<PAGE> 1
As filed with the Securities and Exchange Commission on ____________, 1996
Registration No. 333-_______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
NASHOBA NETWORKS INC.
1995 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(Full title of the plans)
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------- ---
Nashoba Networks Inc. 1995 Employee,
Director and Consultant Stock Option Plan
<S> <C> <C> <C> <C>
Options to Purchase Common Stock 214,615 N/A N/A N/A
Common Stock 214,615 shares $1.09 $233,930.35 $80.67
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Nashoba Networks Inc. 1995
Employee, Director and Consultant Stock Option Plan by reason of any
stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Cisco Systems, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1995 filed with the Commission pursuant to
Section 13 of the Securities Exchange Act of 1934 (the "1934
Act").
(b) (1) The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended October 31, 1995, January 31, 1996
and April 30, 1996, filed with the Commission on
December 12, 1995, March 13, 1996 and June 12, 1996,
respectively.
(2) The Registrant's reports on Form 8-K filed with the
Commission on December 6, 1995, April 2, 1996 and April
26, 1996.
(3) The Registrant's reports on Form 10-C filed with the
Commission on February 26, 1996 and July 11, 1996.
(c) The Registrant's Registration Statement No. 0-18225 on Form
8-A filed with the Commission on January 11, 1990, together
with Amendment No. 1 on Form 8-A filed with the Commission on
February 15, 1990, in which there is described the terms,
rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended and
Restated Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
4.0 Instruments Defining Rights of Shareholders. Reference is made to Registrant's
Registration Statement No. 0-18225 on Form 8-A which is incorporated herein by reference
pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Nashoba Networks Inc. 1995 Employee, Director and Consultant Stock Option Plan.
99.2 Form of Incentive Stock Option Agreement - One Third Vesting Upon Change in Control.
99.3 Form of Incentive Stock Option Agreement - 100% Vesting Upon Change in Control.
99.4 Form of Nonqualified Stock Option Agreement - 100% Vesting Upon Change in Control.
99.5 Form of Stock Option Assumption Agreement for Fully-Vested Shares.
99.6 Form of Stock Option Assumption Agreement for One-Third Vested Shares.
99.7 Memorandum re Assumption of Stock Options under the Nashoba Networks Inc. 1995
Employee, Director and Consultant Stock Option Plan for Fully-Vested Shares.
99.8 Memorandum re Assumption of Stock Options under the Nashoba Networks Inc. 1995
Employee, Director and Consultant Stock Option Plan for One-Third Vested Shares.
</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
II-2.
<PAGE> 4
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 Nashoba Networks Inc. 1995 Employee, Director, and Consultant
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
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Jose,
State of California, on this 11th day of October, 1996.
CISCO SYSTEMS, INC.
By /s/ John T. Chambers
--------------------
John T. Chambers
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John T. Chambers and Larry R. Carter and each of them
acting individually, as such person's true and lawful attorneys-in-fact and
agents, each with full power of substitution, for such person, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitutes, may do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ John T. Chambers President, Chief Executive October 11, 1996
- ---------------------------------
John T. Chambers Officer and Director (Principal
Executive Officer)
/s/ Larry R. Carter Vice President, Finance and October 11, 1996
- ----------------------------------
Larry R. Carter Administration, Chief Financial
Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ John P. Morgridge Chairman of the Board October 11, 1996
- ----------------------------------
John P. Morgridge and Director
</TABLE>
II-4.
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Donald T. Valentine Director October 11, 1996
- ----------------------------------
Donald T. Valentine
/s/ Michael S. Frankel Director October 11, 1996
- ----------------------------------
Michael S. Frankel
/s/ James F. Gibbons Director October 11, 1996
- ----------------------------------
James F. Gibbons
/s/ Robert L. Puette Director October 11, 1996
- ----------------------------------
Robert L. Puette
/s/ Masayoshi Son Director October 11, 1996
- ----------------------------------
Masayoshi Son
/s/ Steven M. West Director October 11, 1996
- ----------------------------------
Steven M. West
/s/ Richard M. Moley Director October 11, 1996
- ----------------------------------
Richard M. Moley
</TABLE>
II-5.
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
4.0 Instruments Defining Rights of Shareholders. Reference is made to Registrant's
Registration Statement No. 0-18225 on Form 8-A which is incorporated herein by reference
pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 Nashoba Networks Inc. 1995 Employee, Director and Consultant Stock Option Plan.
99.2 Form of Incentive Stock Option Agreement - One Third Vesting Upon Change in Control.
99.3 Form of Incentive Stock Option Agreement - 100% Vesting Upon Change in Control.
99.4 Form of Nonqualified Stock Option Agreement - 100% Vesting Upon Change in Control.
99.5 Form of Stock Option Assumption Agreement for Fully-Vested Shares.
99.6 Form of Stock Option Assumption Agreement for One-Third Vested Shares.
99.7 Memorandum re Assumption of Stock Options under the Nashoba Networks Inc. 1995
Employee, Director and Consultant Stock Option Plan for Fully Vested Shares.
99.8 Memorandum re Assumption of Stock Options under the Nashoba Networks Inc. 1995
Employee, Director and Consultant Stock Option Plan for One-Third Vested Shares.
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
<PAGE> 2
October 16, 1996
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 214,615 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 214,615 shares of
the common stock ("Common Stock") of Cisco Systems, Inc. (the "Company")
issuable under the Nashoba Networks Inc. 1995 Employee, Director and Consultant
Stock Option Plan (the "Plan"). We advise you that, in our opinion, when such
shares have been issued and sold pursuant to the applicable provisions of the
Plan and in accordance with the Registration Statement, such shares will be
validly issued, fully paid and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our reports
dated August 15, 1995, with respect to the financial statements and schedule of
Cisco Systems, Inc. for the years ended July 30, 1995, included in the Annual
Report (Form 10-K) for 1995, filed with the Securities and Exchange Commission,
in the Registration Statement on Form S-8 of Cisco Systems, Inc. for the
registration of 214,615 shares of its common stock and 214,615 options to
purchase shares of its commons stock
/s/ Coopers & Lybrand L.L.P.
San Jose, California
October 17, 1996
<PAGE> 1
EXHIBIT 99.1
NASHOBA NETWORKS INC.
1995 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
1. DEFINITIONS. Unless otherwise specified or unless the context
otherwise requires, the following terms, as used in this Nashoba Networks Inc.
1995 Employee, Director and Consultant Stock Option Plan, have the following
meanings:
"Administrator" means the Board of Directors, unless it has delegated
power to act on its behalf to a committee. (See Paragraph 4)
"Affiliate" means a corporation which, for purposes of Section 424 of
the Code, is a parent or subsidiary of the Company, direct or indirect.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Committee" means the Committee to which the Board of Directors has
delegated power to act under or pursuant to the provisions of the Plan.
"Common Stock" means shares of the Company's common stock, $.01 par
value.
"Company" means Nashoba Networks Inc., a Delaware corporation.
"Disability" or "Disabled" means permanent and total disability as
defined in Section 22(e)(3) of the Code.
"Fair Market Value" of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales prices are regularly
reported for the Common Stock, either (a) the average of the closing or last
prices of the Common Stock on the Composite Tape or other comparable reporting
system for the ten (10) consecutive trading days immediately preceding the
applicable date or (b) the closing or last price of the Common Stock on the
Composite Tape or other comparable reporting system for the trading day
immediately preceding the applicable date, as the Administrator shall determine.
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales prices are not
regularly reported for the Common Stock for the trading days or day referred to
in clause (1), and if bid and asked prices for the Common Stock are regularly
reported, either (a) the average
<PAGE> 2
of the mean between the bid and the asked price for the Common Stock at the
close of trading in the over-the-counter market for the ten (10) trading days on
which Common Stock was traded immediately preceding the applicable date or (b)
the mean between the bid and the asked price for the Common Stock at the close
of trading in the over-the-counter market for the trading day on which Common
Stock was traded immediately preceding the applicable date, as the Administrator
shall determine; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.
"ISO" means an option meant to qualify as an incentive stock option
under Code Section 422.
"Key Employee" means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an officer or
director of the Company or of an Affiliate), designated by the Administrator to
be eligible to be granted one or more Options under the Plan.
"Non-Qualified Option" means an option which is not intended to qualify
as an ISO.
"Option" means an ISO or Non-Qualified Option granted under the Plan.
"Option Agreement" means an agreement between the Company and a
Participant delivered pursuant to the Plan.
"Participant" means a Key Employee, director or consultant to whom one
or more Options are granted under the Plan. As used herein, "Participant" shall
include "Participant's Survivors" where the context requires.
"Participant's Survivors" means a deceased Participant's legal
representatives and/or any person or persons who acquired the Participant's
rights to an Option by will or by the laws of descent and distribution.
"Plan" means this Nashoba Networks Inc. 1995 Employee, Director and
Consultant Stock Option Plan.
"Shares" means shares of the Common Stock as to which Options have been
or may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued upon exercise of Options granted
under the Plan may be authorized and unissued shares or shares held by the
Company in its treasury, or both.
2.
<PAGE> 3
2. PURPOSES OF THE PLAN. The Plan is intended to encourage ownership of
Shares by Key Employees, directors and certain consultants to the Company in
order to attract such people, to induce them to work for the benefit of the
Company or of an Affiliate and to provide additional incentive for them to
promote the success of the Company or of an Affiliate. The Plan provides for the
granting of ISOs and Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN. The number of Shares subject to this
Plan as to which Options may be granted from time to time shall be 1,500,000, or
the equivalent of such number of Shares after the Administrator, in its sole
discretion, has interpreted the effect of any stock split, stock dividend,
combination, recapitalization or similar transaction in accordance with
Paragraph 16 of the Plan.
If an Option ceases to be "outstanding," in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN. The Administrator of the Plan will be
the Board of Directors, except to the extent the Board of Directors delegates
its authority to a Committee of the Board of Directors. Following the date on
which the Common Stock is registered under the Securities and Exchange Act of
1934, as amended (the "1934 Act"), the Plan is intended to comply in all
respects with Rule 16b-3 or its successors, promulgated pursuant to Section 16
of the 1934 Act with respect to Participants who are subject to Section 16 of
the 1934 Act, and any provision in this Plan with respect to such persons
contrary to Rule 16b-3 shall be deemed null and void to the extent permissible
by law and deemed appropriate by the Administrator. Subject to the provisions of
the Plan, the Administrator is authorized to:
(a) Interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
(b) Determine which employees of the Company or of an
Affiliate shall be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Options;
(c) Determine the number of Shares for which an Option or
Options shall be granted; and
(d) Specify the terms and conditions upon which an Option or
Options may be granted;
3.
