<PAGE>
As filed with the Securities and Exchange Commission on April 1, 1996
Registration No. 33-________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
CISCO SYSTEMS, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
------------------------
TGV SOFTWARE, INC.
1995 STOCK OPTION PLAN
1990 STOCK 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 159,800 N/A N/A N/A
Common Stock
Common Stock 159,800 $9.187 $1,468,082.60 $506.23
1990 Stock Plan
- ---------------
Options to Purchase 361,695 N/A N/A N/A
Common Stock
Common Stock 361,695 $3.426 $1,239,167.07 $427.30
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of Common
Stock which become issuable under the TGV Software, Inc. 1995 Stock Option
Plan and 1990 Stock 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>
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 30, 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 29, 1995 and January 28, 1996.
(2) The Registrant's report on Form 8-K filed with the
Commission on December 6, 1995.
(3) The Registrant's report on Form 10-C filed with the
Commission on February 26, 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 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.
Item 4. Description of Securities
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended 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.
II-1
<PAGE>
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
4.0 Reference is made to Registrant's Registration Statement No. 0-18225
on Form 8-A and Amendment No. 1 thereto, which are incorporated
herein by reference pursuant to Item 3(c) of this Registration
Statement.
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 TGV Software, Inc. 1995 Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement used in connection with
the 1995 Stock Option Plan.
99.3 Form of Directors' Non-Qualified Stock Option Agreement used in
connection with the 1995 Stock Option Plan.
99.4 Form of Stock Option Assumption Agreement used in connection with
the 1995 Stock Option Plan.
99.5 TGV, Inc. 1990 Stock Plan.
99.6 Form of Non-Qualified Stock Option Agreement used in connection with
the 1990 Stock Plan.
99.7 Non-Qualified Stock Option Agreement under the 1990 Stock Plan -
Craig A. Conway.
99.8 Non-Qualified Stock Option Agreement under the 1990 Stock Plan -
Gary Valenzuela.
99.9 Form of Stock Option Assumption Agreement used in connection with
the 1990 Stock Plan.
</TABLE>
Item 9. Undertakings
------------
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
--------
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
into the Registration Statement; (2) that for the purpose of determining any
liability under the 1933 Act each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the TGV Software, Inc. 1995 Stock Option
Plan and/or 1990 Stock Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into the Registration Statement shall be deemed to be
II-2
<PAGE>
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>
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 29th day of March, 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
capacitates, to sing 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>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ John T. Chambers President, Chief Executive March 29, 1996
- ----------------------- Officer and Director (Principal
John T. Chambers Executive Officer)
/s/ Larry R. Carter Vice President, Finance and March 29, 1996
- ----------------------- Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and
Accounting Officer)
/s/ John P. Morgridge Chairman of the Board March 29, 1996
- ---------------------- and Director
John P. Morgridge
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Donald T. Valentine Director March 29, 1996
- ------------------------
Donald T. Valentine
/s/ Michael S. Frankel Director March 29, 1996
- ------------------------
Michael S. Frankel
/s/ James F. Gibbons Director March 29, 1996
- ------------------------
James F. Gibbons
/s/ Robert L. Puette Director March 29, 1996
- --------------------
Robert L. Puette
/s/ Masayoshi Son Director March 29, 1996
- ----------------------
Masayoshi Son
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
4.0 Reference is made to Registrant's Registration Statement No. 0-18225
on Form 8-A and Amendment No. 1 thereto, which are incorporated
herein by reference pursuant to Item 3(c) of this Registration
Statement.
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 TGV Software, Inc. 1995 Stock Option Plan.
99.2 Form of Non-Qualified Stock Option Agreement used in connection with
the 1995 Stock Option Plan.
99.3 Form of Directors' Non-Qualified Stock Option Agreement used in
connection with the 1995 Stock Option Plan.
99.4 Form of Stock Option Assumption Agreement used in connection with
the 1995 Stock Option Plan.
99.5 TGV, Inc. 1990 Stock Plan.
99.6 Form of Non-Qualified Stock Option Agreement used in connection with
the 1990 Stock Plan.
99.7 Non-Qualified Stock Option Agreement under the 1990 Stock Plan -
Craig A. Conway.
99.8 Non-Qualified Stock Option Agreement under the 1990 Stock Plan -
Gary Valenzuela.
99.9 Form of Stock Option Assumption Agreement used in connection with
the 1990 Stock Plan.
</TABLE>
<PAGE>
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
<PAGE>
March 29, 1996
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 521,495 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 (i) 159,800 shares of the
common stock ("Common Stock") of Cisco Systems, Inc. (the "Company") issuable
under the TGV Software, Inc. 1995 Stock Option Plan and (ii) 361,695 shares of
Common Stock issuable under the TGV Software, Inc. 1990 Stock Plan (the "Option
Plans") as those Options Plans have been assumed by the Company on March 29,
1996. We advise you that, in our opinion, when such shares have been issued and
sold pursuant to the applicable provisions of the Option Plans 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>
EXHIBIT 23.1
Consent of Independent Accountants - Coopers & Lybrand L.L.P.
<PAGE>
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 year 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 521,495
shares of its common stock and 521,495 options to purchase shares of its common
stock.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Jose, California
March 29, 1996
<PAGE>
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5
<PAGE>
EXHIBIT 24
Power of Attorney. Reference is made to page II-4 of
this Registration Statement
<PAGE>
EXHIBIT 99.1
TGV Software, Inc. 1995 Stock Option Plan
<PAGE>
TGV SOFTWARE, INC.
1995 STOCK OPTION PLAN
----------------------
1. Establishment, Purpose and Definitions.
--------------------------------------
(a) There is hereby adopted the 1995 Stock Option Plan (the "Plan") of
TGV Software, Inc. (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in Section 4, below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an opportunity
to purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and employees,
officers, directors, independent contractors, and consultants of the Company and
of its Affiliates an opportunity to purchase shares of Stock pursuant to options
which are not described in Sections 422 or 423 of the Code (referred to as
"nonqualified stock options").
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). Subject to Section 2(e) below, the Board may delegate the
responsibility for administering the Plan to a committee, under such terms and
conditions as the Board shall determine (the "Committee"). The Committee shall
consist of two or more members of the Board or such lesser number of members of
the Board as permitted by Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended ("Rule 16b-3"). None of the members of the Committee
shall receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (i) the Plan or (ii) any other plan of the Company or its affiliates under
which the participants are entitled to acquire Stock (including restricted
Stock), stock options, stock bonuses, related rights or stock appreciation
rights of the Company or any of its Affiliates, other than pursuant to the grant
of automatic options provided in Section 7 below and pursuant to transactions in
any such other plan which do not disqualify a director from being a
disinterested person under Rule 16b-3. The limitations set forth in this Section
2(a) shall automatically
<PAGE>
incorporate any additional requirements that may in the future be necessary for
the Plan to comply with Rule 16b-3. Members of the Committee shall serve at the
pleasure of the Board. The Committee shall select one of its members as
chairman, and shall hold meetings at such times and places as it may determine.
A majority of the Committee shall constitute a quorum and acts of the Committee
at which a quorum is present, or acts reduced to or approved in writing by all
the members of the Committee, shall be the valid acts of the Committee. If the
Board does not delegate administration of the Plan to the Committee, then each
reference in this Plan to "the Committee" shall be construed to refer to the
Board.
(b) Except for options granted to Non-Employee Directors pursuant to
Section 7, the Committee shall determine which eligible individuals (as defined
in Section 4, below) shall be granted options under the Plan, the timing of such
grants, the terms thereof (including any restrictions on the Stock), and the
number of shares subject to such options.
(c) Except for options granted to Non-Employee Directors pursuant to
Section 7, the Committee may amend the terms of any outstanding option granted
under this Plan, but any amendment which would adversely affect the optionee's
rights under an outstanding option shall not be made without the optionee's
written consent. The Committee may, with the optionee's written consent, cancel
any outstanding stock option or accept any outstanding stock option in exchange
for a new option.
(d) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants. Notwithstanding the foregoing, the Committee shall
not exercise any discretionary functions with respect to options granted to Non-
Employee Directors pursuant to Section 7.
(e) Notwithstanding the foregoing provisions of this Section 2, grants
of options to any "Covered Employee, " as such term is defined by Section 162(m)
of the Code shall be made only by a subcommittee of the Committee which, in
addition to meeting other applicable requirements of this Section 2, is composed
solely of two or more "outside directors" within the meaning of Section 162(m)
of the Code and the regulations thereunder (the "Subcommittee") to the extent
necessary to qualify such grants as "performance-based compensation" under
Section 162(m). In the case of such grants to Covered Employees, references to
the "Committee" shall be deemed to be references to the Subcommittee as
specified above.
2
<PAGE>
3. Stock Subject to the Plan.
-------------------------
(a) An aggregate of not more than 500,000 shares of Stock shall be
available for the grant of stock options under the Plan, of which not more than
50,000 shares shall be available for the grant of options under Section 7 of the
Plan. If an option is surrendered (except surrender for shares of Stock) or for
any other reason ceases to be exercisable in whole or in part, the shares which
were subject to such option but as to which the option had not been exercised
shall continue to be available under the Plan.
(b) If there is any change in the Stock subject to any option granted
under the Plan, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of two percent), or
other change in the capital structure of the Company, appropriate adjustments
shall be made by the Committee in order to preserve but not to increase the
benefits to the individual, including adjustments to the number and kind of
shares and the price per share subject to outstanding options.
4. Eligible Individuals. The persons eligible to participate in the Plan
--------------------
(other than pursuant to Section 7) are such employees, officers, independent
contractors, and consultants of the Company or an Affiliate as the Committee, in
its discretion, shall designate from time to time. Notwithstanding the
foregoing, only employees of the Company or an Affiliate (including officers and
directors who are bona fide employees) shall be eligible to receive incentive
stock options. Except for grants pursuant to Section 7, Eligible Individuals
shall not include Non-Employee Directors.
5. The Option Price. The exercise price of each incentive stock option
----------------
shall be not less than the per share fair market value of the Stock subject to
such option on the date the option is granted. Except as provided in Section 7,
the exercise price of each nonqualified stock option shall be as determined by
the Committee. Notwithstanding the foregoing, (i) in the case of an incentive
stock option granted to a person possessing more than ten percent of the
combined voting power of the Company or an Affiliate, the exercise price shall
be not less than 110 percent of the fair market value of the Stock on the date
the option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in Section 3(b), above.
