Non-Qualified Options
5.
<PAGE> 6
only, pursuant to a valid domestic relations order. Except as set forth in the
preceding sentence, during the lifetime of an optionee each Option shall be
exercisable only by such optionee.
12. Terms and Conditions of Options. Options shall be
evidenced by instruments (which need not be identical) in such forms as the
Committee may from time to time approve. Such instruments shall conform to the
terms and conditions set forth in paragraphs 6 through 11 hereof and may contain
such other provisions as the Committee deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of
Common Stock issuable upon exercise of Options. The Committee may specify that
any Non-Qualified Option shall be subject to the restrictions set forth herein
with respect to ISOs, or to such other termination and cancellation provisions
as the Committee may determine. The Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
a. Stock Dividends and Stock Splits. If the shares of
Common Stock shall be subdivided or combined into a greater or smaller number of
shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
b. Consolidations or Mergers. If the Company is to be
consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"), the
Committee or the board of directors of any entity assuming the obligations of
the Company hereunder (the "Successor Board"), shall, as to outstanding Options,
either (i) make appropriate provision for the continuation of such Options by
substituting on an equitable basis for the shares then subject to such Options
either (a) the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition or (b) shares of stock of the
surviving corporation; or (ii) upon written notice to the optionees, provide
that all Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the Options shall terminate; or (iii) terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
c. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above)
6.
<PAGE> 7
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price paid
upon such exercise the securities he would have received ff he had exercised his
Option prior to such recapitalization or reorganization.
d. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall
be made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs or would cause adverse tax consequences to the
holders, it may refrain from making such adjustments.
e. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.
f. Issuance of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to Options. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company.
g. Fractional Shares. No fractional shares shall be issued
under the Plan and the optionee shall receive from the Company cash in lieu of
such fractional shares.
h. Adjustments. Upon the happening of any of the events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Options which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Option being
exercised and specify the number of shares as to which such Option is being
exercised, accompanied by full payment of the purchase price therefor either (a)
in United States dollars in cash or by check, (b) at the discretion of the
Committee, through delivery of shares of Common Stock having a fair market value
equal as of the date of the exercise to the cash exercise price of the Option,
(c) at the discretion of the Committee, by delivery of the optionee's personal
recourse note bearing interest payable not less than annually
7.
<PAGE> 8
at no less than 100% of the lowest applicable Federal rate, as defined in
Section 1274(d) of the Code, (d) at the discretion of the Committee and
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Option and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise, or (e) at the discretion of the
Committee, by any combination of (a), (b), (c) and (d) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b), (c), (d) or (e) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant
of the ISO in question. The holder of an Option shall not have the rights of a
shareholder with respect to the shares covered by his Option until the date of
issuance of a stock certificate to him for such shares. Except as expressly
provided above in paragraph 13 with respect to changes in capitalization and
stock dividends, no adjustment shall be made for dividends or similar rights for
which the record date is before the date such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the
Board on February 24, 1995, subject, with respect to the validation of ISOs
granted under the Plan, to approval of the Plan by the shareholders of the
Company at the next Meeting of Shareholders or, in lieu thereof, by written
consent. If the approval of shareholders is not obtained prior to February 24,
1996, any grants of ISOs under the Plan made prior to that date will be
rescinded. The Plan shall expire at the end of the day on February 24, 2005
(except as to Options outstanding on that date). Subject to the provisions of
paragraph 5 above, Options may be granted under the Plan prior to the date of
shareholder approval of the Plan. The Board may terminate or amend the Plan in
any respect at any time, except that, without the approval of the shareholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except by adjustment pursuant
to paragraph 13); (b) the benefits accruing to participants under the Plan may
not be materially increased; (c) the requirements as to eligibility for
participation in the Plan may not be materially modified; (d) the provisions of
paragraph 3 regarding eligibility for grants of ISOs may not be modified; (e)
the provisions of paragraph 6(B) regarding the exercise price at which shares
may be offered pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); (f) the expiration date of the Plan may not be
extended; and (g) the Board may not take any action which would cause the Plan
to fail to comply with Rule 16b-3. Except as otherwise provided in this
paragraph 15, in no event may action of the Board or shareholders alter or
impair the rights of an optionee, without his consent, under any Option
previously granted to him.