<PAGE> 4
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.
5. ELIGIBILITY FOR PARTICIPATION. The Administrator will, in its sole
discretion, name the Participants in the Plan; provided, however, that each
Participant must be a Key Employee, director or consultant of the Company or of
an Affiliate at the time an Option is granted. Notwithstanding any of the
foregoing provisions, the Administrator may authorize the grant of an Option to
a person not then an employee, director or consultant of the Company or of an
Affiliate. The actual grant of such Option, however, shall be conditioned upon
such person becoming eligible to become a Participant at or prior to the time of
the execution of the Option Agreement evidencing such Option. ISOs may be
granted only to Key Employees. Non-Qualified Options may be granted to any Key
Employee, director or consultant of the Company or an Affiliate. The granting of
any Option to any individual shall neither entitle that individual to, nor
disqualify him or her from, participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS. Each Option shall be set forth in
writing in an Option Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such conditions as
the Administrator may deem appropriate including, without limitation, subsequent
approval by the shareholders of the Company of this Plan or any amendments
thereto. The Option Agreements shall be subject to at least the following terms
and conditions:
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards for any such Non-Qualified Option:
(a) Option Price: The option price (per share) of the Shares
covered by each Option shall be determined by the Administrator but shall not be
less than the par value per share of Common Stock.
(b) Each Option Agreement shall state the number of Shares to
which it pertains;
(c) Each Option Agreement shall state the date or dates on
which it first is exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or become exercisable
in installments over a period
4.
<PAGE> 5
of months or years, or upon the occurrence of certain conditions or the
attainment of stated goals or events; and
(d) Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in form satisfactory to
the Administrator providing for certain protections for the Company and its
other shareholders including requirements that:
(i) The Participant's or the Participant's Survivors'
right to sell or transfer the Shares may be restricted; and
(ii) The Participant or the Participant's Survivors may
be required to execute letters of investment intent and must also acknowledge
that the Shares will bear legends noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a
Key Employee and be subject to at least the following terms and conditions, with
such additional restrictions or changes as the Administrator determines are
appropriate but not in conflict with Code Section 422 and relevant regulations
and rulings of the Internal Revenue Service:
(a) Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as described above, except clause
(a) thereunder.
(b) Option Price: Immediately before the Option is granted, if
the Participant owns, directly or by reason of the applicable attribution rules
in Code Section 424(d):
(i) Ten percent (10%) or less of the total combined
voting power of all classes of share capital of the Company or an Affiliate, the
Option price per share of the Shares covered by each Option shall not be less
than one hundred percent (100%) of the Fair Market Value per share of the Shares
on the date of the grant of the Option.
(ii) More than ten percent (10%) of the total combined
voting power of all classes of share capital of the Company or an Affiliate, the
Option price per share of the Shares covered by each Option shall not be less
than one hundred ten percent (110%) of the said Fair Market Value on the date of
grant.
(c) Term of Option: For Participants who own
(i) Ten percent (10%) or less of the total combined
voting power of all classes of share capital of the Company or an Affiliate,
each Option shall terminate not more than ten (10) years from the date of the
grant or at such earlier time as the Option Agreement may provide.
5.
<PAGE> 6
(ii) More than ten percent (10%) of the total combined
voting power of all classes of share capital of the Company or an Affiliate,
each Option shall terminate not more than five (5) years from the date of the
grant or at such earlier time as the Option Agreement may provide.
(d) Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in any calendar year
(under this or any other ISO plan of the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred thousand dollars
($100,000), provided that this subparagraph (e) shall have no force or effect if
its inclusion in the Plan is not necessary for Options issued as ISOs to qualify
as ISOs pursuant to Section 422(d) of the Code.
(e) Limitation on Grant of ISOs: No ISOs shall be granted
after the date which is the earlier of ten (10) years from the date of the
adoption of the Plan by the Company and the date of the approval of the Plan by
the shareholders of the Company.
7. EXERCISE OF OPTION AND ISSUE OF SHARES. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address, together with provision for payment of the full
purchase price in accordance with this paragraph for the Shares as to which such
Option is being exercised, and upon compliance with any other condition(s) set
forth in the Option Agreement. Such written notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement. Payment of the purchase price for the Shares
as to which such Option is being exercised shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock having a fair market value equal as
of the date of the exercise to the cash exercise price of the Option, determined
in good faith by the Administrator, or (c) at the discretion of the
Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any
6.
<PAGE> 7
law or regulation which requires the Company to take any action with respect to
the Shares prior to their issuance. The Shares shall, upon delivery, be
evidenced by an appropriate certificate or certificates for fully paid,
non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).
The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, (iii) any such amendment of any ISO shall be made
only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holders of such ISO, and
(iv) with respect to any Option held by any Participant who is subject to the
provisions of Section 16(a) of the 1934 Act, any such amendment shall be made
only after the Administrator, after consulting with counsel for the Company,
determines whether such amendment would constitute the grant of a new Option.
8. RIGHTS AS A SHAREHOLDER. No Participant to whom an Option has been
granted shall have rights as a shareholder with respect to any Shares covered by
such Option, except after due exercise of the Option and tender of the full
purchase price for the Shares being purchased pursuant to such exercise and
registration of the Shares in the Company's share register in the name of the
Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS. By its terms, an
Option granted to a Participant shall not be transferable by the Participant
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder; provided,
however, that the designation of a beneficiary of an Option by a Participant
shall not be deemed a transfer prohibited by this Paragraph. Except as provided
in the preceding sentence, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
7.
<PAGE> 8
10. EFFECT OF NATION OF SERVICE OTHER THAN "FOR CAUSE". Except as
otherwise provided in the pertinent Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with the
Company or an Affiliate before the Participant has exercised all Options, the
following rules apply:
(a) A Participant who ceases to be an employee, director or consultant
of the Company or of an Affiliate (for any reason other than termination "for
cause," Disability, or death for which events there are special rules in
Paragraphs 11, 12, and 13, respectively), may exercise any Option granted to him
or her to the extent that the Option is exercisable on the date of such
termination of service, but only within such term as the Administrator has
designated in the pertinent Option Agreement.
(b) In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than three (3) months
after the Participant's termination of employment.
(c) The provisions of this Paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who subsequently becomes
disabled or dies after the termination of employment, director status or
consultancy; provided, however, in the case of a Participant's death within
three (3) months after the termination of employment, director status or
consulting, the Participant's Survivors may exercise the Option within one (1)
year after the date of the Participant's death, but in no event after the date
of expiration of the term of the Option.
(d) Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director status or
termination of consultancy, but prior to the exercise of an Option, the Board of
Directors determines that, either prior or subsequent to the Participant's
termination, the Participant engaged in conduct which would constitute "cause,"
then such Participant shall forthwith cease to have any right to exercise any
Option.
(e) A Participant to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because of temporary
disability (any disability other than a permanent and total Disability as
defined in Paragraph 1 hereof), or who is on leave of absence for any purpose,
shall not, during the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment, director status
or consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
(f) Options granted under the Plan shall not be affected by any change
of employment or other service within or among the Company and any Affiliates,
so long as the Participant continues to be an employee, director or consultant
of the Company or any Affiliate; provided, however, if a Participant's
employment by either the Company or an
8.
<PAGE> 9
Affiliate should cease (other than to become an employee of an Affiliate or the
Company), such termination shall affect the Participant's rights under any
Option granted to such Participant in accordance with the terms of the Plan and
the pertinent Option Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE". Except as otherwise
provided in the pertinent Option Agreement, the following rules apply if the
Participant's service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated "for cause" prior to the time that all of
his or her outstanding Options have been exercised:
(a) All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for cause" will
immediately be forfeited, unless the Option Agreement provides otherwise.
(b) For purposes of this Paragraph, "cause" shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial malfeasance or nonfeasance of duty, unauthorized disclosure of
confidential information, and conduct substantially prejudicial to the business
of the Company or any Affiliate. The determination of the Administrator as to
the existence of cause will be conclusive on the Participant and the Company.
(c) "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of service
but prior to the exercise of an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct which would
constitute "cause," then the right to exercise any Option is forfeited.
(d) Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of "cause" for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY. Except as
otherwise provided in the pertinent Option Agreement, a Participant who ceases
to be an employee, director or consultant of the Company or of an Affiliate by
reason of Disability may exercise any Option granted to such Participant:
(a) To the extent exercisable but not exercised on the date of
Disability; and
(b) In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights as would have accrued
had the Participant not become Disabled prior to the end of the accrual period
which next ends
9.
<PAGE> 10
following the date of Disability. The proration shall be based upon the number
of days of such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of
not more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. Except
as otherwise provided in the pertinent Option Agreement, in the event of the
death of a Participant to whom an Option has been granted while the Participant
is an employee, director or consultant of the Company or of an Affiliate, such
Option may be exercised by the Participant's Survivors:
(a) To the extent exercisable but not exercised on the date of death;
and
(b) In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights which would have
accrued had the Participant not died prior to the end of the accrual period
which next ends following the date of death. The proration shall be based upon
the number of days of such accrual period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares
to be issued upon the particular exercise of an Option shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
10.
<PAGE> 11
(a) The person(s) who exercise such Option shall warrant to the
Company, prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not with a
view to, or for sale in connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such grant:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there shall
have been compliance with all applicable state securities laws."
(b) The Company shall have received an opinion of its counsel that the
Shares may be issued upon such particular exercise in compliance with the 1933
Act without registration thereunder.
The Company may delay issuance of the Shares until completion of any
action or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY. Upon the dissolution or
liquidation of the Company, all Options granted under this Plan which as of such
date shall not have been exercised will terminate and become null and void;
provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise any Option to the extent that the Option
is exercisable as of the date immediately prior to such dissolution or
liquidation.