6. Terms and Conditions of Options.
-------------------------------
(a) Each option granted pursuant to the Plan will be evidenced by a
written Stock Option Agreement executed by the Company and the person to whom
such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that (i) the term of an incentive stock
-------- -------
option shall
3
<PAGE>
not be more than 10 years, (ii) in the case of an incentive stock option granted
to a person possessing more than ten percent of the combined voting power of the
Company or an Affiliate, the term of each incentive stock option shall be no
more than five years, and (iii) the term of an option granted pursuant to
Section 7 shall be as provided in Section 7.
(c) In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year (under this Plan and any other plans
of the Company or its Affiliates) shall not exceed $100,000.
(d) Except for grants to Non-Employee Directors pursuant to Section 7,
which shall be granted on the form of Stock Option Agreement attached hereto as
Exhibit A, the Stock Option Agreement may contain such other terms, provisions,
and conditions as may be determined by the Committee not inconsistent with this
Plan. If an option, or any part thereof is intended to qualify as an incentive
stock option, the Stock Option Agreement shall contain those terms and
conditions which are necessary to so qualify it.
(e) The maximum amount of Stock which may be acquired pursuant to any
individual per calendar year under the Plan shall be 50,000 shares, subject to
adjustment pursuant to Section 3(b). To the extent required by Section 162(m)
of the Code and the regulations thereunder, in applying the foregoing limitation
with respect to an employee, if any option is cancelled, the cancelled option
shall continue to count against the maximum number of shares for which options
may be granted to the employee under this Section 6(e). For this purpose, the
repricing of an option shall be treated as a cancellation of the existing option
and the grant of a new option.
7. Stock Options for Non-Employee Directors.
----------------------------------------
(a) Automatic Grant of Options. An option to purchase 10,000 shares of
--------------------------
Stock shall be granted ("Initial Grant") to each director who is not an officer
of the Company ("Non-Employee Director"), such Initial Grant to be made to Non-
Employee Directors elected or appointed to the Board after the Company's initial
public offering of its Stock in an underwriting pursuant to a registration
statement filed under the Securities Act of 1933 ("IPO") upon the date each
first becomes a Non-Employee Director of the Company. Immediately following each
annual meeting of the Company's stockholders, each Non-Employee Director who
continues as a Non-Employee Director following such annual meeting shall be
granted an option to purchase 1,500 shares of Stock ("Subsequent Grant");
provided that no Subsequent Grant shall be made to any Non-Employee Director who
has not served as a director of the Company, as of the time of such annual
meeting, for at least one year. Each such Subsequent Grant shall be made on the
date of the annual stockholders' meeting in question. If any option ceases
4
<PAGE>
to be exercisable in whole or in part, the shares which were subject to such
option but as to which the option had not been exercised shall continue to be
available under the Plan. All options granted to Non-Employee Directors shall be
nonqualified stock options.
(b) Option Exercise Price. The exercise price per share of Stock
---------------------
covered by each option shall be the per-share fair market value of the Stock on
the date the option is granted; provided that the exercise price per share of
Stock covered by options constituting Initial Grants under Section 7(a)(i) above
shall be the per-share price to the public in the IPO. The exercise price of an
option granted under the Plan shall be subject to adjustment to the extent
provided in Section 3(b) hereof.
(c) Exercisability. Each Initial Grant and Subsequent Grant shall
--------------
vest and become exercisable as to 1/16 of the shares covered thereby on a
quarterly basis on the last day of each three-month period following the date of
grant such that the option will be fully exercisable forty-eight months after
its date of grant.
(d) Affiliated Non-Employee Directors. Notwithstanding any term or
---------------------------------
condition of this Section 7, a Non-Employee Director shall not be granted any
options pursuant to this Section if, at the date such grant would otherwise
become effective, such Non-Employee Director owns, either beneficially or of
record, more than five percent (5%) of the Company's outstanding shares of
Common Stock. For the sole purpose of this Section 7(d) and determining the
eligibility of a Non-Employee to receive options pursuant to this Section 7,
shares of Common Stock owned, either beneficially or of record, by a
corporation, partnership or other business entity of which the Non-Employee
Director serves, either directly or indirectly, as an officer, director,
employee, general partner or other agent shall be attributed to such Non-
Employee Director and deemed owned by such Non-Employee Director.
8. Use of Proceeds. Cash proceeds realized from the sale of Stock under
---------------
the Plan or pursuant to options granted under the Plan shall constitute general
funds of the Company.
9. Amendment, Suspension, or Termination of the Plan.
-------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the shareholders, and provided further that, except as provided in Section
3(b), above, the Board shall in no event amend the Plan in the following
respects without the consent of stockholders then sufficient to approve the Plan
in the first instance:
(i) To increase the maximum number of shares subject to incentive
stock options issued under the Plan; or
5
<PAGE>
(ii) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate with respect to the grant of
incentive stock options on the tenth anniversary of the date of adoption of the
Plan, unless previously terminated by the Board pursuant to this Section 9.
(c) Notwithstanding the provisions of Sections 9(a) and 9(b), above,
the provisions set forth in Section 7 of the Plan (and any other sections of the
Plan that affect the formula award terms of option grants to Non-Employee
Directors required to be specified in the Plan by Rule 16b-3) shall not be
amended periodically and in no event more than once every six months, other than
to comport with changes to the Code, the Employee Retirement Income Security Act
of 1974, as amended, or any applicable rules and regulations thereunder.
10. Assignability. To the extent required by Rule 16b-3, no option
-------------
granted pursuant to this Plan shall be transferable by the holder except by
operation of law or by will or the laws of descent and distribution; provided,
that, if Rule 16b-3 is amended after the date of the Board's adoption of the
Plan to permit broader transferability of options under that Rule, (i) options
granted under Section 7 to Non-Employee Directors shall be transferable to the
fullest extent permitted by Rule 16b-3 as so amended, (ii) any other option
shall be transferable to the extent provided in the option agreement covering
the option, and the Committee shall have discretion to amend any such
outstanding option to provide for broader transferability of the option as the
Committee may authorize within the limitations of Rule 16b-3. Notwithstanding
the foregoing, if required by the Code, each incentive stock option under the
Plan shall be transferable by the optionee only by will or the laws of descent
and distribution, and, during the optionee's lifetime, shall be exercisable only
by the optionee. In the event of any Rule 16b-3 permitted transfer of an option
hereunder, the transferee shall be entitled to exercise the option in the same
manner and only to the same extent as the optionee (or his personal
representative or the person who would have acquired the right to exercise the
option by bequest or intestate succession) would have been entitled to exercise
the option under Sections 6, 7 and 11 had the option not been transferred.
11. Payment Upon Exercise of Options.
--------------------------------
(a) Payment of the purchase price upon exercise of any option granted
under this Plan shall be made in cash, by optionee's personal check, a certified
check, bank draft, or postal or express money order payable to the order of the
Company in lawful money of the United States (collectively, "Cash
Consideration"); provided,
6
<PAGE>
however, that, except for options granted under Section 7, the Committee, in its
sole discretion, may permit an optionee to pay the option price in whole or in
part (i) with shares of Stock owned by the optionee or with shares of Stock
withheld from the shares otherwise deliverable to the optionee upon exercise of
the option; (ii) by delivery on a form prescribed by the Committee of an
irrevocable direction to a securities broker approved by the Committee to sell
shares of Stock and deliver all or a portion of the proceeds to the Company in
payment for the Stock; (iii) by delivery of the optionee's promissory note with
such recourse, interest, security, and redemption provisions as the Committee in
its discretion determines appropriate; or (iv) in any combination of the
foregoing. The exercise price of any options granted under Section 7 shall be
paid in Cash Consideration, the consideration specified in clauses (i) or (ii)
of the preceding sentence, or in any combination thereof. Any Stock used to
exercise options shall be valued at its fair market value on the date of the
exercise of the option. In addition, the Committee, in its sole discretion, may
authorize the surrender by an optionee of all or part of an unexercised option
(excluding options granted under Section 7, above) and authorize a payment in
consideration thereof of an amount equal to the difference between the aggregate
fair market value of the Stock subject to such option and the aggregate option
price of such Stock. In the Committee's discretion, such payment may be made in
cash, shares of Stock with a fair market value on the date of surrender equal to
the payment amount, or some combination thereof.
(b) In the event that the exercise price is satisfied by shares
withheld from the shares of Stock otherwise deliverable to the optionee, the
Committee may issue the optionee an additional option, with terms identical to
the option agreement under which the option was exercised, entitling the
optionee to purchase additional shares of Stock equal to the number of shares so
withheld but at an exercise price equal to the fair market value of the Stock on
the grant date of the new option; provided, however, that no such additional
options may be granted with respect to options granted pursuant to Section 7,
above. Any additional option shall be subject to the provisions of Section 6(e),
above.
12. Withholding Taxes.
-----------------
(a) No Stock shall be delivered under the Plan to any participant
until the participant has made arrangements acceptable to the Committee (or in
the case of exercise of options granted to Named Executives, the Subcommittee)
for the satisfaction of federal, state, and local income and social security tax
withholding obligations, including, without limitation, obligations incident to
the receipt of Stock under the Plan or to the failure to satisfy the conditions
for treatment as incentive stock options under applicable tax law. Upon exercise
of a stock option the Company shall withhold from the optionee an amount
sufficient to satisfy federal, state and local income and social security tax
withholding obligations.
(b) In the event that such tax withholding is satisfied by the Company
or
7
<PAGE>
the optionee's employer withholding shares of Stock otherwise deliverable to
the optionee, the Committee may issue the optionee an additional option, with
terms identical to the option agreement under which the option was exercised,
entitling the optionee to purchase additional shares of Stock equal to the
number of shares so withheld but at an exercise price equal to the fair market
value of the Stock on the grant date of the new option; provided, however, that
no such additional options may be granted with respect to options granted
pursuant to Section 7, above. Any additional option shall be subject to the
provisions of Section 6(e), above.
13. Change in Control.
-----------------
(a) For purposes of this Section 13, a "Change in Control" shall be
deemed to occur upon:
(i) The direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding Stock;
(ii) A change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members cease,
by reason of one or more contested elections for Board membership or by one or
more actions by written consent of stockholders, to be comprised of individuals
who either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination was
approved by the Board;
(iii) Approval by the Company's stockholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) Approval by the Company's stockholders of (A) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (B) the complete liquidation or dissolution of the Company; or
(v) Approval by the Company's stockholders of any reverse merger
in which the Company survives as an entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's
8
<PAGE>
outstanding securities are transferred to a person or persons different from
those who held such securities immediately prior to such merger.
