<PAGE> 1
As filed with the Securities and Exchange Commission on October 23, 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)
GRANITE SYSTEMS, INC.
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 1,700,458 N/A N/A N/A
Common Stock 1,700,458 $0.05 $85,022.90 $29.32
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Granite Systems, Inc. 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 31, 1995 filed with the Commission pursuant to Section 13
of the Securities Exchange Act of 1934 (the "1934 Act").
(b) (1) The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended October 31, 1995, January 31, 1996 and
April 30, 1996, filed with the Commission on December 12,
1995, March 13, 1996 and June 12, 1996, respectively.
(2) The Registrant's reports on Form 8-K filed with the Commission
on December 6, 1995, April 2, 1996, April 26, 1996 and
October 1, 1996, and any amendments thereto.
(3) The Registrant's reports on Form 10-C filed with the
Commission on February 26, 1996 and July 11, 1996.
(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 Granite Systems, Inc. 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 Granite
Systems, Inc. 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 Granite Systems, Inc. 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 9th day of October, 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:
Signatures Title Date
- ---------- ----- ----
/s/ John T. Chambers President, Chief Executive October 9, 1996
- ----------------------- Officer and Director (Principal
John T. Chambers Executive Officer)
/s/ Larry R. Carter Vice President, Finance and October 9, 1996
- ----------------------- Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and
Accounting Officer)
/s/ John P. Morgridge Chairman of the Board October 9, 1996
- ----------------------- and Director
John P. Morgridge
II-4.
<PAGE> 6
Signatures Title Date
- ---------- ----- ----
/s/ Donald T. Valentine Director October 9, 1996
- -----------------------
Donald T. Valentine
/s/ Michael S. Frankel Director October 9, 1996
- -----------------------
Michael S. Frankel
/s/ James F. Gibbons Director October 9, 1996
- -----------------------
James F. Gibbons
/s/ Robert L. Puette Director October 9, 1996
- -----------------------
Robert L. Puette
/s/ Masayoshi Son Director October 9, 1996
- -----------------------
Masayoshi Son
/s/ Steven M. West Director October 9, 1996
- -----------------------
Steven M. West
/s/ Richard M. Moley Director October 9, 1996
- -----------------------
Richard M. Moley
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 Granite Systems, Inc. 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 Granite
Systems, Inc. 1995 Stock Option Plan.
<PAGE> 1
EXHIBIT 5.0
October 23, 1996
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 1,700,458 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 1,700,458 shares of the common
stock ("Common Stock") of Cisco Systems, Inc. (the "Company") issuable under the
Granite Systems, Inc. 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,
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our reports dated August 15,
1995, with respect to the financial statements and schedule of Cisco Systems,
Inc. for the years ended July 30, 1995, included in the Annual Report (Form
10-K) for 1995, filed with the Securities and Exchange Commission, in the
Registration Statement on Form S-8 of Cisco Systems, Inc. for the registration
of 1,700,458 shares of its common stock and 1,700,458 options to purchase shares
of its common stock.
COOPERS & LYBRAND L.L.P.
San Jose, California
October 17, 1996
<PAGE> 1
EXHIBIT 99.1
GRANITE SYSTEMS, INC.
1995 STOCK OPTION PLAN
(AMENDED DECEMBER 20, 1995)
(Adjusted to reflect two-for-one
stock split, effective February 7, 1996)
(FURTHER AMENDED JUNE 30, 1996)
1. Purposes of the Plan. The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Granite Systems, Inc., a California
corporation.
(g) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means
that
<PAGE> 2
the employment or consulting relationship is not interrupted or terminated by
the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (1) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; provided, further, that on the ninety-first day of
any such leave (where reemployment is not guaranteed by contract or statute) an
Optionee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.
(i) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(j) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported, as quoted on such exchange or system for the last market trading day
prior to the time of determination) as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock; or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
(m) "Incentive Stock Option" means an Option intended to
qualify as
2.