16. Conversion of ISOs into Non-Qualified Options. The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but shall not be limited to,
extending the exercise period or reducing the
8.
<PAGE> 9
exercise price of the appropriate installments of such ISOs. At the time of such
conversion, the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action.
17. Application of Funds. The proceeds received by the Company
from the sale of shares pursuant to Options granted under the Plan shall be used
for general corporate purposes.
18. Notice to Company of Disqualifying Disposition. By
accepting an ISO granted under the Plan, each optionee agrees to notify the
Company in writing immediately after he makes a Disqualifying Disposition (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. Withholding of Additional Income Taxes. Upon the exercise
of a Non-Qualified Option, the making of a Disqualifying Disposition (as defined
in paragraph 18), the vesting or transfer of restricted stock or securities
acquired on the exercise of an Option hereunder, or the making of a distribution
or other payment with respect to such stock or securities, the Company may
withhold taxes in respect of amounts that constitute compensation includable in
gross income. The Committee in its discretion may condition (i) the exercise of
an Option, or (ii) the vesting or transferability of restricted stock or
securities acquired by exercising a Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the optionee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. Governmental Regulation. The Company's obligation to sell
and deliver shares of the Common Stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance or sale of such shares.
Government regulations may impose reporting or other
obligations on the Company with respect to the Plan. For example, the Company
may be required to send tax information statements to employees and former
employees that exercise ISOs under the Plan, and the Company may be required to
file tax information returns reporting the income received by optionees in
connection with the Plan.
21. Governing Law; Construction. The validity and construction
of the Plan
9.
<PAGE> 10
and the instruments evidencing Options shall be governed by the laws of the
State of California, without giving effect to the principles of conflicts of law
thereof, or the laws of any jurisdiction in which the Company or its successors
in interest may be organized. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
Date Approved by Board of Directors of the Company: February 24,1995
Date Approved by Shareholders of the Company: , 1995
--------------------
10.
<PAGE> 1
EXHIBIT 99.2
Grant #______
TELEBIT CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
TELEBIT CORPORATION, a California corporation (the "Company"),
has granted to _______________________ (the "Optionee"), an option to purchase a
total of ______ shares of Common Stock (the "Shares"), at the price determined
as provided herein, and in all respects subject to the terms, definitions and
provisions of the 1985 Employee Stock Incentive Program (the "Program") adopted
by the Company which is incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Program shall have the same defined
meanings in this Option Agreement.
1. Nature of the Option. This Option is intended to qualify as
an Incentive Stock Option as defined in Section 422A of the Internal Revenue
Code of 1986 (the "Code").
2. Exercise Price. The exercise price is $___________ for each
share of Common Stock, which price is not less than the Fair Market Value per
share of Common Stock on the date of grant.
3. Exercise of Option. This Option shall be exercisable during
its term, unless waived by the Company, not more frequently than four (4) times
during any calendar year and in accordance with the provisions of Section 8 of
the Program as follows:
(a) Right to Exercise.
(i) Subject to subsections 3(a) (ii) and (iii), below,
this Option shall be exercisable immediately.
(ii) This Option may not be exercised for a fraction of
a share.
(iii) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitations contained in subsection
3(a)(iv).
(iv) In no event may this Option be exercised after the
date of expiration of the term of this Option as set forth in Section 10 below.