(vi) For the purpose of this Section 13, "Approval by the
Company's Stockholders" shall mean approval by a majority of those shares of
Stock voting at a stockholder's meeting at which a quorum is present, excluding
shares beneficially owned (within the meaning of Rule 13d-3 under the Exchange
Act) by the Non-Employee Directors.
(b) Except for options granted to Non-Employee Directors under Section
7, the Committee may provide in any stock option agreement (or in an amendment
thereto) that, in the event of any Change in Control, any outstanding options
covered by such an agreement shall be fully vested, nonforfeitable and become
exercisable, as of the date of the Change in Control.
(c) If the Committee determines to incorporate a Change in Control
provision in any option agreement hereunder, the agreement shall provide that,
(i) in the event of a Change in Control described in clauses (i), (ii) and (v)
of paragraph (a) above, the option shall remain exercisable for the remaining
term of the option and (ii) in the event of a Change in Control described in
clauses (iii) or (iv) of paragraph (a) above, the option shall terminate as of
the effective date of the merger, disposition of assets, liquidation or
dissolution described therein.
(d) As to any options granted under Section 7 to Non-Employee
Directors, (i) in the event of a Change in Control described in clauses (i),
(ii) or (v) of paragraph (a) above, any such outstanding options under the Plan
shall become fully vested and remain exercisable for the remaining term of such
options and (ii) in the event of a Change in Control described in clauses (iii)
or (iv) of paragraph (a) above, outstanding options under the Plan shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein.
(e) Notwithstanding the foregoing provisions of this Section 13, an
outstanding option may not be accelerated under this Section 13 if and to the
extent (i) such option is, in connection with the transaction giving rise to a
Change of Control, either to be assumed by the successor or parent thereof or to
be replaced with a comparable option to purchase shares of the capital stock of
the successor corporation or parent thereof, or (ii) such option is to be
replaced with a cash incentive program of the successor corporation that
preserves the option spread existing at the time of, the corporate transaction
giving rise to the Change of Control and provides for subsequent payment in
accordance with the same vesting schedule applicable to such option.
14. Stockholder Approval. The Plan and any options granted pursuant to
--------------------
Section 7 and options granted to Covered Employees hereunder shall become
effective only upon approval by the holders of a majority of the Company's
shares voting (in
9
<PAGE>
person or by proxy) at a stockholders' meeting held within 12 months of the
Board's adoption of the Plan. The Committee may grant stock options under the
Plan prior to the stockholders' meeting, but until stockholder approval of the
Plan is obtained, no such option shall be exercisable. In the event that
stockholder approval is not obtained within the period provided above, all
options described in this Section 14 previously granted above, shall terminate.
15. Rule 16b-3 Compliance. Transactions under the Plan are intended to
---------------------
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board or
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or the Committee.
Moreover, in the event the Plan does not include a provision required by Rule
16b-3 to be stated therein in order to qualify the grants under Section 5 hereof
as grants under a non-discretionary formula under Rule 16b-3 such provision
(other than one relating to eligibility requirements, or the price and amount of
awards) shall be deemed automatically to be incorporated by reference into the
Plan with respect to grants of options to Non-Employee Directors.
10
<PAGE>
EXHIBIT 99.2
Form of Non-Qualified Stock Option Agreement used in connection
with the 1995 Stock Option Plan
<PAGE>
TGV SOFTWARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
This Agreement is made as of Grant Date (the "Grant Date"),
between TGV Software, Inc., a Delaware corporation (the "Company") and First
Name Last Name ("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the TGV Software, Inc. 1995 Stock
Option Plan (the "Plan"), which Plan is incorporated in this Agreement by this
reference and made a part of it (capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Plan); and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and in the
interests of the Company and its stockholders to grant the options provided for
in this Agreement to Optionee as an inducement to accept employment and/or to
remain in the service of the Company or its Affiliates (as defined in the Plan)
and as an incentive for increased efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. OPTION GRANT. The Company hereby grants to Optionee the right
and option to purchase from the Company on the terms and conditions hereinafter
set forth, all or any part of an aggregate of Shares Granted shares of the
common stock of the Company (the "Stock"). This option is granted under, and
pursuant to the terms of the Plan and the provisions of the Plan shall control
to the extent they are inconsistent with the terms of this Agreement. This
option is not intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") for incentive stock
options.
2. OPTION PRICE. The purchase price of the Stock subject to this
option shall be Option Price per share, which price is not less than 100% of
the per share fair market value of such Stock as of the Grant Date as determined
by the Board of Directors of the Company (the "Board") or a Committee (the
"Committee") designated by it to administer the Plan. If the Board has not
appointed a Committee, then each reference to the "Committee" shall be construed
to refer to the Board. The term "Option Price" as used in this Agreement refers
to the purchase price of the Stock subject to this option.
3. OPTION PERIOD. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to
<PAGE>
the limitations of Section 4 and the vesting provisions of Section 5. The Option
Period shall commence on the Grant Date and except as provided in Section 4,
shall terminate ten (10) years from the Grant Date (the "Termination Date").
4. LIMITS ON OPTION PERIOD. The Option Period may end before the
Termination Date, as follows:
(a) If Optionee ceases to be a bona fide employee of the Company
or an Affiliate for any reason other than as a result of disability (within the
meaning of Section 4(c)) or death, the Option Period shall terminate three (3)
months after the date of such cessation of employment or on the Termination
Date, whichever shall first occur, and the option shall be exercisable only to
the extent exercisable under Section 5 on the date of Optionee's cessation of
employment.
(b) If Optionee dies while in the employ of the Company or any
of its Affiliates, the Option Period shall end one (1) year after the date of
death or on the Termination Date, whichever shall first occur, and Optionee's
executor, administrator or personal representative or the person or persons to
whom Optionee's rights under this option shall pass by will or by the applicable
laws of descent and distribution may exercise this option only to the extent
exercisable under Section 5 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 22(e)(3) of the Code), the Option
Period shall end one (1) year after the date of Optionee's cessation of
employment or on the Termination Date, whichever shall first occur, and the
option shall be exercisable only to the extent exercisable under Section 5 on
the date of Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or an
Affiliate due to disability, or for the purpose of serving the government of the
country in which the principal place of employment of Optionee is located,
either in a military or civilian capacity, or for such other purpose or reason
as the Committee may approve, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an Affiliate except as the Committee may otherwise expressly
provide.
5. VESTING OF RIGHT TO EXERCISE OPTIONS.
(a) Subject to other limitations contained in this Agreement,
the shares covered by this Option shall vest as follows:
AMOUNT VESTING DATE
------ ------------
Period 1 Share Vesting Period 1 Vest Date
Period 2 Share Vesting Period 2 Vest Date
Period 3 Share Vesting Period 3 Vest Date
Period 4 Share Vesting Period 4 Vest Date
2
<PAGE>
No partial exercise of this Option may be for less than the lesser of
(i) 5% of the total number of shares originally covered by the Option, or (ii)
the remaining shares subject to the Option. In no event shall the Company be
required to issue fractional shares.
(b) Notwithstanding the foregoing, all options granted under
this Agreement shall be fully vested, nonforfeitable and become exercisable
immediately prior to the specified effective date of a Change in Control.
However, an outstanding option may not be accelerated under this Section 5(b) if
and to the extent (i) such option is, in connection with the transaction giving
rise to a Change of Control, either to be assumed by the successor or parent
thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, or (ii) such
option is to be replaced with a cash incentive program of the successor
corporation that preserves the option spread existing at the time of the
corporate transaction giving rise to the Change of Control and provides for
subsequent payment in accordance with the same vesting schedule applicable to
such option. In no event shall this Option be exercised after the Termination
Date.
6. METHOD OF EXERCISE. Optionee may exercise the option with
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which the option is exercised. Such
notice shall be accompanied by an amount equal to the Option Price of such
shares, in the form of any one or combination of the following: (i) cash, by
Optionee's personal check, a certified check, bank draft, or postal or express
money order payable to the order of the Company in lawful money of the United
States; (ii) shares of Stock owned by Optionee or with shares of Stock withheld
from the shares otherwise deliverable to Optionee upon exercise of the option;
(iii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iv) a promissory note of the Optionee, or (v) in any combination of the
foregoing. Any Stock used to exercise options shall be valued at its fair
market value on the date of the exercise of the option and shall be held for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes. The shares of Stock shall be valued in accordance
with procedures established by the Committee. Any promissory note used to
exercise this option shall be a full recourse, interest bearing obligation
containing such terms as the Committee shall determine. If a promissory note is
used, the Optionee agrees to execute such further documents as the Committee may
deem necessary or appropriate in connection with issuing the promissory note,
perfecting a security interest in the Stock purchased with the promissory note,
and any related terms or conditions that the Committee may propose. Such
further documents may include, not by way of limitation, a security agreement,
an escrow agreement, a voting trust agreement and an assignment separate from
the certificate.
3
<PAGE>
(b) Optionee (and Optionee's spouse, if any) shall be required,
as a condition precedent to acquiring Stock through exercise of the option, to
execute one or more agreements relating to obligations in connection with
ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Committee, Optionee shall give the
Company satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (i) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (ii) any other sale of
such shares with respect to which in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act of 1933, as amended.
(d) As soon as practicable after receipt of the notice required
in Section 6(a) and satisfaction of the conditions set forth in Sections 6(b)
and 6(c), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the office of the
Company, at 101 Cooper Street, Santa Cruz, CA 95060, attention of the Corporate
Secretary, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, any applicable listing
requirements of any national securities exchange, and requirements under any
other law or regulation applicable to the issuance or transfer of such shares.
7. ADJUSTMENTS. If there should be any change in a class of Stock
subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of 2
percent) or other change in the capital structure of the Company without
consideration, the Company shall make appropriate adjustments in order to
preserve, but not to increase, the benefits to Optionee, including adjustments
of the number and kind of shares of such Stock subject to this option and of the
price per share. Any adjustment made pursuant to this Section 7 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of such Stock of the Company or
shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such Stock equal to the number of shares subject to this
option.
8. LIMITATIONS ON TRANSFER. Except as otherwise provided in the
Plan, this
4
<PAGE>
option shall, during Optionee's lifetime, be exercisable only by Optionee, and
neither this option nor any right hereunder shall be transferable by Optionee by
operation of law or otherwise other than by will or the laws of descent and
distribution. In the event of any attempt by Optionee to alienate, assign,
pledge, hypothecate, or otherwise dispose of this option or of any right
hereunder, except as provided for in this Agreement, or in the event of the levy
of any attachment, execution, or similar process upon the rights or interest
hereby conferred, the Company at its election may terminate this option by
notice to Optionee and this option shall thereupon become null and void.
9. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled
to exercise Optionee's rights in the event of his death shall have any of the
rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
10. NO EFFECT ON TERMS OF EMPLOYMENT. SUBJECT TO THE TERMS OF ANY
WRITTEN EMPLOYMENT CONTRACT TO THE CONTRARY, THE COMPANY (OR ITS AFFILIATE WHICH
EMPLOYS OPTIONEE) SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF
EMPLOYMENT OF OPTIONEE AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR
WITHOUT CAUSE.
11. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its Corporate Secretary
at the Office of the Company at 101 Cooper Street, Santa Cruz, CA 95060, and any
notice to be given to Optionee shall be addressed to him at the address given by
him beneath his signature to this Agreement, or such other address as either
party to this Agreement may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, registered or certified and
deposited (postage or registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
12. COMMITTEE DECISIONS CONCLUSIVE. All decisions of the Committee
upon any question arising under the Plan or under this Agreement shall be
conclusive.
13. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or personal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
14. APPLICABLE LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement as of the day and year first above written.
TGV SOFTWARE, INC.,
A DELAWARE CORPORATION
By:
----------------------------------------------
Its:
----------------------------------------------
-------------------------------------------------
Optionee
Address:
-----------------------------------------
-------------------------------------------------
6
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, ______________________________, spouse of ________________________,
have read and approved the foregoing Agreement. In consideration of granting to
my spouse the right to purchase shares of TGV Software, Inc. as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact with respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: ______________________ By: _________________________________________
<PAGE>
EXHIBIT 99.3
Form of Directors' Non-Qualified Stock Option Agreement used in connection
with the 1995 Stock Option Plan
<PAGE>
TGV SOFTWARE, INC.
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
-----------------------------------------------
This agreement (the "Agreement") is made as of _______________, 199_ (the
"Grant Date") between TGV Software, Inc., a Delaware corporation (the "Company")
and ("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the TGV Software, Inc. 1995 Stock Option
Plan (the "Plan"), which Plan is incorporated in this Agreement by reference and
made a part of it (capitalized terms shall have the meaning ascribed to them in
the Plan);
WHEREAS, the Plan provides for automatic option grants to non-employee
directors of the Company;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of ____________________ shares of the
Common Stock, $.001 par value, of the Company (the "Stock"). The exercise price
of the Stock subject to this option shall be $_____________ per share.
2. Option Period. This option shall be exercisable only during the Option
-------------
Period, and during such Option Period, the exercisability of the option shall be
subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Termination Date, which shall be ten
(10) years from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Termination Date, as follows:
(a) If Optionee ceases to be a director on the Company's Board of
Directors (the "Board") for any reason other than cause, disability (within the
meaning of subparagraph (c) below) or death during the Option Period, the Option
Period shall terminate three (3) months after the date Optionee ceases to be a
director or on the Termination Date, whichever shall first occur, and the option
shall be exercisable only to the extent exercisable under paragraph 4 on the
date Optionee ceases to be a director.
(b) If Optionee should die while serving on the Board, the Option
Period shall end one ( 1 ) year after the date of death or on the Termination
Date, whichever shall first occur, and this option shall be exercisable only to
the extent exercisable
<PAGE>
under paragraph 4 on the date of Optionee's death. In the event of Optionee's
death, Optionee's executor or administrator or the person or persons to whom
Optionee's rights under this option shall pass by will or by the applicable laws
of descent and distribution may exercise the entire unexercised portion of this
option (or any lesser amount).
(c) If Optionee ceases to be a director by reason of disability, as
defined below, the Option Period shall end one (1) year after the date Optionee
ceases to be a director or on the Termination Date, whichever shall first occur,
and this option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a director. For purposes of this
subparagraph (c), an individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. An individual shall not be considered to be permanently
and totally disabled unless he furnishes proof of the existence thereof in such
form and manner, and at such times, as the Board may require.
(d) If Optionee is removed from the Board for cause during the Option
Period, the Option Period shall terminate on the date of such Optionee's removal
as a director and shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options.
------------------------------------
(a) This option shall vest as to 6.25% of the number of shares
originally covered by this option on a quarterly basis on the last day of each
three-month period following the Grant Date so that the option will become fully
vested and exercisable four (4) years following the Grant Date. No partial
exercise of this option may be for less than five percent (5%) of the total
number of shares then available under this option to purchase shares of Stock.
In no event shall the Company be required to issue fractional shares.
(b) Notwithstanding the foregoing, all options granted under this
Agreement shall be subject to the provisions of Section 13(d) of the Plan
(relating to the effect of a "Change in Control" on options granted to Non-
Employee Directors).
5. Method of Exercise. Optionee may exercise the option with respect to
------------------
all or any part of the shares of Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise, specifying
the number of such shares as to which this option is exercised. Such notice
shall be accompanied by an amount equal to the exercise price of such shares, in
the form of any one or combination of the following: (1) Cash Consideration; (2)
with shares of stock owned by Optionee or with shares of stock withheld from the
shares otherwise deliverable to the Optionee upon exercise of the option; or (3)
by delivery on a form prescribed by the
2
<PAGE>
Committee of an irrevocable direction to a securities broker approved by the
Committee to sell shares of Stock and deliver all or a portion of the proceeds
to the Company in payment for the Stock.
(b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which, in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.
(c) As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraph 5(b),
the Company shall, without transfer or issue tax and without other incidental
expense to Optionee, deliver to Optionee at the office of the Company, at 101
Cooper Street, Santa Cruz, CA 95060, attention of the Corporate Secretary, or
such other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with applicable registration
requirements under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares. If Optionee fails to
accept delivery of and pay for all or any part of the number of shares specified
in such notice upon tender or delivery thereof, Optionee's right to purchase
such shares may be terminated by the Company at its election.
6. Changes in Capitalization. If there should be any change in a class of
-------------------------
Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of 2
percent) or other change in the capital structure of the Company, the Company
shall make appropriate adjustments in order to preserve, but not to increase,
the benefits to Optionee, including adjustments of the number and kind of shares
of such Stock subject to this option and of the price per share. Any adjustment
made pursuant to this paragraph 6 as a consequence of a change in the capital
structure of the Company shall not entitle Optionee to acquire a number of
shares of such Stock of the Company or shares of stock of any successor company
greater than the number of shares Optionee would receive if, prior to such
change, Optionee had actually held a number of shares of such Stock equal to the
number of shares subject to this option.
7. Limitations on Transfer. To the extent required by Rule 16b-3 of the
-----------------------
3
<PAGE>
Exchange Act, no Option shall be transferable by an Optionee other than by
operation of law or by will or by the laws of descent or distribution; provided
that, if Rule 16b-3 is amended after the Board's adoption of the Plan to permit
greater transferability of an Option, the Option hereunder shall be transferable
to the fullest extent provided by Rule 16b-3 as so amended. In the event of any
Rule 16b-3 permitted transfer of the Option, the transferee shall be entitled to
exercise the Option in the same manner and only to the same extent as the
Optionee (or his personal representative or the person who would have acquired
the right to exercise the Option by bequest or intestate succession) would have
been entitled to exercise the Option had the Option not been transferred.
8. No Stockholder Rights. Neither Optionee nor any person entitled to
---------------------
exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care of its Corporate Secretary
at the office of the Company at 101 Cooper Street, Santa Cruz, CA 95060, and any
notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified and deposited (postage and registration or certification fee prepaid)
in a post office or branch post office regularly maintained by the United
States.
10. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
11. Withholding. Optionee agrees to make appropriate arrangements with the
-----------
Company for satisfaction of any applicable federal, state or local income tax
withholding requirements or social security requirements.
12. Applicable Law. The interpretation, performance, and enforcement of
--------------
this Agreement shall be governed by the laws of the State of California.
4
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above.
TGV Software, Inc., a Delaware corporation
By
-----------------------------------------
--------------------------------------------
Optionee
Address:
-----------------------------------
--------------------------------------------
5
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, ______________________________, spouse of ________________________,
have read and approved the foregoing Agreement. In consideration of granting to
my spouse the right to purchase shares of TGV Software, Inc. as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact with respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws or similar laws relating to marital property in
effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated:______________________________ By: ___________________________________
<PAGE>
EXHIBIT 99.4
Form of Stock Option Assumption Agreement used in connection
with the 1995 Stock Option Plan
<PAGE>
1995 STOCK OPTION PLAN
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE: 1-
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 29th day of March, 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 TGV Software,
Inc., a Delaware corporation ("TGV"), which were granted to Optionee under the
TGV Software, Inc. 1995 Stock Option Plan (the "Plan") and are evidenced by a
Stock Option Agreement (the "Option Agreement") between TGV and Optionee.
WHEREAS, TGV has this day been acquired by Cisco through merger of a
wholly-owned Cisco subsidiary ("Acquisition Corporation") with and into TGV (the
"Merger") pursuant to the Agreement and Plan of Merger dated January 23, 1996 by
and among Cisco, TGV and Acquisition Corporation (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to assume all
obligations of TGV under all 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 .4 of a share of Cisco common stock ("Cisco
Stock") for each outstanding share of TGV 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 TGV common stock subject to the stock options
held by Optionee under the Plan immediately prior to the Effective Time (the
"TGV 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 TGV under each of the TGV Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each TGV
Option hereby assumed and the exercise price payable
<PAGE>
thereunder have been adjusted to reflect the Exchange Rate at which shares of
TGV 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 TGV
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 TGV Option shall be as indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed TGV 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 TGV common stock subject to the TGV 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 TGV Option immediately
prior to the Merger.
3. The following provisions shall govern each TGV 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 "Plan
Administrator" shall mean the Compensation Committee of the Cisco Board of
Directors.
- The grant date and the expiration date of each assumed TGV Option and
all other provisions which govern either the exercisability or the termination
of the assumed TGV 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 TGV 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 TGV Options shall be deemed to
occur by reason of the Merger, and the grant date for each assumed TGV Option
shall accordingly remain the same as in effect under the applicable Option
Agreement immediately prior to the Merger.
- No partial exercise of the assumed TGV Option shall be for a number of
shares of Cisco Stock less than five percent (5%) of the total number of shares
of TGV common stock originally covered by such option, multiplied by the
Exchange Rate.