<PAGE> 3
an incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(o) "Option" means a stock option granted pursuant to the
Plan.
(p) "Optioned Stock" means the Common Stock subject to an
Option.
(q) "Optionee" means an Employee or Consultant who receives an
Option.
(r) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(s) "Plan" means this 1995 Stock Option Plan.
(t) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 18 below.
(u) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
11 of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is ten million (10,000,000) shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any, upon
which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.
(b) Plan Procedure After the Date, if any, Upon Which the
Company Becomes Subject to the Exchange Act.
(i) Administration With Respect to Directors and
Officers. With respect to grants of Options to Employees who are also officers
or directors
3.
<PAGE> 4
of the Company, the Plan shall be administered by (A) the Board if the Board may
administer the Plan in compliance with Rule 16b-3 promulgated under the Exchange
Act or any successor thereto ("Rule 16b-3") with respect to a plan intended to
qualify thereunder as a discretionary plan, or (B) a committee designated by the
Board to administer the Plan, which committee shall be constituted in such a
manner as to permit the Plan to comply with Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. 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, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Rule 16b-3 with respect to a
plan intended to qualify thereunder as a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither directors nor
officers.
(iii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options to Employees or Consultants
who are neither directors nor officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of California corporate and securities laws, of the Code, and of any
applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. 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, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(c) Powers of the Administrator. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom
Options may from time to time be granted hereunder;
4.
<PAGE> 5
(iii) to determine whether and to what extent
Options are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vii) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(f) instead of
Common Stock;
(viii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted; and
(ix) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company
5.
<PAGE> 6
or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined at the time such Options are
granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment relationship with the Company, nor shall
it interfere in any way with his or her right or the Company's right to
terminate his or her employment relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. Term of Option. The term of each Option shall be the term stated
in the Option Agreement; provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. However, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator.
6.
<PAGE> 7
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, (6) any combination of the foregoing methods of payment, or (7)
such other consideration as the Administrator deems acceptable. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and as set forth in the Notice of
Grant, including performance criteria with respect to the Company and/or the
Optionee, and as shall be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
7.
<PAGE> 8
(b) Termination of Employment. In the event of termination of
an Optionee's Continuous Status as an Employee or Consultant with the Company
(but not in the event of a change of status from Employee to Consultant (in
which case an Employee's Incentive Stock Option shall be treated as a
Nonstatutory Stock Option on the day that is three months and one day following
such change of status) or from Consultant to Employee), such Optionee may, but
only within such period as is set forth in the Option Agreement, (and in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise his or her Option to the extent that Optionee
was vested at the date of such termination and to the extent that such Option is
or becomes exercisable during such period. To the extent that Optionee was not
vested in the Option at the date of such termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified in the
Option Agreement, the Option shall terminate.
(c) Disability of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of
Disability, Optionee may, but only within such period as is set forth in the
Option Agreement, (and in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that Optionee was vested at the date of such termination and to the
extent that such Option is or becomes exercisable during such period. However,
if such exercise occurs more than twelve (12) months from the date of
termination, an Employee's Incentive Stock Option shall be treated as a
Nonstatutory Stock Option. To the extent that Optionee was not vested at the
date of such termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified in the Option Agreement, the Option
shall terminate.
(d) Death of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of the
death of an Optionee, the Option may be exercised, but only within such period
as is set forth in the Option Agreement, ( and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), to the extent that such Option is or becomes exercisable during such
period, by the 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 the
Option was vested at the date of death. To the extent that the Option was not
vested at the date of death, or if the Option is not exercised to the extent
entitled within the time specified in the Option Agreement, the Option shall
terminate.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the
8.
<PAGE> 9
time that such offer is made.