(b) Method of Exercise. This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of the Common Stock as may be required by the Company pursuant to
the provisions of the Program. Such written notice, attached hereto as Exhibit
1, shall be signed by the Optionee and shall be delivered in person or by
certified
<PAGE> 2
mail to the Secretary of the Company. The written notice shall be accompanied by
payment of the exercise price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the exercise price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
4. Method of Payment. Payment of the exercise price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash,
(b) check; or
(c) surrender of other Shares of Common Stock of the
Company which (i) either have been owned by the Optionee for more than six (6)
months on the date of surrender or were not acquired, directly or indirectly,
from the Company and (ii) have a Fair Market Value on the date of surrender
equal to the exercise price of the Shares as to which the Option is being
exercised.
5. Restrictions on Exercise. This Option may not be exercised
until such time as the Program has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. Termination of Status as an Employee. In the event of
termination of Optionee's Continuous Status as an Employee, Optionee may, but
only within thirty (30) days after the date of such termination (but in no event
later than the date of expiration of the term of this Option as set forth in
Section 10 below), exercise this Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE
AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES
2.
<PAGE> 3
HEREUNDER). THE OPTIONEE UNDERSTANDS THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL
CONFER ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHTS OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
7. Disability of Optionee. Notwithstanding the provisions of
Section 6 above, in the event of termination of Optionee's Continuous Status as
an Employee as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Internal Revenue Code), Optionee may, but only within
six (6) months from the date of termination of employment (but in no event later
than the date of expiration of the term of this Option as set forth in Section
10 below), exercise his or her Option to the extent otherwise so entitled at the
date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination or if Optionee does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
8. Death of Optionee. In the event of the death of Optionee:
(a) during the term of this Option and while an Employee of
the Company and having been in Continuous Status as an Employee since the date
of grant of the Option, the Option may be exercised, at any time within six (6)
months following the date of death, by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that Optionee on the date of death was entitled to exercise it at the
date of death; or
(b) within thirty (30) days after the termination of
Optionee's Continuous Status as an Employee, for any reason other than for cause
or a voluntary termination initiated by the Optionee, the Option may be
exercised, at any time within six (6) months following the date of death, by
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
9. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
10. Term of Option. This Option may not be exercised more than
five (5) years from the date of grant of this Option, and may be exercised
during such term only in accordance with the terms of the Program and the terms
of this Option.
3.
<PAGE> 4
11. Early Disposition of Stock. Optionee understands that if
he disposes of any Shares received under this Option within two (2) years after
the date of this Agreement or within one (1) year after such Shares were
transferred to him, he will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount generally
measured by the difference between the price paid for the Shares and the lower
of the fair market value of the Shares on the date of the exercise or the fair
market value of the Shares at the date of disposition. The amount of such
ordinary income may be measured differently if Optionee is an officer, director
or 10% shareholder of the Company, or if the Shares were subject to a
substantial risk of forfeiture at the time they were transferred to Optionee.
Optionee hereby agrees to notify the Company in writing within 30 days after the
date of any such disposition. Optionee understands that if he disposes of such
Shares at any time after the expiration of such two-year and one-year holding
periods, any gain on such sale will be taxed as long-term capital gain.
DATE OF GRANT: _____________________, 199__
TELEBIT CORPORATION,
a California corporation
By:
------------------------------------
Title:
---------------------------------
4.
<PAGE> 5
Optionee acknowledges receipt of a copy of the Program, a copy
of which is annexed hereto, and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee has had an opportunity to obtain the
advice of counsel prior to executing this Option and hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under the Program. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.
Dated:
-----------------------
--------------------------------------
Optionee
--------------------------------------
Social Security #
Residence Address:
--------------------------------------
--------------------------------------
5.
<PAGE> 6
CONSENT
The undersigned spouse of Optionee agrees that the spouse's
interest in the Stock subject to this Agreement shall be irrevocably bound by
this Agreement and further understands and agrees that any community property
interest, if any, shall be similarly bound by this Agreement.
--------------------------------------
Spouse of Optionee
6.