- 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
2
<PAGE>
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) TGV. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed TGV Option upon the
Optionee's cessation of employee status with TGV shall hereafter be applied on
the basis of the Optionee's cessation of employee status with Cisco and its
subsidiaries, and each assumed TGV 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 TGV 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 TGV
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed TGV 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>
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 TGV Options hereby assumed by Cisco Systems, Inc.
are as set forth in the Option Agreement, the Plan and such Stock Option
Assumption Agreement.
---------------------------------------
1-, OPTIONEE
DATED: __________________, 1996
4
<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of TGV Software, Inc.
Common Stock (Pre-Merger)
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc.
Common Stock (Post-Merger)
<PAGE>
EXHIBIT 99.5
TGV, Inc. 1990 Stock Plan
<PAGE>
TGV, INC.
1990 STOCK PLAN
1. Establishment, Purpose, and Definitions.
---------------------------------------
(a) There is hereby adopted the 1990 Stock Plan (the "Plan") of TGV,
Inc., a California corporation (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in paragraph 4 below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an opportunity
to purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422A of
the Internal Revenue Code, as amended (the "Code"), and employees, officers,
directors, independent contractors, and consultants of the Company and of its
Affiliates an opportunity to purchase shares of Stock pursuant to options which
are not described in Section 422A or 423 of the Code (referred to as
"nonqualified stock options"). The Plan also provides for the transfer or sale
of Stock to eligible individuals in connection with the performance of services
for the Company or its Affiliates.
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 425(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). The Committee shall consist of not less
than three members to be appointed by the Board. The Board may remove members
from or add members to the Committee. Vacancies on the Committee shall be filled
by the Board. The Committee shall select one of its members as chairman, and
shall hold meetings at such times and places as it may determine. A majority of
the Committee shall constitute a quorum and acts of the Committee at which a
quorum is present, or acts reduced to or approved in writing by all the members
of the Committee, shall be the valid acts of the Committee. If the Board does
not delegate administration of the Plan to the Committee, then each reference in
this Plan to "the Committee" shall be construed to refer to the Board.
(b) The Committee shall determine which eligible individuals (as
defined
<PAGE>
in paragraph 4 below) shall be granted options under the Plan, the timing of
such grants, the terms thereof (including any restrictions on the Stock), and
the number of shares for which an option or options shall be granted to an
optionee.
(c) The Committee may amend the terms of any outstanding option
granted under this Plan, but any amendment which would adversely affect the
optionee's rights under an outstanding option shall not be made without the
optionee's written consent. The Committee may, with the optionee's written
consent, cancel any outstanding stock option or accept any outstanding stock
option in exchange for a new option.
(d) The Committee shall also determine which eligible individuals (as
defined in paragraph 4 below) shall be issued Stock under the Plan, the timing
of such grants, the terms thereof (including any restrictions), and the number
of shares to be granted. The Stock shall be issued for such consideration (if
any) as the Committee deems appropriate. Stock issued subject to restrictions
shall be evidenced by a written agreement (the "Restricted Stock Purchase
Agreement"). The Committee may amend any Restricted Stock Purchase Agreement,
but any amendment which would adversely affect the individual's rights to the
Stock shall not be made without his or her written consent.
(e) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all optionees.
3. Stock Subject to the Plan.
-------------------------
(a) An aggregate of not more than two million five hundred thousand
(2,500,000) shares of Stock shall be available for the grant of options or the
issuance of Stock under the Plan. If an option is surrendered (except surrender
for shares of Stock) or for any other reason ceases to be exercisable in whole
or in part, the shares which were subject to such option but as to which the
option had not been exercised shall continue to be available under the Plan.
(b) If there is any change in the Stock subject to the Plan, the Stock
subject to a Restricted Stock Purchase Agreement or the Stock subject to any
option granted under the Plan, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent of the outstanding capital Stock of the Company), or other change in the
corporate structure of the Company, appropriate adjustments may be made by the
Committee in order to preserve but not to increase the benefits to the
individual, including adjustments to the aggregate number and kind of shares
subject to the Plan or to a Restricted Stock Purchase Agreement and the number
and kind
2
<PAGE>
of shares and the price per share subject to outstanding options on a basis
consistent with adjustments made to the shares issued and outstanding outside of
the Plan.
4. Eligible Individuals. Individuals who shall be eligible to have granted
--------------------
to them the options or Stock provided for by the Plan shall be such employees,
officers, directors, independent contractors, and consultants of the Company or
an Affiliate as the Committee, in its discretion, shall designate from time to
time. Notwithstanding the foregoing, only employees of the Company or an
Affiliate (including officers and directors who are bona fide employees) shall
be eligible to receive incentive stock options.
5. The Option Price. The exercise price of the Stock covered by each
----------------
incentive stock option shall be not less than the per share fair market value of
such Stock as determined in good faith by the Committee as of the date the
option is granted. The exercise price of the Stock covered by each nonqualified
stock option shall be not less than 85% of the per share fair market value of
such stock as determined in good faith by the Committee as of the date the
option is granted. Notwithstanding the foregoing, in the case of an incentive
stock option granted to a person possessing more than ten percent (10%) of the
combined voting power of the Company or an Affiliate, the exercise price shall
be not less than 110 percent (110%) of the fair market value of the Stock on the
date the option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in paragraph 3(b) above.
6. Terms and Conditions of Options.
-------------------------------
(a) Each option granted pursuant to the Plan will be evidenced by a
written Stock Option Agreement executed by the Company and the person to whom
such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that the term of any stock option shall not
-------- -------
be for more than ten (10) years and that, in the case of an option granted to a
person possessing more than ten percent of the combined voting power of the
Company or an Affiliate, the term of each option shall be for no more than five
(5) years.
(c) In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year (under this Plan and any other plans
of the Company or its Affiliates) shall not exceed $100,000.
(d) The Stock Option Agreement may contain such other terms,
provisions, and conditions as may be determined by the Committee (not
inconsistent with this Plan). If an option, or any part thereof, is intended to
qualify as an incentive stock option, the Stock Option Agreement shall contain
those terms and conditions which are necessary to
3
<PAGE>
so qualify it as an incentive stock option.
7. Terms and Conditions of Stock Purchase and Bonus.
------------------------------------------------
(a) Each sale or grant of stock pursuant to the Plan will be evidenced
by either a written Restricted Stock Purchase Agreement executed by the Company
and the person to whom such stock is sold or granted or a written Restricted
Stock Bonus Agreement executed by the Company and the person to whom such stock
is granted.
(b) The Restricted Stock Purchase Agreement or Restricted Stock Bonus
Agreement may contain such other terms, provisions, and conditions as may be
determined by the Committee (not inconsistent with this Plan), including not by
way of limitation, restrictions on transfer, forfeiture provisions, repurchase
provisions, and vesting provisions.
(c) At the time of each sale or grant of stock or options pursuant to
the Plan, a copy of the Plan shall be delivered by the Company to the person to
whom such stock is sold or option granted.
8. Amendment, Suspension or Termination of the Plan.
------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided, however, except as provided in paragraph 3(b),
-------- -------
above, the Board shall not amend the Plan with respect to incentive stock
options in the following respects without the consent of stockholders then
sufficient to approve the Plan with respect to incentive stock options in the
first instance:
(i) To increase the maximum number of shares subject to incentive
stock options issued under the Plan; or
(ii) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate on October __, 2000, unless
previously terminated by the Board pursuant to this paragraph 9.
9. Assignability. Each option granted pursuant to this Plan shall, during
-------------
the optionee's lifetime, be exercisable only by him, or by his guardian or legal
representative and neither the option nor any right hereunder shall be
transferable by optionee by operation of law or otherwise other than by will or
the laws of descent and distribution. Stock subject to a Restricted Stock
Purchase Agreement shall be transferable only as
4
<PAGE>
provided in such Agreement. This Plan and all options to purchase Stock and all
shares of Stock issued hereunder shall be binding upon, and shall inure to the
benefit of, any successor corporation to the Company.
10. Payment Upon Exercise. Payment of the purchase price upon exercise of
---------------------
any option granted under this Plan shall be made in cash; provided, however,
-------- -------
that the Committee, in its sole discretion, may permit an optionee to pay the
option price in whole or in part (i) with shares of Stock owned by the Optionee;
(ii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iii) by delivery of the optionee's promissory note with such recourse,
interest, security, and redemption provisions as the Committee in its discretion
determines appropriate; or (iv) in any combination of the foregoing. Any Stock
used to exercise options shall be valued at its fair market value on the date of
the exercise of the option.
11. Withholding. No Stock shall be granted or sold under the Plan to any
-----------
participant until the participant has made arrangements acceptable to the
Committee for the satisfaction of federal, state, and local income and social
security tax withholding obligations incident to either the receipt of Stock
under the Plan, the lapsing of restrictions applicable to such Stock, or the
failure to satisfy the conditions for treatment as incentive stock options under
applicable tax law. With the consent of the Committee (which consent may be
withheld by the Committee in its sole discretion) and in accordance with
procedures established by the Committee, optionees may utilize the Company's
common stock (whether acquired through exercise of a stock option or otherwise)
to satisfy federal, state, and local income and social security tax withholding
obligations.
12. Restrictions on Transfer of Shares. The Stock acquired pursuant to the
----------------------------------
Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances, or other transfer as are in effect among the
stockholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
13. Stockholder Approval. This Plan shall only become effective with
--------------------
regard to incentive stock options upon its approval by a majority of the
stockholders voting (in person or by proxy) at a stockholders' meeting held
within twelve (12) months of the Board's adoption of the Plan. The Committee may
grant incentive stock options under the Plan prior to stockholder approval, but
until stockholder approval of the Plan is obtained, no incentive stock option
shall be exercisable.
14. Merger or Consolidation. In the event of any of the following
-----------------------
transactions (a "Corporate Transaction"):
(a) a merger or acquisition in which the Company is not the surviving
5
<PAGE>
entity, except for a transaction the principal purpose of which is to change the
State of the Company's incorporation, or
(b) any reverse merger in which the Company is the surviving entity
but in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred to holders different from those who held the stock
immediately prior to such merger, 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, unless such successor corporation does
not agree to assume the option or to substitute an equivalent option, in which
case in lieu of such assumption or substitution, the optionee shall have the
right to exercise the option as to all of the optioned stock, including shares
as to which the option would not otherwise be exercisable. If the option becomes
fully exercisable in lieu of assumption or substitution in the event of a
Corporate Transaction, the Board shall notify the optionee that the option shall
be fully exercisable for a period of fifteen (15) days from the date of such
notice, and the option will terminate upon the expiration of such period.