10. Non-Transferability of Options. Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
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 of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, the Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, if so provided in an Optionee's individual Option
Agreement, in lieu of such assumption or substitution, provide for the Optionee
to have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If not so
provided in an Optionee's individual Option Agreement, the Option shall
terminate as of the date of the closing of the merger or asset sale.
9.
<PAGE> 10
For the purposes of this section, the Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
12. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such awards
shall remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such award and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of
10.
<PAGE> 11
counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
16. Agreements. Options shall be evidenced by written agreements in
such form as the Board shall approve from time to time.
17. Shareholder Approval. Options issued under the Plan shall be
subject to approval of the Plan by the shareholders of the Company within twelve
(12) months before or after the date the Plan is adopted. Such shareholder
approval shall be obtained in the degree and manner required under applicable
state and federal law and the rules of any stock exchange upon which the Common
Stock is listed.
11.
<PAGE> 1
EXHIBIT 99.2
GRANITE SYSTEMS, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of
the Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number _______
Date of Grant _______
Vesting Commencement Date _______
Exercise Price per Share $_______
Total Number of Shares Granted _______
Total Exercise Price $_______
Type of Option: _______ Incentive Stock Option
_______ Nonstatutory Stock Option
Term Expiration Date: _______
Exercise Schedule.
Regardless of whether and to what extent this Option has
vested, it shall not be exercisable until the earliest of the following:
<PAGE> 2
- the Company becomes a "C" corporation, as such term is defined
in Code Section 1361(a)(2);
- immediately prior to the date the Company merges with or into
another corporation or sells substantially all of its assets;
- the Company undertakes an offering of shares of common stock
registered under Form S-1 (or any successor form) with the
Securities and Exchange Commission under the Securities Act of
1933, as amended;
- eight (8) years after the Vesting Commencement Date.
Vesting Schedule:
Subject to accelerated vesting as described below, 25% of the
Shares subject to the Option shall vest twelve months after the Vesting
Commencement Date, and 1/48 of the Shares subject to the Option shall vest each
month thereafter on the day of each calendar month that corresponds to the day
of the vesting commencement date but only if Optionee is a Consultant or
Employee of the Company on the applicable vesting date; provided that for
purposes of calculating such monthly vesting after the first anniversary of the
vesting commencement date, if the day of the month for such vesting does not
occur in any month, the vesting date for such month shall be deemed to be the
last calendar day of such month (for example, if a vesting commencement date
falls on the 31st of a month, the vesting date for April and each other month
with only 30 days shall be the 30th day of the month); provided, however, that
if Optionee provides services to the Company on a part-time basis, vesting
hereunder shall be pro-rated accordingly; provided, further, that if Optionee
goes on a leave of absence from the Company, vesting hereunder shall cease for
the duration of such leave of absence.
Assumption, Substitution or Accelerated Vesting upon Merger:
In the event of a merger of the Company with or into another
corporation, this Option shall be assumed or an equivalent option or right may
be substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation; provided, however, that if such successor corporation or
a Parent or Subsidiary of the successor corporation refuses to so assume or
substitute this Option, 100% of the Shares subject to this Option shall vest
prior to the merger, but only if Optionee is a Consultant or Employee of the
Company on the applicable vesting date. If this Option becomes exercisable in
the event of a merger, the Administrator shall notify Optionee that this Option
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and this Option will terminate upon the expiration of such period.
2.
<PAGE> 3
Termination Period:
This Option, to the extent vested and exercisable, may be
exercised for three months after termination of Optionee's employment or
consulting relationship (extended to twelve months if such termination is
because of Optionee's death or Disability) but in no event later than the Term
Expiration Date as set forth above; provided, however, that if upon the date of
termination of Optionee's employment or consulting relationship this Option is
fully or partially vested but is not exercisable, then, to the extent that this
Option was vested on such date, it shall remain in fill force and effect and not
terminate until six months (or more than three months, up to a maximum of twelve
months, if Optionee's termination of employment or consulting relationship
pursuant to Optionee's death or Disability occurred nine or fewer months prior
to this Option becoming exercisable) after the date it becomes exercisable, but
in no event later than the Term/Expiration Date as provided above. After such
period, and, in any event, to the extent not vested at the time of the
termination of Optionee's employment or consulting relationship, the Option
shall terminate. Moreover, if an Optionee exercises his or her Option more than
three months after the date of termination of such Optionee's employment or
consulting relationship with the Company (extended to twelve months if such
termination is because of Optionee's death or Disability), such Option shall be
treated as a Nonstatutory Stock Option.