<PAGE> 1
Exhibit 99.3
Grant #______
EXHIBIT 1
To: Telebit Corporation
One Executive Drive
Chelmsford, MA 01824
Attention: Corporate Controller
Subject: Notice of Intention to Exercise Incentive Stock Option
In respect to the incentive stock option granted to
_______________ on _________, 199__ to purchase an aggregate of _________ shares
of Telebit's Common Stock, this is official notice that the undersigned intends
to exercise such option to purchase shares as follows:
Number of Shares: __________________________________
Date of Purchase: __________________________________
Mode of Payment: __________________________________
The Shares should be issued as follows:
Name: _____________________________________
Address: __________________________________
__________________________________
__________________________________
I HAVE READ AND FULLY UNDERSTAND THE COMPANY'S INSIDER TRADING POLICY, ADOPTED
AS OF JUNE 1, 1991, AND HEREBY DECLARE THAT I POSSESS NO "INSIDER INFORMATION"
AS DEFINED IN SAID POLICY.
Signed: ___________________________________
Date: _____________________________________
Social Security #: ________________________
<PAGE> 1
Exhibit 99.4
1995 STOCK OPTION PLAN
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 24th day of
October 1996 by Cisco Systems, Inc., a California corporation ("Cisco").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of the common stock of Telebit
Corporation, a Delaware corporation ("Telebit"), which were granted to Optionee
under the Telebit Corporation 1995 Stock Option Plan (the "Plan") and are
evidenced by a Stock Option Agreement (the "Option Agreement") between Telebit
and Optionee.
WHEREAS, Telebit has this day been acquired by Cisco through
merger of a wholly-owned Cisco subsidiary ("Acquisition Corporation") with and
into Telebit (the "Merger") pursuant to the Agreement and Plan of Merger dated
July 21, 1996 by and among Cisco, Telebit and Acquisition Corporation (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of Telebit under all unvested options outstanding
under the Plan at the consummation of the Merger and to issue to the holder of
each outstanding option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement,
the exchange ratio in effect for the Merger is .2113596 of a share of Cisco
common stock ("Cisco Stock") for each outstanding share of Telebit common stock
(the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately
upon the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Telebit common stock subject to the
stock options held by Optionee under the Plan immediately prior to the Effective
Time (the "Telebit Options") and the exercise price payable per share are set
forth in Exhibit A hereto. Cisco hereby assumes, as of the Effective Time, all
the duties and obligations of Telebit
<PAGE> 2
under each of the Telebit Options. In connection with such assumption, the
number of shares of Cisco Stock purchasable under each Telebit Option hereby
assumed and the exercise price payable thereunder have been adjusted to reflect
the Exchange Rate at which shares of Telebit common stock were converted into
shares of Cisco Stock in consummation of the Merger. Accordingly, the number of
shares of Cisco Stock subject to each Telebit Option hereby assumed shall be as
specified for that option in attached Exhibit B, and the adjusted exercise price
payable per share of Cisco Stock under the assumed Telebit Option shall be as
indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
Telebit Option is to assure that the spread between the aggregate fair market
value of the shares of Cisco 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 Telebit common
stock subject to the Telebit 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 Telebit Option immediately prior to the Merger.
3. The following provisions shall govern each Telebit Option
hereby assumed by Cisco:
- 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 Cisco, all references to "Shares", "Stock" or
"Common Stock" shall mean shares of Cisco Stock, and all references to the
Committee shall mean the Compensation Committee of the Cisco Board of Directors.
- The grant date and the expiration date of each assumed
Telebit Option and all other provisions which govern either the exercisability
or the termination of the assumed Telebit 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 Cisco
Stock.
- Each assumed Telebit 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 Cisco Stock subject to each such installment adjusted to
reflect the Exchange Rate. Accordingly, no accelerated vesting of the Telebit
Options shall be deemed to occur by reason of the Merger, and the grant date for
each assumed Telebit Option shall accordingly remain the same as in effect under
the applicable Option Agreement immediately prior to the Merger.
2.