16. ADJUSTMENTS. Upon the occurrence of any of the following events, a
Participant's rights with respect to any Option granted to him or her hereunder
which have not previously been exercised in full shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the written
agreement between the Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Option
11.
<PAGE> 12
shall be appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that an Options
must be exercised (either to the extent then exercisable or, at the discretion
of the Administrator, all Options being made fully exercisable for purposes of
this subsection), within a specified number of days of the date of such notice,
at the end of which period the Options shall terminate; or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the Fair Market
Value of the shares subject to such Options (either to the extent then
exercisable or, at the discretion of the Administrator, all Options being made
fully exercisable for purposes of this subsection) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Option prior to such
recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOS, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
17. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. Except as expressly
12.
<PAGE> 13
provided herein, no adjustments shall be made for dividends paid in cash or in
property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES. No fractional share shall be issued under the
Plan and the person exercising such right shall receive from the Company cash in
lieu of such fractional share equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOS, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.
20. WITHHOLDING. In the event that any federal, state, or local income
taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Option holder's salary, wages or other
remuneration in connection with the exercise of an Option or a Disqualifying
Disposition (as defined in Paragraph 21), the Option holder shall advance in
cash to the Company, or to any Affiliate of the Company which employs or
employed the Option holder, the amount of such withholdings unless a different
withholding arrangement, including the use of shares of the Company's Common
Stock, is authorized by the Administrator (and permitted by law); provided,
however, that with respect to persons subject to Section 16 of the 1934 Act, any
such withholding arrangement shall be in compliance with any applicable
provisions of Rule 16b-3 promulgated under Section 16 of the 1934 Act. For
purposes hereof, the fair market value of the shares withheld for purposes of
payroll withholding shall be determined in the manner provided in Paragraph 1
above, as of the most recent practicable date prior to the date of exercise. If
the fair market value of the shares withheld is less than the amount of payroll
withholdings required, the Option holder may be required to advance the
difference in cash to the Company or the Affiliate employer. The Administrator
in its discretion may condition the exercise of an Option for less than the then
Fair Market Value on the Participant's payment of such additional withholding.
13.
<PAGE> 14
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Key Employee
who receives an ISO must agree to notify the Company in writing immediately
after the Key Employee makes a Disqualifying Disposition of any shares acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such shares before the later of (a) two
years after the date the Key Employee was granted the ISO, or (b) one year after
the date the Key Employee acquired shares by exercising the ISO. If the Key
Employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
22. TERMINATION OF THE PLAN. The Plan will terminate on the date which
is ten (10) years from the earlier of the date of its adoption and the date of
its approval by the shareholders of the Company. The Plan may be terminated at
an earlier date by vote of the shareholders of the Company; provided, however,
that any such earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS. The Plan may be amended by
the shareholders of the Company. The Plan may also be amended by the
Administrator, including, without limitation, to the extent necessary to qualify
any or all outstanding Options granted under the Plan or Options to be granted
under the Plan for favorable federal income tax treatment (including deferral of
taxation upon exercise) as may be afforded incentive stock options under Section
422 of the Code, to the extent necessary to ensure the qualification of the Plan
under Rule 16b-3, at such time, if any, as the Company has a class of stock
registered pursuant to Section 12 of the 1934 Act, and to the extent necessary
to qualify the shares issuable upon exercise of any outstanding Options granted,
or Options to be granted, under the Plan for listing on any national securities
exchange or quotation in any national automated quotation system of securities
dealers. Any amendment approved by the Administrator which is of a scope that
requires shareholder approval in order to ensure favorable federal income tax
treatment for any incentive stock options or requires shareholder approval in
order to ensure the compliance of the Plan with Rule 16b-3 at such time, if any,
as the Company has a class of stock registered pursuant to Section 12 of the
1934 Act, shall be subject to obtaining such shareholder approval. Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under an Option previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements in a manner which may be
adverse to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Option Agreements may be amended by
the Administrator in a manner which is not adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Plan or any
Option Agreement shall be deemed to prevent the Company or an Affiliate from
terminating the employment, consultancy or director status of a Participant, nor
to prevent
14.
<PAGE> 15
a Participant from terminating his or her own employment, consultancy or
director status or to give any Participant a right to be retained in employment
or other service by the Company or any Affiliate for any period of time.
25. GOVERNING LAW. This Plan shall be construed and enforced in
accordance with the law of the Commonwealth of Massachusetts.
15.
<PAGE> 1
EXHIBIT 99.2
INCENTIVE STOCK OPTION - ONE THIRD VESTING UPON CHANGE IN CONTROL
INCENTIVE STOCK OPTION AGREEMENT
NASHOBA NETWORKS INC.
AGREEMENT made as of ____________, 199_, between Nashoba Networks Inc.,
a Delaware corporation having a principal place of business at 9 Goldsmith
Street, Littleton, Massachusetts 01460 (the "Company"), and __________________,
an employee of the Company, residing at ________________, _______, ________ (the
"Employee").
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock, $.01 par value (the "Shares"), under and
for the purposes of the 1995 Employee, Director and Consultant Stock Option Plan
of the Company (the "Plan"); and
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Employee the right
and option to purchase all or any part of an aggregate of two thousand two
hundred and fifty (2,250) Shares, on the terms and conditions and subject to all
the limitations set forth herein and in the Plan, which is incorporated herein
by reference. The Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE. The purchase price of the Shares covered by the
Option shall be Three Dollars ($3.00) per Share, subject to adjustment, as
provided in the Plan, in the event of a stock split, reverse stock split or
other events affecting the holders of Shares. Payment shall be made in
accordance with Paragraph 7 of the Plan.
3. EXERCISE OF OPTION. Subject to the terms and conditions set forth in
this Agreement and the Plan, the Option granted hereby shall become exercisable
as follows:
<PAGE> 2
<TABLE>
<S> <C>
On or after ________ _____, 199__ up to ___________________ (___)
Shares)
On or after ________ ______, 199__ Up to an additional ____________
________ (___) Shares
On or after ________ ______, 199__ up to an additional ____________
_________ (___) Shares
On or after ________ ______, 200__ up to an additional ____________
_________ (___) Shares
On or after ________ ______, 200__ Up to an additional ____________
_________ (___) Shares
</TABLE>
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
Notwithstanding any contrary provision in the Plan or this Agreement,
upon the occurrence of a Change of Control (as hereinafter defined), then one
third (1/3) of any previously unvested portion of the Option shall become fully
exercisable immediately prior to the effectiveness of such Change of Control and
the remaining two thirds (2/3) of any previously unvested portion shall continue
to vest on the Schedule set forth in this Agreement. As used herein, a "Change
of Control" means that any of the following events has occurred:
(i) Any person (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) becomes the beneficial owner (as
defined in Rule 13d-3 promulgated under the Securities and Exchange
Commission) directly or indirectly or more than fifty (50%) of the
outstanding common stock of the Company, or otherwise becomes entitled
to vote more than fifty percent (50%) of the voting power entitled to
be cast at elections for directors ("Voting Power") of the Company;
(ii) The stockholders or the Board of Directors shall have
approved any consolidation or merger of the Company in which (A) the
Company is not the continuing or surviving corporation or (B) pursuant
to which the holders of the Company's shares of common stock
immediately prior to such merger or consolidation would not be the
holders immediately after such merger or consolidation of at least 51%
of the Voting Power of the Company;
(iii) The stockholders or the Board of Directors shall have
approved any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or
2.
<PAGE> 3
(iv) The liquidation or dissolution of the Company or the
Company ceasing to do business.
4. TERM OF OPTION. The Option shall terminate ten (10) years from the
date of this Agreement or, if the Employee owns as of the date hereof more than
10% of the total combined voting power of all classes of capital stock of the
Company or an Affiliate, five (5) years from the date of this Agreement, but
shall be subject to earlier termination as provided herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination by the Employee's employer for "cause" (as defined in the Plan), the
Option may be exercised, if it has not previously terminated, within one (1)
month after the date the Employee ceases to be an employee of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be
exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment.
Notwithstanding the foregoing, in the event of the Employee's death
within one (1) month after the termination of employment, the Employee's legal
representatives and/or any person or persons who acquired the Employee's rights
to the Option by will or by the laws of descent and distribution may exercise
the Option within one (1) year after the date of the Employee's death, but in no
event after the date of expiration of the term of the Option.
In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease forthwith, and this Option
shall thereupon terminate. Notwithstanding anything herein to the contrary, if
subsequent to the Employee's termination as an employee, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Employee's termination, the Employee engaged
in conduct which would constitute "cause," then the Employee shall forthwith
cease to have any right to exercise the Option and this Option shall thereupon
terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date
of Disability; and
3.
<PAGE> 4
(b) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights as would have accrued had the Employee not become Disabled prior
to the end of the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of days during
the accrual period prior to the date of Disability.
In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Employee's
Survivors. In such event, the Option must be exercised, if at all, within one
(1) year after the date of death of the Employee or, if earlier, within the
originally prescribed term of the Option. In such event, the Option shall be
exercisable:
(x) To the extent exercisable but not exercised as of the date
of death; and
(y) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights to exercise the Option as would have accrued had the Employee
not died prior to the end of the accrual period which next ends
following the date of death. The proration shall be based upon the
number of days during the accrual period prior to the Employee's death.
5. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company, at
the principal executive office of the Company. Such notice shall state the
election to exercise the Option and the number of Shares in respect of which it
is being exercised, shall be signed by the person or persons so exercising the
Option, and shall be in substantially the form attached hereto. Payment of the
purchase price for such Shares shall be made in accordance with Paragraph 7 of
the Plan. The Company shall deliver a certificate or certificates representing
such Shares as soon as practicable after the notice shall be received, provided,
however, that the Company may delay issuance of such Shares until completion of
any action or obtaining of any consent, which the Company deems necessary under
any applicable law (including, without limitation, state securities or "blue
sky" laws). The certificate or certificates for the Shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by Employee and if Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Paragraph 4 hereof, by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
4.