15. Effect of Change in Stock Subject to Plan. Appropriate adjustments
-----------------------------------------
shall be made in the number, exercise price, and class of shares of stock
subject to an option in the event of a stock dividend, stock split, reverse
stock split, or like change in the capital structure of the Company. Any such
adjustment shall be determined in good faith by the Board and shall be binding
on the Company and the optionee.
16. Information. During the period that any option is outstanding, the
-----------
Company shall provide optionees, access, on an annual or other periodic basis,
to such financial information regarding the Company as the Company prepares for
distribution to its shareholders.
6
<PAGE>
EXHIBIT 99.6
Form of Non-Qualified Stock Option Agreement used in connection
with the 1990 Stock Plan
<PAGE>
TGV, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement is made as of ____________________, 199_ (the "Grant Date"),
between TGV, Inc., a California corporation (the "Company") and
____________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the TGV, Inc. 1990 Stock Plan (the
"Plan"), which Plan is incorporated in this Agreement by reference and made a
part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and interest of
the Company and its shareholders to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the service of the Company
and its Affiliates (as defined in the Plan) and as an incentive for increased
efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. (a) Option Grant. The Company hereby grants to Optionee the right and
------------
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of shares of the Common Stock of the
Company (the "Stock"). This option is not intended to satisfy the requirements
of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Option Price. The purchase price of the Stock subject to this
------------
option shall be $____________________ per share. The term "Option Price" as used
in this Agreement refers to the purchase price of the Stock subject to this
option.
2. Option Period. This option shall be exercisable only during the Option
-------------
Period, and during such Option Period, the exercisability of the option shall be
subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall terminate ten years from the Grant Date (the
"Termination Date").
3. Limits on Option Period. The Option Period may end before the
-----------------------
Termination Date, as follows:
(a) If Optionee ceases to be a bona fide employee of the Company or an
Affiliate for any reason other than termination for cause, disability (within
the meaning of
<PAGE>
subparagraph (c)) or death during the Option Period, the Option Period shall
terminate thirty (30) days after the date of such cessation of employment or on
the Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee dies while in the employ of the Company or any of its
Affiliates, the Option Period shall end one year after the date of death or on
the Termination Date, whichever shall first occur, and Optionee's executor or
administrator or the person or persons to whom Optionee's rights under this
option shall pass by will or by the applicable laws of descent and distribution
may exercise this option only to the extent exercisable under paragraph 4 on the
date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability
(within the meaning of Section 105(d)(4) of the Code), the Option Period shall
end one year after the date of Optionee's cessation of employment or on the
Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or an
Affiliate because of his disability, or for the purpose of serving the
government of the country in which the principal place of employment of Optionee
is located, either in a military or civilian capacity, or for such other purpose
or reason as the Board may approve, Optionee shall not be deemed during the
period of such absence, by virtue of such absence alone, to have terminated
employment with the Company or an Affiliate except as the Board of Directors of
the Company (the "Board") may otherwise expressly provide.
(e) If Optionee's employment with the Company or any of its Affiliates
terminates for cause during the Option Period, the Option Period shall terminate
on the date of such Optionee's termination of employment and shall not
thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. Subject to other limitations
------------------------------------
contained in this Agreement, the Optionee shall have the right to exercise the
options in accordance with the following schedule:
(a) As to 25% of the number of shares covered by the option, at any
time after one year from the Grant Date;
(b) As to an additional 25% of the number of shares covered by the
option, at any time after two years from the Grant Date;
(c) As to an additional 25% of the number of shares covered by the
option, at any time after three years from the Grant Date; and
2
<PAGE>
(d) As to the remaining 25% of the number of shares covered by the
Option, at any time after four years from the Grant Date.
Any portion of the option that is not exercised shall accumulate and may be
exercised at any time during the Option Period prior to the Termination Date.
No partial exercise of this option may be for less than five percent (5%) of the
total number of shares then available under this option. In no event shall the
Company be required to issue fractional shares.
5. Method of Exercise. Optionee may exercise the option with respect to
------------------
all or any part of the shares of Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise, specifying
the number of such shares as to which this option is exercised. Such notice
shall be accompanied by an amount equal to the Option Price of such shares, in
the form of any one or combination of the following: (i) cash, a certified
check, bank draft, postal or express money order payable to the order of the
Company in lawful money of the United States; or (ii) such other consideration
as the Committee may consider acceptable in its sole discretion; or (iii) in any
combination of the foregoing. If shares of Stock are permitted to be delivered
as consideration, the shares of Stock shall be valued in accordance with
procedures established by the Board or a committee appointed by the Board to
administer the Plan (the "Committee"). (If the Board does not delegate
administration of the Plan to the Committee, then each reference in this
Agreement to "the Committee" shall be construed to refer to the Board.) Any note
used to exercise this option shall be a full recourse, interest-bearing
obligation containing such terms as the Committee shall determine. If a note is
used, the Optionee agrees to execute such further documents as the Company may
deem necessary or appropriate in connection with issuing the note, perfecting a
security interest in the Stock purchased with the note, and any related terms or
conditions that the Company may propose. Such further documents may include, not
by way of limitation, a security agreement, an escrow agreement, a voting trust
agreement and an assignment separate from certificate.
(b) Optionee (and Optionee's spouse, if any) shall be required, as a
condition precedent to acquiring Stock through exercise of the option, to
execute one or more agreements relating to obligations in connection with
ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
3
<PAGE>
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which, in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act of 1933, as amended.
As soon as practicable after receipt of the notice required in paragraph
5(a) and satisfaction of the conditions set forth in paragraphs 5(b) and 5(c),
the Company shall, without transfer or issue tax and without other incidental
expense to Optionee, deliver to Optionee at the principal office of the Company,
attention of the Secretary, or such other place as may be mutually acceptable to
the Company and Optionee, a certificate or certificates of such shares of Stock;
provided, however, that the time of such delivery may be postponed by the
Company for such period as may be required for it with reasonable diligence to
comply with applicable registration requirements under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any
applicable listing requirements of any national securities exchange, and
requirements under any other law or regulation applicable to the issuance or
transfer of such shares.
6. Corporate Transactions. If there should be any change in a class of
----------------------
Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent (2%) of the Company's outstanding capital stock) or other change in the
corporate structure of the Company, the Company shall make appropriate
adjustments in order to preserve, but not to increase, the benefits to Optionee,
including adjustments in the number of shares of such Stock subject to this
option and in the price per share. Any adjustment made pursuant to this
paragraph 6 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire a number of shares of such Stock
of the Company or shares of stock of any successor company greater than the
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of such Stock equal to the number of shares
subject to this option.
In the event of any of the following transactions (a "Corporate
Transaction"):
(a) a merger or acquisition in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change the
State of the Company's incorporation, or
(b) any reverse merger in which the Company is the surviving entity
but in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred to holders different from those who held the stock
immediately prior to such merger, 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, unless such successor corporation does
not agree to assume the option or to substitute an equivalent option, in which
case in lieu of such assumption or substitution, the Optionee shall have the
right to exercise the option as to all of the optioned stock, including shares
as to which the
4
<PAGE>
option would not otherwise be exercisable. If the option becomes fully
exercisable in lieu of assumption or substitution in the event of a Corporate
Transaction, the Board shall notify the Optionee that the option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the option will terminate upon the expiration of such period.
7. Limitations on Transfer. This option shall, during Optionee's lifetime,
-----------------------
be exercisable only by him or by his representative or legal guardian, and
neither this option nor any right hereunder shall be transferable by Optionee by
operation of law or otherwise other than by will or the laws of descent and
distribution. In the event of any attempt by Optionee to alienate, assign,
pledge, hypothecate, or otherwise dispose of this option or of any right
hereunder, except as provided for in this Agreement, or in the event of the levy
of any attachment, execution, or similar process upon the rights or interest
hereby conferred, the Company at its election may terminate this option by
notice to Optionee and this option shall thereupon become null and void.
8. No Shareholder Rights. Neither Optionee nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death shall have any of the
rights of a shareholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. Lock-Up Agreement. Optionee, if requested by an underwriter of Common
-----------------
Stock or other securities of the Company, shall agree not to sell or otherwise
transfer or dispose of any Common Stock of the Company held by Optionee (except
Common Stock included in such registration) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the
underwriter shall require. Such agreement shall be in writing in the form
satisfactory to such underwriter. The Company may impose stop-transfer
instructions with respect to such Common Stock subject to the foregoing
restriction until the end of said period.
10. No Effect on Terms of Employment. Subject to the terms of any written
--------------------------------
employment contract to the contrary, the Company (or its Affiliate which employs
Optionee) shall have the right to terminate or change the terms of employment of
Optionee at any time and for any reason whatsoever, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care of its Secretary at the
Office of the Company (currently located in Santa Cruz, California), and any
notice to be given to Optionee shall be addressed to him at the address given by
him beneath his signature to this Agreement, or such other address as either
party to this Agreement may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, registered or certified and
deposited (postage or registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
5
<PAGE>
12. Committee Decisions Conclusive. All decisions of the Committee upon
------------------------------
any question arising under the Plan or under this Agreement shall be conclusive.
13. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
14. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company and his employer for satisfaction in cash of any applicable federal,
state or local income tax or employment tax withholding requirements.
15. California Law. The interpretation, performance, and enforcement of
--------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused these presents to be executed on
its behalf, and Optionee has hereunto set his hand as of the day and year first
above written.
TGV, Inc.,
a California corporation
By:
----------------------------------------------
Its:
--------------------------------------------
OPTIONEE:
-------------------------------------------------
Optionee
Address:
----------------------------------------
----------------------------------------
6
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, _______________, the spouse of _______________, have read and approved
the foregoing Agreement. In consideration of granting of the right of my spouse
to purchase shares of TGV, Inc., as set forth in the Agreement, I hereby appoint
my spouse as my attorney-in-fact in respect to the exercise of any rights of the
Agreement insofar as I may have any rights under such community property laws of
the State of California or similar laws relating to marital property in effect
in the state of our residence as of the date of the signing of the foregoing
Agreement.