<PAGE> 3
- 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 Cisco or any present or future Cisco
subsidiary, including (without limitation) Telebit. Accordingly, the provisions
of the Option Agreement governing the termination of the assumed Telebit Option
upon the Optionee's cessation of employee status with Telebit shall hereafter be
applied on the basis of the Optionee's cessation of employee status with Cisco
and its subsidiaries, and each assumed Telebit Option shall accordingly
terminate, within the designated time period in effect under the Option
Agreement for that option, following such cessation of employment with Cisco and
its subsidiaries.
- The adjusted exercise price payable for the Cisco Stock
subject to each assumed Telebit 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 Cisco Stock delivered in payment
of such adjusted exercise price, the period for which such shares were held as
Telebit common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Telebit Option,
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: Christine Calice
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Cisco 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 ________, 1996.
CISCO SYSTEMS, INC.
By:
-------------------------------------
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 Telebit Options hereby assumed by Cisco Systems,
Inc. are as set forth in the Option Agreement, the Plan and such Stock Option
Assumption Agreement.
-----------------------------------------
OPTIONEE
DATED: __________________, 1996
4.
<PAGE> 5
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of Telebit Corporation
Common Stock (Pre-Merger)
<PAGE> 6
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc.
Common Stock (Post-Merger)
<PAGE> 1
Exhibit 99.5
MEMORANDUM
TO: Holders of Telebit Corporation 1995 Stock Option Plan Unvested Options
FROM: Cisco Systems, Inc.
DATE: October 24, 1996
RE: Assumption of Stock Options
- -------------------------------------------------------------------------------
As you know, Telebit Corporation ("Telebit") was recently acquired by
Cisco Systems, Inc. ("Cisco") through a merger effected on October 24, 1996
(the "Merger").
In connection with this transaction, Cisco has assumed all of your
outstanding unvested Telebit stock options under the Telebit 1995 Stock Option
Plan so that those options now cover shares of Cisco common stock. Several
additional changes to your options were also made as part of the assumption
process. These changes are set forth in the Stock Option Assumption Agreement
attached hereto and may be summarized as follows:
1. The number of shares of Cisco common stock subject to your option
reflects the ratio at which shares of Telebit common stock were exchanged
for shares of Cisco common stock in the Merger. That ratio was 0.2113596
of a share of Cisco common stock for each share of Telebit common stock
(the "Exchange Ratio"). Accordingly, the number of Cisco shares now
subject to your option is equal to the number of shares of Telebit common
stock which were subject to your option immediately before the Merger,
multiplied by the Exchange Ratio and rounded down to the next whole share.
2. The aggregate exercise price payable for the shares of Cisco common
stock now subject to your option is in substance the same as the price
that was in effect for the shares of Telebit common stock purchasable
under your option immediately prior to the Merger. However, the exercise
price per share has been adjusted to reflect the Exchange Ratio in
accordance with applicable tax and accounting rules.
<PAGE> 2
3. No change has been made to the vesting schedule in effect for your
option. Your Cisco option will continue to vest in accordance with the same
installment vesting schedule in effect under your Telebit option, with the
number of Cisco shares subject to each such installment adjusted to reflect
the Exchange Ratio. However, you will now earn vesting credit not only for
the period you continue in employment or service with Telebit after the
Merger but also for any period of service you may complete as an employee
of Cisco or any other Cisco subsidiary should you subsequently transfer
within the Cisco organization.
Attached are two copies of the Stock Option Assumption Agreement
pursuant to which Cisco has assumed your Telebit options with the adjustments
discussed above. Please review the agreement carefully so that you understand
your rights to acquire Cisco shares. You should contact Christine Calice at
Cisco at (408) 526-4000 if you have any questions. After you have reviewed the
agreement, please sign one copy and return it to Ms. Calice in the pre-addressed
envelope enclosed.
The other copy of the Stock Option Assumption Agreement should be
attached to your existing option documentation so that you will have a complete
record of all the terms and provisions applicable to your option as now assumed
by Cisco.
2.