<PAGE> 5
6. PARTIAL EXERCISE. Exercise of this Option to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that no fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY. The Option shall not be transferable by the
Employee otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules thereunder. Except
as provided in the preceding sentence, the Option shall be exercisable, during
the Employee's lifetime, only by the Employee and shall not be assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other disposition of the Option
or of any rights granted hereunder contrary to the provisions of this Paragraph
7, or the levy of any attachment or similar process upon the Option or such
rights, shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall have no
rights as a stockholder with respect to Shares subject to this Agreement until a
stock certificate therefor has been issued to the Employee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of Options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to Options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
10. TAXES. The Employee acknowledges that any income or other taxes due
from him or her with respect to this Option or the Shares issuable pursuant to
this Option shall be the Employee's responsibility.
In the event of a Disqualifying Disposition (as defined in Paragraph 15
below) or if the Option is converted into a Non-Qualified Option and such
Non-Qualified Option is exercised, the Company may withhold from the Employee's
remuneration, if any, the appropriate amount of federal, state and local
withholding attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the common stock otherwise deliverable to the Employee on
exercise of the Option, provided, however, that with respect to persons subject
to Section 16 of the Securities Exchange Act of 1934 (the "1934 Act") any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule 16b-3 promulgated under Section 16 of the 1934 Act. The Participant further
agrees that, if the Company does not
5.
<PAGE> 6
withhold an amount from the Participant's remuneration sufficient to satisfy the
Company's income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount underwithheld.
11. PURCHASE FOR INVESTMENT. Unless the offering and sale of the
Share to be issued upon the particular exercise of the Option shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), and Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the following legend
which shall be endorsed upon the certificate(s) evidencing the Shares
issued pursuant to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there shall
have been compliance with all applicable state securities laws"; and
(b) If the Company so requires, the Company shall have
received an opinion of its counsel, that the Shares may be issued upon
such particular exercise in compliance with the Act without
registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the Company
deems necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Employee pursuant to the exercise
of the Option granted hereby shall not be transferred by the Employee except as
permitted herein.
12.2 In the event of the Employee's termination of employment by
the Company, any parent or subsidiary of the Company, direct or indirect, or any
subsidiary of the parent of the Company, Disability or death, the Company shall
have the option, but not the obligation, to repurchase all or any part of the
Shares issued pursuant to this Agreement (including, without limitation, Shares
purchased after termination of employment, Disability
6.
<PAGE> 7
or death in accordance with Paragraph 4 hereof). In the event the Company does
not, upon the death or Disability of the Employee or termination of his or her
employment (as described above), exercise its option pursuant to this Paragraph
12.2, the restrictions set forth in the balance of this Agreement shall not
thereby lapse, and the Employee for himself or herself, his or her heirs,
legatees, executors, administrators and other successors in interest, agrees
that the Shares shall remain subject to such restrictions. The following
provisions shall apply to a repurchase under this Paragraph 12.2:
(i) The per share repurchase price of the Shares to be sold to
the Company upon exercise of its option under this Paragraph 12.3 shall
be equal to the Fair Market Value of each such Share determined in
accordance with the Plan as of the date of termination, death or
Disability.
(ii) The Company's option to repurchase the Employee's Shares
in the event of termination of employment, death or Disability shall be
valid for a period of six (6) months commencing with the date of such
termination, death or Disability.
(iii) In the event the Company shall be entitled to and shall
elect to exercise its option to repurchase the Employee's Shares under
this Paragraph 12.2, the Company shall notify the Employee, or in case
of death, his or her representative, in writing of its intent to
repurchase the Shares. Such written notice may be mailed by the Company
up to and including the last day of the time period provided for in
Paragraph 12.2(ii) for exercise of the Company's option to repurchase.
(iv) The written notice to the Employee shall specify the
address at, and the time and date on, which payment of the repurchase
price is to be made (the "Closing"). The date specified shall not be
less than ten (10) days nor more than sixty (60) days from the date of
the mailing of the notice, and the Employee or his or her successor in
interest with respect to the Shares shall have no further rights as the
owner thereof from and after the date specified in the notice. At the
Closing, the repurchase price shall be delivered to the Employee or his
or her successor in interest and the Shares being purchased, duly
endorsed for transfer, shall, to the extent that they are not then in
the possession of the Company, be delivered to the Company by the
Employee or his or her successor in interest.
12.3 It shall be a condition precedent to the validity of any sale or
other transfer of any Shares by the Employee that the following restrictions be
complied with (except as hereinafter otherwise provided):
(i) No Shares owned by the Employee may be sold, pledged or
otherwise transferred (including by gift or devise) to any person or
entity, voluntarily, or by operation of law, except in accordance with
the terms and conditions hereinafter set forth.
7.
<PAGE> 8
(ii) Before selling or otherwise transferring all or part of
the Shares, the Employee shall give written notice of such intention to
the Company which notice shall include the name of the proposed
transferee, the proposed purchase price per share, the terms of payment
of such purchase price and all other matters relating to such sale or
transfer and shall be accompanied by a copy of the binding written
agreement of the proposed transferee to purchase the Shares of the
Employee. Such notice shall constitute a binding offer by the Employee
to sell to the Company such number of the Shares then held by the
Employee as are proposed to be sold in the notice at the monetary price
per share designated in such notice, payable on the terms offered to
the Employee by the proposed transferee (provided, however, that the
Company shall not be required to meet any non-monetary terms of the
proposed transfer, including, without limitation, delivery of other
securities in exchange for the Shares proposed to be sold). The Company
shall give written notice to the Employee as to whether such offer has
been accepted in whole by the Company within sixty (60) days after its
receipt of written notice from the Employee The Company may only accept
such offer in whole and may not accept such offer in part. Such
acceptance notice shall fix a time, location and date for the closing
on such purchase ("Closing Date") which shall not be less than ten (10)
nor more than sixty (60) days after the giving of the acceptance
notice. The place for such closing shall be at the Company's principal
office. At such closing, the Employee shall accept payment as set forth
herein and shall deliver to the Company in exchange therefor
certificates for the number of Shares stated in the notice accompanied
by duly executed instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Employee shall be free to sell all, but not less than all, of the
Shares set forth in his or her notice to the designated transferee at
the price and terms designated in the Employee's notice provided that
(i) such sale is consummated within six (6) months after the giving of
notice by the Employee to the Company as aforesaid, and (ii) the
transferee first agrees in writing to be bound by the provisions of
this Paragraph 12 so that he or she shall thereafter only be permitted
to sell or transfer the Shares in accordance with the terms hereof.
After the expiration of such six (6) months, the provisions of this
Paragraph 12.3 shall again apply with respect to any proposed voluntary
transfer of the Employee's Shares.
The restrictions on transfer contained in this Paragraph 12.3 shall not
apply to (a) transfers by the Employee to the trustee or trustees of a
trust revocable solely by him or her, (b) transfers by the Employee to
his or her guardian or conservator, (c) or transfers by the Employee,
in the event of his or her death, to his or her executor(s) or
administrator(s) or to trustee(s) under his or her will (collectively,
"Permitted Transferees"); provided, however, that in any such event the
Shares so transferred in the hands of each such Permitted Transferee
shall remain subject to this Agreement, and each such Permitted
Transferee shall so acknowledge in writing as a condition precedent to
the effectiveness of such transfer.
8.
<PAGE> 9
(iv) The provisions of this Paragraph 12.3 may be waived by
the Company. Any such waiver may be unconditional or based upon such
conditions as the Company may impose.
12.4 In the event that the Employee or his or her successor in interest
fails to deliver the Shares to be repurchased by the Company under this
Agreement, the Company may elect (a) to establish a segregated account in the
amount of the repurchase price, such account to be turned over to the Employee
or his or her successor in interest upon delivery of such Shares, and (b)
immediately to take such action as is appropriate to transfer record title of
such Shares from the Employee to the Company and to treat the Employee and such
Shares in all respects as if delivery of such Shares had been made as required
by this Agreement. The Employee hereby irrevocably grants the Company a power of
attorney which shall be coupled with an interest for the purpose of effectuating
the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock split
on or with respect to any of its common capital stock, or otherwise distribute
securities of the Company to the holders of its common capital stock, the number
of shares of stock or other securities of the Company issued with respect to the
Shares then subject to the restrictions contained in this Agreement shall be
added to the Shares subject to the Company's rights to repurchase pursuant to
this Agreement. If the Company shall distribute to its stockholders shares of
stock of another corporation, the shares of stock of such other corporation, the
shares of stock of such other corporation, distributed with respect to the
Shares then subject to the restrictions contained in this Agreement, shall be
added to the Shares subject to the Company's rights to repurchase pursuant to
this Agreement.
12.6 If the outstanding shares of common capital stock of the Company
shall be subdivided into a greater number of shares or combined into a smaller
number of shares, or in the event of a reclassification of the outstanding
shares of common capital stock of the Company, or if the Company shall be a
party to a merger, consolidation or capital reorganization, there shall be
substituted for the Shares then subject to the restrictions contained in this
Agreement such amount and kind of securities as are issued in such subdivision,
combination, reclassification, merger, consolidation or capital reorganization
in respect of the Shares subject immediately prior thereto to the Company's
rights to repurchase pursuant to this Agreement.
12.7 The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement or to treat as owner of such Shares, or to accord the right to
vote as such owner or to pay dividends to, any person or organization to which
any such Shares shall have been so sold, assigned or otherwise transferred, in
violation of this Agreement.
9.
<PAGE> 10
12.8 The provisions of Paragraph 12.3 shall terminate upon the
effective date of the registration of the Shares pursuant to the Securities
Exchange Act of 1934.
12.9 All certificates representing the Shares to be issued to the
Employee pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in an Incentive Stock Option Agreement dated
as of April 29, 1996 with this Company, a copy of which Agreement is available
for inspection at the offices of the Company or will be made available upon
request."
13. NO OBLIGATION TO EMPLOY. The Company is not by the Plan or this
Option obligated to continue the Employee as an employee of the Company.
14. OPTION IS AN ISO. The parties each intend that the Option be an ISO
so that the Employee (or the Employee's Survivors) may qualify for the favorable
tax treatment provided to holders of Options that meet the standards of Code
Section 422. Any provision of this Agreement or the Plan which conflicts with
the Code so that this Option would not be deemed an ISO is null and void and any
ambiguities shall be resolved so that the Option qualifies as an ISO.