Dated: _________________________, 199__. By: __________________________
7
<PAGE>
EXHIBIT 99.7
Non-Qualified Stock Option Agreement under the 1990 Stock Plan - Craig A. Conway
<PAGE>
TGV, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
This Agreement is made as of November 18, 1993 (the "Grant Date"),
between TGV, Inc., a California corporation (the "Company") and Craig A. Conway
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the TGV, Inc. 1990 Stock Plan (the
"Plan"), which Plan is incorporated in this Agreement by reference and made a
part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and interest of
the Company and its shareholders to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the service of the Company
and its Affiliates (as defined in the Plan) and as an incentive for increased
efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. (a) Option Grant. The Company hereby grants to Optionee the
------------
right and option to purchase from the Company on the terms and conditions
hereinafter set forth, all or any part of an aggregate of 470,000 shares of the
Common Stock of the Company (the "Stock"). This option is not intended to
satisfy the requirements of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code").
(b) Option Price. The purchase price of the Stock subject to
------------
this option shall be $3.50 per share. The term "Option Price" as used in this
Agreement refers to the purchase price of the Stock subject to this option.
2. Option Period. This option shallbe exercisable only during
-------------
the Option Period, and during such Option Period, the exercisability of the
option shall be subject to the limitations of paragraph 3 and the vesting
provisions of paragraph 4. The Option Period shall commence on the Grant Date
and, except as provided in paragraph 3, shall terminate ten years from the Grant
Date (the "Termination Date").
3. Limits on Option Period. The Option Period may end before the
-----------------------
Termination Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company
or an Affiliate for any reason other than disability (within the meaning of
subparagraph (c)) or death during the Option Period, the Option Period shall
terminate three (3) months after the date of such cessation of employment or on
the Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee dies while in the employ of the Company or any
of its Affiliates, the Option Period shall end one year after the date of death
or on the Termination Date, whichever shall first occur, and Optionee's executor
or administrator or the person or persons to whom Optionee's rights under this
option shall pass by will or by the applicable laws of descent and distribution
may exercise this option only to the extent exercisable under paragraph 4 on the
date of Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 105(d)(4) of the Code), the Option
Period shall end one year after the date of Optionee's cessation of employment
or on the Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or an
Affiliate because of his disability, or for the purpose of serving the
government of the country in which the principal place of employment of Optionee
is located, either in a military or civilian capacity, or for such other purpose
or reason as the Board may approve, Optionee shall not be deemed during the
period of such absence, by virtue of such absence alone, to have terminated
employment with the Company or an Affiliate except as the Board of Directors of
the Company (the "Board") may otherwise expressly provide.
4. Vesting of Right to Exercise Options. Subject to other
------------------------------------
limitations contained in this Agreement, the Optionee shall have the right to
exercise the options in accordance with the following schedule:
(a) 16,875 shares of Stock shall vest on the 10th day of
February, May, August and November, commencing on February 10, 1994, so that
270,000 shares of Stock (the "Four Year Stock") shall be fully vested as of
November 10, 1997. Notwithstanding the foregoing, upon the closing of the sale
of the Company's Common Stock in a firm commitment, underwritten public offering
pursuant to a registration statement on Form S-l under the Securities Act of
1933, as amended, 67,500 of such 270,000 shares of Stock shall be accelerated
and immediately exercisable so that upon the later of November 10, 1996 or the
date of the closing of such public offering, 270,000 shares of Stock shall be
fully vested; and
2
<PAGE>
(b) 200,000 shares of Stock (the "Ten Year Stock") shall vest on
the ten (10) year anniversary of the day immediately preceding the Grant Date.
Notwithstanding the foregoing:
(i) In the event that the Company's consolidated net sales
in any fiscal year ended prior to the Termination Date equals or exceeds
$30,000,000, and if the Company's consolidated pre-tax profit equals or exceeds
30% (or, if less, a percent specified in a business plan adopted by the Board
equal to or greater than 20%) in such fiscal year, 50,000 shares of Stock shall
be accelerated and immediately exercisable as of the date of the Company's
audited consolidated income statement for such fiscal year;
(ii) In the event that the Company's consolidated net sales
in any fiscal year ended prior to the Termination Date equals or exceeds
$50,000,000, and if the Company's consolidated pre-tax profit equals or exceeds
25% (or, if less, a percent specified in a business plan adopted by the Board
equal to or greater than 20%) in such fiscal year, 50,000 shares of Stock shall
be accelerated and immediately exercisable as of the date of the Company's
audited consolidated income statement for such fiscal year;
(iii) In the event that the Company's consolidated net sales
in any fiscal year ended prior to the Termination Date equals or exceeds
$70,000,000, and if the Company's consolidated pre-tax profit equals or exceeds
20% in such fiscal year, 50,000 shares of Stock shall be accelerated and
immediately exercisable as of the date of the Company's audited consolidated
income statement for such year; and
(iv) In the event that the Company's consolidated net sales
in any fiscal year ended prior to the Termination Date equals or exceeds
$100,000,000, and if the Company's consolidated pre-tax profit equals or exceeds
20% in such fiscal year, 50,000 shares of Stock shall be accelerated and
immediately exercisable as of the date of the Company's audited consolidated
income statement for such fiscal year.
Shares of Stock shall be accelerated pursuant to any of clauses (i)
through (iv) of paragraph 4(b) only for the first year in which net sales and
pre-tax profit of the Company equal or exceed the amount specified in such
clause. For example, in the event that net sales and pre-tax profit of the
Company exceed the amounts specified in two clauses of paragraph 4(b), (i) no
shares of Stock shall be accelerated in the event that shares of Stock were
previously accelerated pursuant to both clauses, (ii) 50,000 shares of Stock
shall be accelerated in the event that shares of Stock were previously
accelerated pursuant to one of such clauses, and (iii) 100,000 shares of Stock
shall be accelerated in the event that no shares of Stock were previously
accelerated pursuant to either clause. Consolidated net sales and pre-tax
profit shall be determined in accordance with generally accepted accounting
principles.
6. Method of Exercise. Optionee may exercise the option with
------------------
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
3
<PAGE>
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised. Such
notice shall be accompanied by an amount equal to the Option Price of such
shares, in the form of any one or combination of the following: (i) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; or (ii) shares of Stock
valued at fair market value; or (iii) in any combination of the foregoing. The
shares of Stock shall be valued in accordance with procedures established by the
Board or a committee appointed by the Board to administer the Plan (the
"Committee").
(b) Optionee (and Optionee's spouse, if any) shall be required,
as a condition precedent to acquiring Stock through exercise of the option, to
execute one or more agreements relating to obligations in connection with
ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which, in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act of 1933, as amended.
As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraphs 5(b)
and 5(c), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the principal office of
the Company, attention of the Secretary, or such other place as may be mutually
acceptable to the Company and Optionee, a certificate or certificates of such
shares of Stock; provided, however, that the time of such delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with applicable registration requirements under
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, any applicable listing requirements of any national securities
exchange, and requirements under any other law or regulation applicable to the
issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in a class
----------------------
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent) or other change in the corporate structure of the Company, the Company
shall make appropriate adjustments in
4
<PAGE>
order to preserve, but not to increase, the benefits to Optionee, including
adjustments in the number of shares of such Stock subject to this option and in
the price per share.
In the event any of the following transactions (a "Corporate
Transaction"):
(a) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation, or
(b) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger, or
(c) any merger in which the Company is the surviving entity and,
within one hundred eighty (180) days after the closing of such merger,
Optionee's responsibilities as President and Chief Executive Officer of Company
shall be terminated other than for cause (as defined in that certain Employment
Agreement dated as of November 3, 1993 by and between Optionee and the
Company),the Optionee shall have the right to exercise the option (i) as to all
of the Four Year Stock, including shares of Four Year Stock as to which the
option would not otherwise be exercisable, and (ii) as to all or any portion of
the unvested Ten Year Stock that the Board shall fairly determine to accelerate
upon a Corporate Transaction. If the option becomes fully exercisable in the
event of a Corporate Transaction, the Board, upon approval by the Board of the
Corporate Transaction, shall notify the Optionee that the option shall be fully
exercisable for a period of twenty (20) days from the date of such notice, and
the option will terminate upon the expiration of such period.
7. Limitations on Transfer. This option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither this option nor any right
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this option or of any right hereunder, except as provided for in this
Agreement, or in the event of the levy of any attachment, execution, or similar
process upon the rights or interest hereby conferred, the Company at its
election may terminate this option by notice to Optionee and this option shall
thereupon become null and void.
8. No Shareholder Rights. Neither Optionee nor any person entitled
---------------------
to exercise Optionee's rights in the event of his death shall have any of the
rights of a shareholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
5
<PAGE>
9. Lock-Up Agreement. Optionee, if requested by an underwriter of
-----------------
Common Stock or other securities of the Company, shall agree not to sell or
otherwise transfer or dispose of any Common Stock of the Company held by
Optionee (except Common Stock included in such registration) during the 180-day
period following the effective date of a registration statement of the Company
filed under the Securities Act of 1933, as amended, or such shorter period of
time as the underwriter shall require. Such agreement shall be in writing in
the form satisfactory to such underwriter. The Company may impose stop-transfer
instructions with respect to such Common Stock subject to the foregoing
restriction until the end of said period.
10. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care of its Secretary at the
principal office of the Company, and any notice to be given to Optionee shall be
addressed to him at the address given by him beneath his signature to this
Agreement, or such other address as either party to this Agreement may hereafter
designate in writing to the other. Any such notice shall be deemed to have been
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States.
11. Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
12. California Law. The interpretation, performance, and enforcement
--------------
of this Agreement shall be governed by the laws of the State of California.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
TGV, Inc.,
a California corporation
By:
----------------------------------------------
Its:
---------------------------------------------
OPTIONEE:
------------------------------------------------
Craig A. Conway
Address:
---------------------------------------
---------------------------------------
7
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, ______________________________, the spouse of Craig A. Conway, have read
and approved the foregoing Agreement. In consideration of granting of the right
of my spouse to purchase shares of TGV, Inc., as set forth in the Agreement, I
hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights of the Agreement insofar as I may have any rights under such
community property laws of the State of California or similar laws relating to
marital property in effect in the state of our residence as of the date of the
signing of the foregoing Agreement.
Dated: ___________________________, 1994. By: _______________________________
8
<PAGE>
EXHIBIT 99.8
Non-Qualified Stock Option Agreement under the 1990 Stock Plan - Gary Valenzuela
<PAGE>
TGV, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
This Agreement is made as of February 8, 1994 (the "Grant Date"),
between TGV, Inc., a California corporation (the "Company") and Gary Valenzuela
("Optionee").