II. AGREEMENT
1. Grant of Option. Granite Systems, Inc., a California
corporation (the "Company"), hereby grants to the Optionee named in the Notice
of Grant (the "Optionee"), an option (the "Option") to purchase a total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the 1995 Stock
Option Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option.
If designated in the Notice of Grant as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option.
2. Exercise of Option. This Option shall be exercisable during
its term in accordance with the Exercise Schedule set out in the Notice of Grant
and with the provisions of Section 9 of the Plan as follows:
3.
<PAGE> 4
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction
of a share.
(b) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is covered by
the Exercise Schedule in the Notice of Stock Option Grant.
(c) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in the Notice of
Stock Option Grant.
(ii) Method of Exercise. This Option shall be
exercisable by written notice (in the form attached as Exhibit A) 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
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified 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.
3. Optionee's Representation. In the event the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his
Investment Representation Statement in the form attached hereto as Exhibit B,
and shall read the applicable rules of the Commissioner of Corporations attached
to such Investment Representation Statement.
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:
(i) cash; or
(ii) check; or
4.
<PAGE> 5
(iii) surrender of other shares of Common Stock of the
Company which (A) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by the Optionee for more than six (6) months on
the date of surrender, and (B) 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; or
(iv) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery, to
the Company of the sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. In addition to the restrictions
contained in the Exercise Schedule in the Notice of Stock Option Grant, this
Option may not be exercised until such time as the Plan has been approved by the
shareholders of the Company, or if the issuance of such 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. 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 him.
The terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
7. Term of Option. This Option may be exercised only within
the term set out in the Notice of Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option. The limitations
set out in Section 7 of the Plan regarding Options designated as Incentive Stock
Options and Options granted to more than ten percent (10%) shareholders shall
apply to this Option.
8. Taxation Upon Exercise of Option. Optionee understands
that, upon exercising a Nonstatutory Option, he or she will recognize income for
tax purposes in an amount equal to the excess of the then fair market value of
the Shares over the exercise price. However, the timing of this income
recognition may be deferred for up to six months if Optionee is subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If the Optionee is an employee, the Company will be required to withhold
from Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying disposition of an
Incentive Stock
5.
<PAGE> 6
Option. The Optionee shall satisfy his or her tax withholding obligation arising
upon the exercise of this Option out of Optionee's compensation or by payment to
the Company.
9. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal and California tax consequences
of exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(i) Exercise of ISO. If this Option qualifies as an
ISO, there will be no regular federal income tax liability or California income
tax liability upon the exercise of the Option, although the excess, if any, of
the fair market value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject the Optionee to the alternative minimum tax
in the year of exercise.
(ii) Exercise of Nonstatutory Stock Option. There may
be a regular federal income tax liability and California income tax liability
upon the exercise of a Nonstatutory Stock Option. The Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the date
of exercise over the Exercise Price. If Optionee is an employees, the Company
will be required to withhold from Optionee's compensation or collect from
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(iii) Disposition of Shares. In the case of an NSO, if
Shares are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and California
income tax purposes. In the case of an ISO, if Shares transferred pursuant to
the Option are held for at least one year after exercise and are disposed of at
least two years after the Date of Grant, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
such one-year period or within two years after the Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the Exercise
Price and the lesser of (1) the fair market value of the Shares on the date of
exercise, or (2) the sale price of the Shares.