Nonetheless, if the Option is determined not to be an ISO, the Employee
understands that the Company and any Affiliates are not responsible to
compensate him or her or otherwise make up for the treatment of the Option as a
Non-qualified Option and not as an ISO. The Employee should consult with the
Employee's own tax advisors regarding the tax effects of the Option and the
requirements necessary to obtain favorable tax treatment under Section 422 of
the Code, including, but not limited to, holding period requirements.
15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. The Employee agrees
to notify the Company in writing immediately after the Employee makes a
Disqualifying Disposition of any of the Shares acquired pursuant to the exercise
of the Option. A Disqualifying Disposition is defined in Section 424(c) of the
Code and includes any disposition (including any sale) of such Shares before the
later of (a) two years after the date the Employee was granted the Option or (b)
one year after the date the Employee acquired Shares by exercising the Option,
except as otherwise provided in Section 424(c) of the Code. If the Employee has
died before the Shares are sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.
16. NOTICES. Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by recognized courier service, facsimile,
registered or certified mail, return receipt required, addressed as follows:
To the Company: Nashoba Networks Inc.
9 Goldsmith Street
Littleton, MA 01460
Attn: Nick Grewal, President
10.
<PAGE> 11
To the Employee: __________________
__________________
__________________
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
17. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the law of the Commonwealth of Massachusetts.
18. BENEFIT OF AGREEMENT. Subject to the provisions of the Plan and the
other provisions hereof, this Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties hereto.
19. ENTIRE AGREEMENT. This Agreement, together with the Plan, embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement not expressly set forth in this
Agreement shall affect or be used to interpret, change or restrict, the express
terms and provision of this Agreement, provided, however, in any event, this
Agreement shall be subject to and governed by the Plan.
20. MODIFICATIONS AND AMENDMENTS. The terms and provision of this
Agreement may be modified or amended as provided by the Plan.
21. WAIVERS AND CONSENTS. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
22. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934. If the Employee to whom the Option has been
granted pursuant to this Agreement is subject to Section 16 of the 1934 Act,
Section 16 requires that at least six (6) months must elapse from the date of
grant of the Option to the date of disposition of the Shares.
11.
<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto set his
or her hand, all as of the date and year first above written.
NASHOBA NETWORKS INC.
By:
-------------------------------
Name: William H. Voorheis
Title: Vice President, Operations
EMPLOYEE
----------------------------------
[Type in name of employee here]
12.
<PAGE> 13
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[FORM FOR PRIVATE COMPANIES]
To: Nashoba Networks Inc.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase _________shares
(the "Shares") of the common stock, $.01 par value, of Nashoba Networks Inc.
(the "Company"), at the exercise price of $3.00 per share, pursuant to and
subject to the terms of that certain Incentive Stock Option Agreement between
the undersigned and the Company dated as of , 199 .
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informal
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares. I understand that because the
Shares have not been registered under the 1933 Act, I must continue to bear the
economic risk of the investment for an indefinite time and the Shares cannot be
sold unless the Shares are subsequently registered under applicable federal and
state securities laws or an exemption from such registration requirements is
available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares or (2) the Company receives an opinion of
my legal counsel (concurred in by legal counsel for the Company) stating that
such transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
<PAGE> 14
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the Company has no
obligation to me to register the sale of the Shares with the SEC and has not
represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the
Shares set forth in the 1995 Employee, Director and Consultant Stock Option Plan
and the Incentive Stock Option Agreement which I have carefully reviewed. I
consent to the placing of a legend on my certificate for the Shares referring to
such restriction and the placing of stop transfer orders until the Shares may be
transferred in accordance with the terms of such restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Pleases issue the stock certificate for the Shares (check one):
__________ to me
__________ to me and ___________________ as joint tenants with right of
survivorship and mail the certificate to me at the following address:
________________________________________________________________________________
My mailing address (if different from the above address) for shareholder
communication is:
________________________________________________________________________________
Very truly yours,
______________________________ ______________________________________
Date Employee (signature)
______________________________ ______________________________________
Social Security Number Print Name
2.
<PAGE> 1
EXHIBIT 99.3
INCENTIVE STOCK OPTION AGREEMENT - 100% VESTING UPON CHANGE IN CONTROL
INCENTIVE STOCK OPTION AGREEMENT
NASHOBA NETWORKS INC.
AGREEMENT made as of ____________, 199_, between Nashoba Networks Inc.,
a Delaware corporation having a principal place of business at 9 Goldsmith
Street, Littleton, Massachusetts 01460 (the "Company"), and ____________________
, an employee of the Company (the "Employee").
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock, $.01 par value (the "Shares"), under and
for the purposes of the 1995 Employee, Director and Consultant Stock Option Plan
of the Company (the "Plan"); and
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Employee the right
and option to purchase all or any part of an aggregate of twenty five thousand
(25,000) Shares, on the terms and conditions and subject to all the limitations
set forth herein and in the Plan, which is incorporated herein by reference. The
Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE. The purchase price of the Shares covered by the
Option shall be Five Cents ($0.05) per Share, subject to adjustment, as provided
in the Plans in the event of a stock split, reverse stock split or other events
affecting the holders of Shares. Payment shall be made in accordance with
Paragraph 7 of the Plan.
3. EXERCISE OF OPTION. Subject to the terms and conditions set forth in
this Agreement and the Plan, the Option granted hereby shall become exercisable
as follows:
<PAGE> 2
<TABLE>
<S> <C>
On or after the effective date up to _____________ (_____) Shares
of this Agreement
On or after ____________ ______, 199__ up to an additional _____________ (_____) Shares
On or after ____________ ______, 199__ up to an additional _____________ (_____) Shares
On or after ____________ ______, 199__ up to an additional _____________ (_____) Shares
On or after ____________ ______, 199__ up to an additional _____________ (_____) Shares
</TABLE>
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
Notwithstanding any contrary provision in the Plan or this Agreement,
upon the occurrence of a Change of Control (as hereinafter defined), then the
Option shall become fully exercisable immediately prior to the effectiveness of
such Change of Control. As used herein, a "Change of Control" means that any of
the following events has occurred:
(i) Any person (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) becomes the beneficial owner (as
defined in Rule 13d-3 promulgated under the Securities and Exchange
Commission) directly or indirectly of more than fifty (50%) of the
outstanding common stock of the Company, or otherwise becomes entitled
to vote more than fifty percent (50%) of the voting power entitled to
be cast at elections for directors ("Voting Power") of the Company;
(ii) The stockholders or the Board of Directors shall have
approved any consolidation or merger of the Company in which (A) the
Company is not the continuing or surviving corporation or (B) pursuant
to which the holders of the Company's shares of common stock
immediately prior to such merger or consolidation would not be the
holders immediately after such merger or consolidation of at least 51%
of the Voting Power of the Company;
(iii) The stockholders or the Board of Directors shall have
approved any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or
(iv) The liquidation or dissolution of the Company or the
Company ceasing to do business.
2
<PAGE> 3
4. TERM OF OPTION. The Option shall terminate ten (10) years from the
date of this Agreement or, if the Employee owns as of the date hereof more than
10% of the total combined voting power of all classes of capital stock of the
Company or an Affiliate, five (5) years from the date of this Agreement, but
shall be subject to earlier termination as provided herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination by the Employee's employer for "cause" (as defined in the Plan), the
Option may be exercised, if it has not previously terminated, within one (1)
month after the date the Employee ceases to be an employee of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be
exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment.
Notwithstanding the foregoing, in the event of the Employee's death
within one (1) month after the termination of employment, the Employee's legal
representatives and/or any person or persons who acquired the Employee's rights
to the Option by will or by the laws of descent and distribution may exercise
the Option within one (1) year after the date of the Employee's death, but in no
event after the date of expiration of the term of the Option.
In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease forthwith, and this Option
shall thereupon terminate. Notwithstanding anything herein to the contrary, if
subsequent to the Employee's termination as an employee, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Employee's termination, the Employee engaged
in conduct which would constitute "cause," then the Employee shall forthwith
cease to have any right to exercise the Option and this Option shall thereupon
terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date
of Disability; and
(b) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional rights as
would have accrued had the Employee not become Disabled prior to the end of the
accrual period which next ends
3
<PAGE> 4
following the date of Disability. The proration shall be based upon the number
of days during the accrual period prior to the date of Disability.
In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Participant's
Survivors. In such event, the Option must be exercised, if at all, within one
(1) year after the date of death of the Employee or, if earlier, within the
originally prescribed term of the Option. In such event, the Option shall be
exercisable:
(x) To the extent exercisable but not exercised as of the date
of death; and
(y) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights to exercise the Option as would have accrued had the Employee
not died prior to the end of the accrual period which next ends
following the date of death. The proration shall be based upon the
number of days during the accrual period prior to the Employee's death.
5. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company, at
the principal executive office of the Company. Such notice shall state the
election to exercise the Option and the number of Shares in respect of which it
is being exercised, shall be signed by the person or persons so exercising the
Option, and shall be in substantially the form attached hereto. Payment of the
purchase price for such Shares shall be made in accordance with Paragraph 7 of
the Plan. The Company shall deliver a certificate or certificates representing
such Shares as soon as practicable after the notice shall be received, provided,
however, that the Company may delay issuance of such Shares until completion of
any action or obtaining of any consent, which the Company deems necessary under
any applicable law (including, without limitation, state securities or "blue
sky" laws). The certificate or certificates for the Shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by Employee and if Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Paragraph 4 hereof, by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
6. PARTIAL EXERCISE. Exercise of this Option to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that no fractional share shall be issued pursuant to this Option.
4
<PAGE> 5
7. NON-ASSIGNABILITY. The Option shall not be transferable by the
Employee otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules thereunder. Except
as provided in the preceding sentence, the Option shall be exercisable, during
the Employee's lifetime, only by the Employee and shall not be assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other disposition of the Option
or of any rights granted hereunder contrary to the provisions of this Paragraph
7, or the levy of any attachment or similar process upon the Option or such
rights, shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall have no
rights as a stockholder with respect to Shares subject to this Agreement until a
stock certificate therefor has been issued to the Employee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of Options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to Options and related provisions with respect to successors to
the business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
10. TAXES. The Employee acknowledges that any income or other taxes due
from him or her with respect to this Option or the Shares issuable pursuant to
this Option shall be the Employee's responsibility.