WITNESSED:
WHEREAS, the Company has adopted the TGV, Inc. 1990 Stock Plan (the
"Plan"), which Plan is incorporated in this Agreement by reference and made a
part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and interest of
the Company and its shareholders to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the service of the Company
and its Affiliates (as defined in the Plan) and as an incentive for increased
efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. (a) Option Grant. The Company hereby grants to Optionee the
------------
right and option to purchase from the Company on the terms and conditions
hereinafter set forth, all or any part of an aggregate of 62,500 shares of the
Common Stock of the Company (the "Stock"). This option is not intended to
satisfy the requirements of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code").
(b) Option Price. The purchase price of the Stock subject to
------------
this option shall be $5.50 per share. The term "Option Price" as used in this
Agreement refers to the purchase price of the Stock subject to this option.
2. Option Period. This option shall be exercisable only during the
-------------
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall terminate ten years from the Grant Date (the
Termination Date").
3. Limits on Option Period. The Option Period may end before the
-----------------------
Termination Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company
or an Affiliate for any reason other than disability (within the meaning of
subparagraph (c)) or death during the Option Period, the Option Period shall
terminate three (3) months after the date of such cessation of employment or on
the Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee dies while in the employ of the Company or any
of its Affiliates, the Option Period shall end one year after the date of death
or on the Termination Date, whichever shall first occur, and Optionee's executor
or administrator or the person or persons to whom Optionee's rights under this
option shall pass by will or by the applicable laws of descent and distribution
may exercise this option only to the extent exercisable under paragraph 4 on the
date of Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 105(d)(4) of the Code), the Option
Period shall end one year after the date of Optionee's cessation of employment
or on the Termination Date, whichever shall first occur, and the option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or an
Affiliate because of his disability, or for the purpose of serving the
government of the country in which the principal place of employment of Optionee
is located, either in a military or civilian capacity, or for such other purpose
or reason as the Board may approve, Optionee shall not be deemed during the
period of such absence, by virtue of such absence alone, to have terminated
employment with the Company or an Affiliate except as the Board of Directors of
the Company (the "Board") may otherwise expressly provide.
4. Vesting of Right to Exercise Options. Subject to other
------------------------------------
limitations contained in this Agreement, the Optionee shall have the right to
exercise the options in accordance with the following schedule:
(a) As to 25% of the number of shares of Stock covered by the
option, at any time after one year from December 23, 1993; and
(b) Thereafter, on the 23rd day of March, June, September and
December, commencing on March 23, 1995, as to an additional 6.25% of the number
of shares of Stock covered by the option, so that all shares of Stock covered by
the option shall be fully vested on December 23, 1997.
Notwithstanding anything contained in clauses (a) and (b) above, upon
the closing of the sale of the Company's Common Stock in a firm commitment,
underwriting public offering pursuant to a registration statement on Form S-1
under the Securities Act of 1933, as amended (the Offering"), in addition to any
shares of Stock that may already be
2
<PAGE>
vested, an additional 15% of the shares of Stock covered by the option shall be
accelerated and immediately exercisable and, to the extent that not all shares
of Stock covered by this option are vested, the remaining unvested shares of
Stock shall vest:
(i) in the event that the Offering shall occur prior to December
23, 1994, in accordance with clauses (a) and (b) above; provided, that
references to "shares of Stock covered by the option" shall be read to
apply only to the remaining 85% of the shares of Stock covered by the
option; and
(ii) In the event that the Offering shall occur on or after
December 23, 1994, in accordance with clauses (a) and (b) above;
provided, that, the percent of shares covered by the option that shall
vest on each of the dates specified in clause (b) shall be adjusted to
a percent necessary to provide that the unvested shares of Stock
covered by the option shall vest in equal installments on each of the
dates set forth in clause (b) that shall occur subsequent to the
Offering.
5. Method of Exercise. Optionee may exercise the option with
------------------
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised. Such
notice shall be accompanied by an amount equal to the Option Price of such
shares, in the form of any one or combination of the following: (i) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; or (ii) shares of Stock
valued at fair market value; or (iii) in any combination of the foregoing. The
shares of Stock shall be valued in accordance with procedures established by the
Board or a committee appointed by the Board to administer the Plan (the
"Committee").
(b) Optionee (and Optionee's spouse, if any) shall be required,
as a condition precedent to acquiring Stock through exercise of the option, to
execute one or more agreements relating to obligations in connection with
ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to
3
<PAGE>
which, in the opinion of counsel for the Company, such assurance is not required
to be given in order to comply with the provisions of the Securities Act of
1933, as amended.
As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraphs 5(b)
and 5(c), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the principal office of
the Company, attention of the Secretary, or such other place as may be mutually
acceptable to the Company and Optionee, a certificate or certificates of such
shares of Stock; provided, however, that the time of such delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with applicable registration requirements under
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, any applicable listing requirements of any national securities
exchange, and requirements under any other law or regulation applicable to the
issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in a class
----------------------
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent) or other change in the corporate structure of the Company, the Company
shall make appropriate adjustments in order to preserve, but not to increase,
the benefits to Optionee, including adjustments in the number of shares of such
Stock subject to this option and in the price per share.
In the event any of the following transactions (a Corporate
Transaction"):
(a) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation, or
(b) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger, 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, unless such successor corporation does
not agree to assume the option or to substitute an equivalent option, in which
case in lieu of such assumption or substitution, the Optionee shall have the
right to exercise the option as to all of the optioned stock, including shares
as to which the option would not otherwise be exercisable. If the option
becomes fully exercisable in lieu of assumption or substitution in the event of
a Corporate Transaction, the Board, upon approval by the Board of the Corporate
Transaction, shall notify the Optionee that the option shall be fully
exercisable for a period of twenty (20) days from the date of such notice, and
the option will terminate upon the expiration of such period.
7. Limitations on Transfer. This option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither this option nor any right
hereunder shall be
4
<PAGE>
transferable by Optionee by operation of law or otherwise other than by will or
the laws of descent and distribution. In the event of any attempt by Optionee to
alienate, assign, pledge, hypothecate, or otherwise dispose of this option or of
any right hereunder, except as provided for in this Agreement, or in the event
of the levy of any attachment, execution, or similar process upon the rights or
interest hereby conferred, the Company at its election may terminate this option
by notice to Optionee and this option shall thereupon become null and void.
8. No Shareholder Rights. Neither Optionee nor any person entitled
---------------------
to exercise Optionee's rights in the event of his death shall have any of the
rights of a shareholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. Lock-Up Agreement. Optionee, if requested by an underwriter of
-----------------
Common Stock or other securities of the Company, shall agree not to sell or
otherwise transfer or dispose of any Common Stock of the Company held by
Optionee (except Common Stock included in such registration) during the 180 day
period following the effective date of a registration statement of the Company
filed under the Securities Act of 1933, as amended, or such shorter period of
time as the underwriter shall require. Such agreement shall be in writing in
the form satisfactory to such underwriter. The Company may impose stop-transfer
instructions with respect to such Common Stock subject to the foregoing
restriction until the end of said period.
10. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care of its Secretary at the
principal office of the Company, and any notice to be given to Optionee shall be
addressed to him at the address given by him beneath his signature to this
Agreement, or such other address as either party to this Agreement may hereafter
designate in writing to the other. Any such notice shall be deemed to have been
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States.
11. Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
12. California Law. The interpretation, performance, and enforcement
--------------
of this Agreement shad be governed by the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
TGV, Inc., a California corporation
By:
---------------------------------------------
Its:
-------------------------------------------
OPTIONEE:
------------------------------------------------
Gary Valenzuela
Address:
----------------------------------------
----------------------------------------
6
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, ______________________________, the spouse of Gary Valenzuela, have
read and approved the foregoing Agreement. In consideration of granting of the
right of my spouse to purchase shares of TGV, Inc., as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: _______________________ , 1994. ________________________________________
7
<PAGE>
EXHIBIT 99.9
Form of Stock Option Assumption Agreement used in connection
with the 1990 Stock Plan
<PAGE>
1990 STOCK OPTION PLAN
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE: 1-
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 29th day of March, 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 TGV Software,
Inc., a Delaware corporation ("TGV"), which were granted to Optionee under the
TGV Software, Inc. 1990 Stock Option Plan (the "Plan") and are evidenced by a
Stock Option Agreement (the "Option Agreement") between TGV and Optionee.
WHEREAS, TGV has this day been acquired by Cisco through merger of a
wholly-owned Cisco subsidiary ("Acquisition Corporation") with and into TGV (the
"Merger") pursuant to the Agreement and Plan of Merger dated January 23, 1996 by
and among Cisco, TGV and Acquisition Corporation (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to assume all
obligations of TGV under all 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 .4 of a share of Cisco common stock ("Cisco
Stock") for each outstanding share of TGV 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 TGV common stock subject to the stock options
held by Optionee under the Plan immediately prior to the Effective Time (the
"TGV 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 TGV under each of the TGV Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each TGV
Option hereby assumed and the exercise price payable
<PAGE>
thereunder have been adjusted to reflect the Exchange Rate at which shares of
TGV 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 TGV
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 TGV Option shall be as indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed TGV 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 TGV common stock subject to the TGV 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 TGV Option immediately
prior to the Merger.
3. The following provisions shall govern each TGV 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 "Plan
Administrator" shall mean the Compensation Committee of the Cisco Board of
Directors.
- The grant date and the expiration date of each assumed TGV Option and
all other provisions which govern either the exercisability or the termination
of the assumed TGV 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 TGV 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 TGV Options shall be deemed to
automatically occur by reason of the Merger, and the grant date for each assumed
TGV Option shall accordingly remain the same as in effect under the applicable
Option Agreement immediately prior to the Merger.
- Any exercise of the assumed TGV Option for less than the full number of
shares of Cisco Stock subject to that option shall be subject to any partial
exercise limitations set forth in the Option Agreement in effect for such option
immediately prior to the Merger.
- For purposes of applying any and all provisions of the Option Agreement
relating to Optionee's status as an employee with the Company, Optionee shall
2
<PAGE>
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) TGV. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed TGV Option upon the
Optionee's cessation of employee status with TGV shall hereafter be applied on
the basis of the Optionee's cessation of employee status with Cisco and its
subsidiaries, and each assumed TGV 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 TGV 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 TGV
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed TGV 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>
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 TGV Options hereby assumed by Cisco Systems, Inc.
are as set forth in the Option Agreement, the Plan and such Stock Option
Assumption Agreement.
-------------------------------
1-, OPTIONEE
DATED: __________________, 1996
4
<PAGE>
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of TGV Software, Inc.
Common Stock (Pre-Merger)
5
<PAGE>
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc.
Common Stock (Post-Merger)
6