(iv) Notice of Disqualifying Disposition of ISO Shares.
If the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition. Optionee
6.
<PAGE> 7
agrees that Optionee may be subject to income tax withholding by the Company on
the compensation income recognized by the Optionee.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan 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 reviewed the Plan and this Option in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
GRANITE SYSTEMS, INC.
a California corporation
By:_____________________________________
Dated:__________________ ________________________________________
Optionee
7.
<PAGE> 1
EXHIBIT 99.3
EXHIBIT A
1995 STOCK PLAN
EXERCISE NOTICE
Granite Systems, Inc.
2400 Bayshore Parkway
Mountain View, CA 94043
1. Exercise of Option. Effective as of today,
________________________, 19 ____________, the undersigned ("Optionee") hereby
elects to exercise Optionee's option to purchase _________________ shares of the
Common Stock (the "Shares") of Granite Systems. Inc. (the "Company") under and
pursuant to the 1995 Stock Option Plan, as amended (the "Plan") and the [ ]
Incentive [ ] Nonstatutory Stock Option Agreement dated
_________________________ (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate
evidencing such Shares is issued (as evidenced by the appropriate entry on the
books of the Company or of a duty authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 12 of the Plan.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal hereunder. Upon such exercise, Optionee
shall have no further rights as a holder of the Shares so purchased except the
right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
4. Company's Right of First Refusal. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal"),
<PAGE> 2
a. Notice of Proposed Transfer. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating: (i)
the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii)
the name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
b. Exercise of Right of First Refusal. At any time
within thirty (3O) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase some
or all of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
c. Purchase Price. The purchase price ("Purchase
Price") for the Shares purchased by the Company or its assignee(s) under this
Section shall be the Offered Price. If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.
d. Payment. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
e. Holders Right to Transfer. If some or all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply to
the Shares in the hands of such Proposed Transferee. If the Shares described in
the Notice are not transferred to the Proposed Transferee within such period, a
new Notice shall be given to the Company, and the Company and/or its assignees
shall again be offered the Right of First Refusal before any Shares held by the
Holder may be sold or otherwise transferred.
f. Exception for Certain Family Transfers. Anything
to the contrary contained in this Section notwithstanding, upon the approval of
the Administrator, the transfer of any or all of the Shares during the
Optionee's lifetime or on the Optionee's death by will or intestacy to the
Optionee's immediate family or a trust for the benefit of the Optionee's
immediate family shall be exempt from the provisions of this Section. "Immediate
Family" as
2.
<PAGE> 3
used herein shall mean spouse, lineal descendant or antecedent, father, mother,
brother or sister. In such case, the transferee or other recipient shall receive
and hold the Shares so transferred subject to the provisions of this Section,
and there shall be no further transfer of such Shares except in accordance with
the terms of this Section.
g. Termination of Right of First Refusal. The Right
of First Refusal shall terminate as to any Shares 90 days after the first sale
of Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the 1933) Act.
5. Tax Consultation. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted with
any tax consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
a. Legends. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER
OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.
3.
<PAGE> 4
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit B, the Investment
Representation Statement.
b. Stop-Transfer Notices. Optionee agrees that in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
c. Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. Successors and Assigns. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
8. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The good faith
resolution of such a dispute by the Board or committee shall be final and
binding on the Company and on Optionee.
9. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
excluding that body of law pertaining to conflicts of law. Should any provision
of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
10. Notices. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and
fees prepaid, addressed to the other party
4.
<PAGE> 5
at its address as shown below beneath its signature, or to such other address as
such party may designate in writing from time to time to the other party.
11. Further Instruments. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
12. Delivery of Payment. Optionee herewith delivers to the
Company the full Exercise Price for the Shares.
13. Entire Agreement. The Plan and Notice of Grant/Option
Agreement are incorporated herein by reference. This Agreement, the Plan, the
Option Agreement and the Investment Representation Statement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and is governed by California law except for that body of
law pertaining to conflict of laws.