In the event of a Disqualifying Disposition (as defined in Paragraph 15
below) or if the Option is converted into a Non-Qualified Option and such
Non-Qualified Option is exercised, the Company may withhold from the Employee's
remuneration, if any, the appropriate amount of federal, state and local
withholding attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the common stock otherwise deliverable to the Participant on
exercise of the Option, provided, however, that with respect to persons subject
to Section 16 of the Securities Exchange Act of 1934 (the "1934 Act") any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule 16b-3 promulgated under Section 16 of the 1934 Act. The Participant
5
<PAGE> 6
further agrees that, if the Company does not withhold an amount from the
Participant's remuneration sufficient to satisfy the Company's income tax
withholding obligation, the Participant will reimburse the Company on demand, in
cash, for the amount underwithheld.
11. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares
to be issued upon the particular exercise of the Option shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are acquiring such
Shares for their own respective accounts, for investment, and not with a view
to, or for sale in connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the certificate(s)
evidencing the Shares issued pursuant to such exercise:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of
counsel satisfactory to it that an exemption from registration
under such Act is then available, and (2) there shall have
been compliance with all applicable state securities laws";
and
(b) If the Company so requires, the Company shall have
received an opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining of any consent, which
the Company deems necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Employee pursuant to the exercise of
the Option granted hereby shall not be transferred by the Employee except as
permitted herein.
6
<PAGE> 7
12.2 In the event of the Employee's termination of employment by the
Company, any parent or subsidiary of the Company, direct or indirect, or any
subsidiary of the parent of the Company, Disability or death, the Company shall
have the option, but not the obligation, to repurchase all or any part of the
Shares issued pursuant to this Agreement (including, without limitation, Shares
purchased after termination of employment, Disability or death in accordance
with Paragraph 4 hereof). In the event the Company does not, upon the death or
Disability of the Employee or termination of his or her employment (as described
above), exercise its option pursuant to this Paragraph 12.2, the restrictions
set forth in the balance of this Agreement shall not thereby lapse, and the
Employee for himself or herself, his or her heirs, legatees, executors,
administrators and other successors in interest, agrees that the Shares shall
remain subject to such restrictions. The Following provisions shall apply to a
repurchase under this Paragraph 12.2:
(i) The per share repurchase price of the Shares to be sold to
the Company upon exercise of its option under this Paragraph 12.2 shall
be equal to the Fair Market Value of each such Share determined in
accordance with the Plan as of the date of termination, death or
Disability.
(ii) The Company's option to repurchase the Employee's Shares
in the event of termination of employment, death or Disability shall be
valid for a period of six (6) months commencing with the date of such
termination, death or Disability.
(iii) In the event the Company shall be entitled to and shall
elect to exercise its option to repurchase the Employee's Shares under
this Paragraph 12.2, the Company shall notify the Employee, or in case
of death, his or her representative, in writing of its intent to
repurchase the Shares. Such written notice may be mailed by the Company
up to and including the last day of the time period provided for in
Paragraph 12.2(ii) for exercise of the Company's option to repurchase.
(iv) The written notice to the Employee shall specify the
address at, and the time and date on, which payment of the repurchase
price is to be made (the "Closing"). The date specified shall not be
less than ten (10) days nor more than sixty (60) days from the date of
the mailing of the notice, and the Employee or his or her successor in
interest with respect to the Shares shall have no further rights as the
owner thereof from and after the date specified in the notice. At the
Closing, the repurchase price shall be delivered to the Employee or his
or her successor in interest and the Shares being purchased, duly
endorsed for transfer, shall, to the extent that they are not then in
the possession of the Company, be delivered to the Company by the
Employee or his or her successor in interest.
7
<PAGE> 8
12.3 It shall be a condition precedent to the validity of any sale or
other transfer of any Shares by the Employee that the following restrictions be
complied with (except as hereinafter otherwise provided):
(i) No Shares owned by the Employee may be sold, pledged or
otherwise transferred (including by gift or devise) to any person or
entity, voluntarily, or by operation of law, except in accordance with
the terms and conditions hereinafter set forth.
(ii) Before selling or otherwise transferring all or part of
the Shares, the Employee shall give written notice of such intention to
the Company which notice shall include the name of the proposed
transferee, the proposed purchase price per share, the terms of payment
of such purchase price and all other matters relating to such sale or
transfer and shall be accompanied by a copy of the binding written
agreement of the proposed transferee to purchase the Shares of the
Employee. Such notice shall constitute a binding offer by the Employee
to sell to the Company such number of the Shares then held by the
Employee as are proposed to be sold in the notice at the monetary price
per share designated in such notice, payable on the terms offered to
the Employee by the proposed transferee (provided, however, that the
Company shall not be required to meet any non-monetary terms of the
proposed transfer, including, without limitation, delivery of other
securities in exchange for the Shares proposed to be sold). The Company
shall give written notice to the Employee as to whether such offer has
been accepted in whole by the Company within sixty (60) days after its
receipt of written notice from the Employee. The Company may only
accept such offer in whole and may not accept such offer in part. Such
acceptance notice shall fix a time, location and date for the closing
on such purchase ("Closing Date") which shall not be less than ten (10)
nor more than sixty (60) days after the giving of the acceptance
notice. The place for such closing shall be at the Company's principal
office. At such closing, the Employee shall accept payment as set forth
herein and shall deliver to the Company in exchange therefor
certificates for the number of Shares stated in the notice accompanied
by duly executed instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Employee shall be free to sell all, but not less than all, of the
Shares set forth in his or her notice to the designated transferee at
the price and terms designated in the Employee's notice, provided that
(i) such sale is consummated within six (6) months after the giving of
notice by the Employee to the Company as aforesaid, and (ii) the
transferee first agrees in writing to be bound by the provisions of
this Paragraph 12 so that he or she shall thereafter only be permitted
to sell or transfer the Shares in accordance with the terms hereof.
After the expiration of such six (6) months, the provisions of this
Paragraph 12.3 shall again apply with respect to any proposed voluntary
transfer of the Employee's Shares.
8
<PAGE> 9
The restrictions on transfer contained in this Paragraph 12.3 shall not
apply to (a) transfers by a participant to the trustee or trustees of a
trust revocable solely by him or her, (b) transfers by a Participant to
his or her guardian or conservator, (c) or transfers by a Participant,
in the event of his or her death, to his or her executor(s) or
administrator(s) or to trustee(s) under his or her will (collectively,
"Permitted Transferees"); provided however, that in any such event the
Shares so transferred in the hands of each such Permitted Transferee
shall remain subject to this Agreement, and each such Permitted
Transferee shall so acknowledge in writing as a condition precedent to
the effectiveness of such transfer.
(iv) The provisions of this Paragraph 12.3 may be waived by
the Company. Any such waiver may be unconditional or based upon such
conditions as the Company may impose.
12.4 In the event that the Employee or his or her successor in interest
fails to deliver the Shares to be repurchased by the Company under this
Agreement, the Company may elect (a) to establish a segregated account in the
amount of the repurchase price, such account to be turned over to the Employee
or his or her successor in interest upon delivery of such Shares, and (b)
immediately to take such action as is appropriate to transfer record title of
such Shares from the Employee to the Company and to treat the Employee and such
Shares in all respects as if delivery of such Shares had been made as required
by this Agreement. The Employee hereby irrevocably grants the Company a power of
attorney which shall be coupled with an interest for the purpose of effectuating
the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock split
on or with respect to any of its common capital stock, or otherwise distribute
securities of the Company to the holders of its common capital stock, the number
of shares of stock or other securities of the Company issued with respect to the
Shares then subject to the restrictions contained in this Agreement shall be
added to the Shares subject to the Company's rights to repurchase pursuant to
this Agreement. If the Company shall distribute to its stockholders shares of
stock of another corporation, the shares of stock of such other corporation,
distributed with respect to the Shares then subject to the restrictions
contained in this Agreement, shall be added to the Share subject to the
Company's rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of common capital stock of the Company
shall be subdivided into a greater number of shares or combined into a smaller
number of shares, or in the event of a reclassification of the outstanding
shares of common capital stock of the Company, or if the Company shall be a
party to a merger, consolidation or capital reorganization, there shall be
substituted for the Shares then
9
<PAGE> 10
subject to the restrictions contained in this Agreement such amount and kind of
securities as are issued in such subdivision, combination, reclassification,
merger, consolidation or capital reorganization in respect of the Shares subject
immediately prior thereto to the Company's rights to repurchase pursuant to this
Agreement.
12.7 The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Agreement.
12.8 The provisions of Paragraph 12.3 shall terminate upon the
effective date of the registration of the Shares pursuant to the Securities
Exchange Act of 1934.
12.9 All certificates representing the Shares to be issued to the
Employee pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in an Incentive Stock Option Agreement dated
as of February 1, 1995 with this Company, a copy of which Agreement is available
for inspection at the offices of the Company or will be made available upon
request."
13. NO OBLIGATION TO EMPLOY. The Company is not by the Plan or this
Option obligated to continue the Employee as an employee of the Company.
14. OPTION IS AN ISO. The parties each intend that the Option be an ISO
so that the Employee (or the Employee's Survivors) may qualify for the favorable
tax treatment provided to holders of Options that meet the standards of Code
Section 422. Any provision of this Agreement or the Plan which conflicts with
the Code so that this Option would not be deemed an ISO is null and void and any
ambiguities shall be resolved so that the Option qualifies as an ISO.
Nonetheless, if the Option is determined not to be an ISO, the Employee
understands that the Company and any Affiliates are not responsible to
compensate him or her or otherwise make up for the treatment of the Option as a
Non-qualified Option and not as an ISO. The Employee should consult with the
Employee's own tax advisors regarding the tax effects of the Option and the
requirements necessary to obtain favorable tax treatment under Section 422 of
the Code, including, but not limited to, holding period requirements.
10
<PAGE> 1
EXHIBIT 99.4
NON-QUALIFIED STOCK OPTION AGREEMENT - 100% VESTING UPON CHANGE IN CONTROL
NON-QUALIFIED STOCK OPTION AGREEMENT
NASHOBA NETWORKS INC.
AGREEMENT made as of ________, 199__ , between Nashoba Networks Inc., a
Delaware corporation having a principal place of business at 9 Goldsmith Street,
Littleton, Massachusetts 01460 (the "Company"), and ______________________ , an
employee of the Company, residing at _________________, _______, _____________
_____ (the "Employee").
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock, $.01 per value (the "Shares"), under and
for the purposes of the 1995 Employee, Director and Consultant Stock Option Plan
of the Company (the "Plan"); and
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein shall be a Non-Qualified Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Employee the right
and option to purchase all or any part of an aggregate of One Hundred and
Twenty-Five Thousand (125,000) Shares, on the terms and conditions and subject
to all the limitations set forth herein and in the Plan, which is incorporated
herein by reference. The Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE. The purchase price of the Shares covered by the
Option shall be Five Cents ($0.05) per Share, subject to adjustment, as provided
in the Plan, in the event of a stock split, reverse stock split or other events
affecting the holders of Shares. Payment shall be made in accordance with
Paragraph 7 of the Plan.
3. EXERCISE OF OPTION. Subject to the terms and conditions set forth in
this Agreement and the Plan, the Option granted hereby shall become exercisable
as follows:
<PAGE> 2
<TABLE>
<S> <C>
On or after ____________ ______, 199__ up to ____________________ (______) Shares
On or after ____________ ______, 199__ up to an additional ____________________
(______) Shares
On or after ____________ ______, 199__ up to an additional ____________________
(______) Shares
On or after ____________ ______, 199__ up to an additional ____________________
(______) Shares
On or after ____________ ______, 199__ up to an additional ____________________
(______) Shares
</TABLE>
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
Notwithstanding any contrary provision in the Plan or this Agreement,
upon the occurrence of a Change of Control (as hereinafter defined), then the
Option shall become fully exercisable immediately prior to the effectiveness of
such Change of Control. As used herein, a "Change of Control" means that any of
the following events has occurred:
(i) Any person (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) becomes the beneficial owner (as
defined in Rule 13d-3 promulgated under the Securities and Exchange
Commission) directly or indirectly of more than fifty percent (50%) of
the outstanding common stock of the Company, or otherwise becomes
entitled to vote more than fifty percent (50%) of the voting power
entitled to be cast at elections for directors ("Voting Power") of the
Company;
(ii) The stockholders or the Board of Directors shall have
approved any consolidation or merger of the Company in which (A) the
Company is not the continuing or surviving corporation or (B) pursuant
to which the holders of the Company's shares of common stock
immediately prior to such merger or consolidation would not be the
holders immediately after such merger or consolidation of at least 51%
of the Voting Power of the Company;
(iii) The stockholders or the Board of Directors shall have
approved any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or
(iv) The liquidation or dissolution of the Company or the
Company ceasing to do business.
<PAGE> 3
4. TERM OF OPTION. The Option shall terminate ten (10) years from the
date of this Agreement, but shall be subject to earlier termination as provided
herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination by the Employee's employer for "cause" (as defined in the Plan), the
Option may be exercised, if it has not previously terminated, within one (1)
month after the date the Employee ceases to be an employee of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be
exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment.
Notwithstanding the foregoing, in the event of the Employee's death
within one (1) month after the termination of employment, the Employee's legal
representatives and/or any person or persons who acquired the Employee's rights
to the Option by will or by the laws of descent and distribution may exercise
the Option within one (1) year after the date of the Employee's death, but in no
event after the date of expiration of the term of the Option.
In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease forthwith, and this Option
shall thereupon terminate. Notwithstanding anything herein to the contrary, if
subsequent to the Employee's termination as an employee, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Employee's termination, the Employee engaged
in conduct which would constitute "cause," then the Employee shall forthwith
cease to have any right to exercise the Option and this Option shall thereupon
terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date
of Disability; and
(b) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional rights as
would have accrued had the Employee not become Disabled prior to the end of the
accrual period which next ends following the date of Disability. The proration
shall be based upon the number of days during the accrual period prior to the
date of Disability.
3.
<PAGE> 4
In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Employee's
Survivors. In such event, the Option must be exercised, if at all, within one
(1) year after the date of death of the Employee or, if earlier, within the
originally prescribed term of the Option. In such event, the Option shall be
exercisable:
(x) To the extent exercisable but not exercised as of the date
of death; and
(y) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional rights to
exercise the Option as would have accrued had the Employee not died prior to the
end of the accrual period which next ends following the date of death. The
proration shall be based upon the number of days during the accrual period prior
to the Employee's death.
5. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company, at
the principal executive office of the Company. Such notice shall state the
election to exercise the Option and the number of Shares in respect of which it
is being exercised, shall be signed by the person or persons so exercising the
Option, and shall be in substantially the form attached hereto. Payment of the
purchase price for such Shares shall be made in accordance with Paragraph 7 of
the Plan. The Company shall deliver a certificate or certificates representing
such Shares as soon as practicable after the notice shall be received, provided,
however, that the Company may delay issuance of such Shares until completion of
any action or obtaining of any consent, which the Company deems necessary under
any applicable law (including, without limitation, state securities or "blue
sky" laws). The certificate or certificates for the Shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by Employee and if Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Paragraph 4 hereof, by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
6. PARTIAL EXERCISE. Exercise of this Option to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that no fractional share shall be issued pursuant to this Option.
4.
<PAGE> 5
7. NON-ASSIGNABILITY. The Option shall not be transferable by the
Employee otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules thereunder. Except
as provided in the preceding sentence, the Option shall be exercisable, during
the Employee's lifetime, only by the Employee and shall not be assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other disposition of the Option
or of any rights granted hereunder contrary to the provisions of this Paragraph
7, or the levy of any attachment or similar process upon the Option or such
rights, shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall have no
rights as a stockholder with respect to Shares subject to this Agreement until a
stock certificate therefor has been issued to the Employee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of Options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to Options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
10. TAXES. The Employee acknowledges that upon exercise of the Option
the Employee must be deemed to have taxable income measured by the difference
between the then fair market share of the shares received upon exercise and the
price paid for such shares pursuant to this Agreement (the "Taxable Income").
The Employee acknowledges that any income or other taxes due from him or her
with respect to this Option or the Shares issuable pursuant to this Option shall
be the Employee's responsibility.
If the Company in its discretion determines that it is obligated to
withhold income or other taxes with respect to the exercise of the Option, the
Employee hereby agrees that the Company may withhold from the Employee's
remuneration, if any, the appropriate amount of federal, state and local
withholding attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the common stock otherwise deliverable to the Employee on
exercise of the Option, provided, however, that with respect to persons subject
to Section 16 of the Securities Exchange Act of 1934 (the "1934 Act") any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule
5.
<PAGE> 6
16b-3 promulgated under Section 16 of the 1934 Act. The Participant further
agrees that, if the Company does not withhold an amount from the Participant's
remuneration sufficient to satisfy the Company's income tax withholding
obligation, the Participant will reimburse the Company on demand, in cash, for
the amount underwithheld.
11. PURCHASE FOR INVESTMENT. Unless the offering and sale of
the Shares to be issued upon the particular exercise of the Option shall have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the following legend
which shall be endorsed upon the certificate(s) evidencing the Shares
issued pursuant to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (20 there shall
have been compliance with all applicable state securities laws"; and
(b) If the Company so requires, the Company shall have
received an opinion of its counsel that the Shares may be issued upon
such particular exercise in compliance with the Act without
registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the Company
deems necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Employee pursuant to the
exercise of the Option granted hereby shall not be transferred by the Employee
except as permitted herein.
12.2 In the event of the Employee's termination of employment
by the Company, any parent or subsidiary of the Company, direct or indirect, or
any subsidiary of the parent of the Company, Disability or death, the Company
shall have the option,
6.
<PAGE> 7
but not the obligation, to repurchase all or any part of the Shares issued
pursuant to this Agreement (including, without limitation, Shares purchased
after termination of employment, Disability or death in accordance with
Paragraph 4 hereof). In the event the Company does not, upon the death or
Disability of the Employee or termination of his or her employment (as described
above), exercise its option pursuant to this Paragraph 12.2, the restrictions
set forth in the balance of this Agreement shall not thereby lapse, and the
Employee for himself or herself, his or her heirs, legatees, executors,
administrators and other successors in interest, agrees that the Shares shall
remain subject to such restrictions. The following provisions shall apply to a
repurchase under this Paragraph 12.2:
(i) The per share repurchase price of the Shares to be sold to
the Company upon exercise of its option under this Paragraph 12.2 shall
be equal to the Fair Market Value of each such Share determined in
accordance with the Plan as of the date of termination, death or
Disability.
(ii) The Company's option to repurchase the Employee's Shares
in the event of termination of employment, death or Disability shall be
valid for a period of six (6) months commencing with the date of such
termination, death or Disability.
(iii) In the event the Company shall be entitled to and shall
elect to exercise its option to repurchase the Employee's Shares under
this Paragraph 12.2, the Company shall notify the Employee, or in case
of death, his or her representative, in writing of its intent to
repurchase the Shares. Such written notice may be mailed by the Company
up to and including the last day of the time period provided for in
Paragraph 12.2(ii) for exercise of the Company's option to repurchase.
(iv) The written notice to the Employee shall specify the
address at, and the time and date on, which payment of the repurchase
price is to be made (the "Closing"). The date specified shall not be
less than ten (10) days nor more than sixty (60) days from the date of
the mailing of the notice, and the Employee or his or her successor in
interest with respect to the Shares shall have no further rights as the
owner thereof from and after the date specified in the notice. At the
Closing, the repurchase price shall be delivered to the Employee or his
or her successor in interest and the Shares being purchased, duly
endorsed for transfer, shall, to the extent that they are not then in
the possession of the Company, be delivered to the Company by the
Employee or his or her successor in interest.
12.3 It shall be a condition precedent to the validity of any sale or
other transfer of any Shares by the Employee that the following restrictions be
complied with (except as hereinafter otherwise provided):
7.
<PAGE> 8
(i) No Shares owned by the Employees may be sold, pledged or
otherwise transferred (including by gift or devise) to any person or
entity, voluntarily, or by operation of law, except in accordance with
the terms and conditions hereinafter set forth.