Submitted by:
OPTIONEE:
________________________________________
(Signature)
Address:
________________________________________
________________________________________
Accepted by:
GRANITE SYSTEMS, INC.
By:_____________________________________
Its:____________________________________
2400 Bayshore Parkway
Mountain View, CA 94043
5.
<PAGE> 1
EXHIBIT 99.4
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF GRANITE SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
OPTION ASSUMPTION AGREEMENT issued as of the 27th day of
September 1996 by Cisco Systems, Inc., a California corporation ("Cisco").
WHEREAS, the undersigned Optionee is the holder of one or more
outstanding options to purchase shares of the common stock of Granite Systems,
Inc., a California corporation ("Granite"), which were granted to Optionee
pursuant to the Granite Systems, Inc. 1995 Stock Option Plan (the "Option Plan")
and are evidenced by a Stock Option Agreement (the "Option Agreement") between
Granite and Optionee.
WHEREAS, Granite has this day been acquired by Cisco through
merger of Granite with Cisco (the "Merger") pursuant to the Agreement and Plan
of Merger dated September 27, 1996 (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume the obligations of Granite 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 0.221992
shares of Cisco common stock ("Cisco Stock") for each outstanding share of
Granite common stock ("Granite 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.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Granite Stock subject to the stock
options held by Optionee under the Option Plan immediately prior to the
Effective Time (the "Granite Options") and the exercise price payable per share
are set forth below. Cisco
<PAGE> 2
hereby assumes, as of the Effective Time, all the duties and obligations of
Granite under each of the Granite 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>
GRANITE CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# of Shares # of Shares Adjusted
Common Stock Exercise Common Stock Exercise
Granite 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
Granite Option hereby assumed and the exercise price payable thereunder reflect
the Exchange Rate at which shares of Granite 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 Granite 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 Granite Stock subject to the
Granite 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 Granite Option
immediately prior to the Merger.
3. The following provisions shall govern each Granite 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," "Optioned Stock" or "Shares" shall mean shares of Cisco Stock, all
references to "Board" or "Administrator" shall mean the Compensation Committee
of the Cisco Board of Directors.
- The grant date and the expiration date of each assumed
Granite Option and all other provisions which govern the termination of each
such assumed Granite 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.
2.
<PAGE> 3
- Each assumed Granite Option shall vest 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 vesting of the Granite Options shall be
deemed to occur by reason of the Merger, and the vesting dates under each
applicable Option Agreement shall remain the same.
- The adjusted exercise price payable for the Cisco Stock
subject to each assumed Granite 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
Granite Option, the period for which such shares were held as Granite Stock
prior to the Merger shall be taken into account.
- In order to exercise each assumed Granite 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) Granite.
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 27th day of September, 1996.
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 Granite 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: , 1996
-----------------
4.
<PAGE> 1
EXHIBIT 99.5
MEMORANDUM
TO: Holder of Granite Systems, Inc. Incentive and Nonstatutory Stock Options
FROM: Cisco Systems, Inc.
DATE: September 27, 1996
RE: Assumption of Stock Options
As you know, Granite Systems, Inc. ("Granite") was recently
acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on September
27, 1996 (the "Merger").
In connection with this transaction, Cisco has assumed all of
your outstanding Granite stock options 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 Granite common stock were
exchanged for shares of Cisco common stock in the Merger. That ratio
was 0.221992 of a share of Cisco common stock for each share of Granite
common stock (the "Exchange Ratio"). Accordingly, the number of Cisco
shares now subject to your option is equal to the number of shares of
Granite 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 the same as the price
that was in effect for the shares of Granite 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. Accordingly, the exercise price per share in effect under your
option immediately before the Merger has been divided by 0.221992 to
establish the price per share payable for the Cisco common stock.
<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 Granite
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 Granite 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 Granite 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.