(ii) Before selling or otherwise transferring all or part of
the Shares, the Employee shall give written notice of such intention to
the Company which notice shall include the name of the proposed
transferee, the proposed purchase price per share, the terms of payment
of such purchase price and all other matters relating to such sale or
transfer and shall be accompanied by a copy of the binding written
agreement of the proposed transferee to purchase the Shares of the
Employee. Such notice shall constitute a binding offer by the Employee
to sell to the Company such number of the Shares then held by the
Employee as are proposed to be sold in the notice at the monetary price
per share designated in such notice, payable on the terms offered to
the Employee by the proposed transferee (provided, however, that the
Company shall not be required to meet any non-monetary terms of the
proposed transfer, including, without limitation, delivery of other
securities in exchange for the Shares proposed to be sold). The Company
shall give written notice to the Employee as to whether such offer has
been accepted in whole by the Company within sixty (60) days after its
receipt of written notice from the Employee. The Company may only
accept such offer in whole and may not accept such offer in part. Such
acceptance notice shall fix a time, location and date for the closing
on such purchase ("Closing Date") which shall not be less than ten (10)
nor more than sixty (60) days after the giving of the acceptance
notice. The place for such closing shall be at the Company's principal
office. At such closing, the Employee shall accept payment as set forth
herein and shall deliver to the Company in exchange therefor
certificates for the number of Shares stated in the notice accompanied
by duly executed instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Employee shall be free to sell all, but not less than all, of the
Shares set forth in his or her notice to the designated transferee at
the price and terms designated in the Employee's notice, provided that
(i) such sale is consummated within six (6) months after the giving of
notice by the Employee to the Company as aforesaid, and (ii) the
transferee first agrees in writing to be bound by the provisions of
this Paragraph 12 so that he or she shall thereafter only be permitted
to sell or transfer the Shares in accordance with the terms hereof.
After the expiration of such six (6) months, the provisions of this
Paragraph 12.3 shall again apply with respect to any proposed voluntary
transfer of the Employee's Shares.
The restrictions on transfer contained in this Paragraph 12.3
shall not apply to (a) transfers by the Employee to the trustee or trustees of a
trust revocable solely by him or her, (b) transfers by the Employee to his or
her guardian or conservator, (c) or
8.
<PAGE> 9
transfers by the Employee, in the event of his or her death, to his or her
executor(s) or administrator(s) or to trustee(s) under his or her will
(collectively, "Permitted Transferees"); provided however, that in any such
event the Shares so transferred in the hands of each such Permitted Transferee
shall remain subject to this Agreement, and each such Permitted Transferee shall
so acknowledge in writing as a condition precedent to the effectiveness of such
transfer.
(iv) The provisions of this Paragraph 12.3 may be waived by
the Company. Any such waiver may be unconditional or based upon such
conditions as the Company may impose.
12.4 In the event that the Employee or his or her successor in
interest fails to deliver the Shares to be repurchased by the Company under this
Agreement, the Company may elect (a) to establish a segregated account in the
amount of the repurchase price, such account to be turned over to the Employee
or his or her successor in interest upon delivery of such Shares, and (b)
immediately to take such action as is appropriate to transfer record title of
such Shares from the Employee to the Company and to treat the Employee and such
Shares in all respects as if delivery of such Shares had been made as required
by this Agreement. The Employee hereby irrevocably grants the Company a power of
attorney which shall be coupled with an interest for the purpose of effectuating
the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock
split on or with respect to any of its common capital stock, or otherwise
distribute securities of the Company to the holders of its common capital stock,
the number of shares of stock or other securities of the Company issued with
respect to the Shares then subject to the restrictions contained in this
Agreement shall be added to the Shares subject to the Company's rights to
repurchase pursuant to this Agreement. If the Company shall distribute to its
stockholders shares of stock of another corporation, the shares of stock of such
other corporation, distributed with respect to the Shares then subject to the
restrictions contained in this Agreement, shall be added to the Shares subject
to the Company's rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of common capital stock of the
Company shall be subdivided into a greater number of shares or combined into a
smaller number of shares, or in the event of a reclassification of the
outstanding shares of common capital stock of the Company, or if the Company
shall be a party to a merger, consolidation or capital reorganization, there
shall be substituted for the Shares then subject to the restrictions contained
in this Agreement such amount and kind of securities as are issued in such
subdivision, combination, reclassification, merger, consolidation or capital
reorganization in respect of the Shares subject immediately prior thereto to the
Company's rights to repurchase pursuant to this Agreement.
9.
<PAGE> 10
12.7 The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Agreement.
12.8 The provisions of Paragraph 12.3 shall terminate upon the
effective date of the registration of the Shares pursuant to the Securities
Exchange Act of 1934.
12.9 All certificates representing the Shares to be issued to the
Employee pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in a Non-Qualified Stock Option Agreement
dated as of February 2, 1996 with this Company, a copy of which Agreement is
available for inspection at the offices of the Company or will be made available
upon request."
13. NO OBLIGATION TO EMPLOY. The Company is not by the Plan or this
Option obligated to continue the Employee as an employee of the Company.
14. NOTICES. Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by recognized courier service, facsimile,
registered or certified mail, return receipt requested, addressed as follows:
To the Company: Nashoba Networks Inc.
9 Goldsmith Street
Littleton, MA 01460
Attn: Narotam S. Grewal, President
To the Employee: ________________
________________
________________
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the law of the Commonwealth of Massachusetts.
16. BENEFIT OF AGREEMENT. Subject to the provisions of the Plan and the
other provisions hereof, this Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties hereto.
10.
<PAGE> 11
17. ENTIRE AGREEMENT. This Agreement, together with the Plan, embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter subject hereof and supersedes all prior oral or written
agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement not expressly set
forth in this Agreement shall affect or be used to interpret, change or
restrict, the express terms and provisions of this Agreement, provided, however,
in any event, this Agreement shall be subject to and governed by the Plan.
18. MODIFICATION AND AMENDMENTS. The terms and provisions of this
Agreement may be modified or amended as provided in the Plan.
19. WAIVERS AND CONSENTS. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
20. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934. If the Employee to whom the Option has been
granted pursuant to this Agreement is subject to Section 16 of the 1934 Act,
Section 16 requires that at least six (6) months must elapse from the date of
grant of the Option to the date of disposition of the Shares.
11.
<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto set his
or her hand, all as of the day and year first above written.
NASHOBA NETWORKS INC.
By:
-------------------------------------
Narotam S. Grewal
President
EMPLOYEE
-----------------------------------------
[Type in name of employee here]
12.
<PAGE> 1
EXHIBIT 99.5
FULLY-VESTED
MEMORANDUM
TO: Holders of Nashoba Networks Inc. Stock Options
FROM: Cisco Systems, Inc.
DATE: September 18, 1996
RE: Assumption of Stock Options
As you know, Nashoba Networks Inc. ("Nashoba") was recently
acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on September
18, 1996 (the "Merger"). As a result, Nashoba has become a wholly-owned Cisco
subsidiary.
In connection with this transaction, Cisco has assumed all of
your outstanding Nashoba stock options so that those options now cover shares of
Cisco common stock. Several additional changes to your options were also made as
part of the assumption process. These changes are set forth in the Stock Option
Assumption Agreement attached hereto and may be summarized as follows:
1. The number of shares of Cisco common stock subject to your
option reflects the ratio at which shares of Nashoba common stock were
exchanged for shares of Cisco common stock in the Merger. That ratio
was 0.2174317 of a share of Cisco common stock for each share of
Nashoba common stock (the "Exchange Ratio"). Accordingly, the number of
Cisco shares now subject to your option is equal to the number of
shares of Nashoba common stock which were subject to your option
immediately before the Merger, multiplied by the Exchange Ratio and
rounded down to the next whole share.
2. The aggregate exercise price payable for the shares of
Cisco common stock now subject to your option is the same as the price
that was in effect for the shares of Nashoba common stock purchasable
under your option immediately prior to the Merger. However, the
exercise price per share has been adjusted to reflect the Exchange
Ratio. Accordingly, the exercise price per share in effect under your
option immediately before the Merger has been divided by 0.2174317 to
establish the price per share payable for the Cisco common stock.
<PAGE> 2
3. By reason of the Merger, your assumed Nashoba Option has,
in accordance with the provisions of the Option Agreement, accelerated
and become immediately exercisable for all the option shares as
fully-vested shares of Cisco stock.
Attached are two (2) copies of the Stock Option Assumption
Agreement pursuant to which Cisco has assumed your Nashoba options with the
adjustments discussed above. Please review the agreement carefully so that you
understand your rights to acquire Cisco shares. You should contact Christine
Calice at Cisco at (408) 526-4000 if you have any questions. After you have
reviewed the agreement, please sign one copy and return it to Ms. Calice in the
pre-addressed envelope enclosed.
The other copy of the Stock Option Assumption Agreement should
be attached to your existing option documentation so that you will have a
complete record of all the terms and provisions applicable to your option as now
assumed by Cisco.
2.
<PAGE> 1
EXHIBIT 99.6
ONE-THIRD VESTED
MEMORANDUM
TO: Holders of Nashoba Networks Inc. Stock Options
FROM: Cisco Systems, Inc.
DATE: September 18, 1996
RE: Assumption of Stock Options
As you know, Nashoba Networks Inc. ("Nashoba") was recently
acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on September
18, 1996 (the "Merger"). As a result, Nashoba has become a wholly-owned Cisco
subsidiary.
In connection with this transaction, Cisco has assumed all of
your outstanding Nashoba stock options so that those options now cover shares of
Cisco common stock. Several additional changes to your options were also made as
part of the assumption process. These changes are set forth in the Stock Option
Assumption Agreement attached hereto and may be summarized as follows:
1. The number of shares of Cisco common stock subject to your
option reflects the ratio at which shares of Nashoba common stock were
exchanged for shares of Cisco common stock in the Merger. That ratio
was 0.2174317 of a share of Cisco common stock for each share of
Nashoba common stock (the "Exchange Ratio"). Accordingly, the number of
Cisco shares now subject to your option is equal to the number of
shares of Nashoba common stock which were subject to your option
immediately before the Merger, multiplied by the Exchange Ratio and
rounded down to the next whole share.
2. The aggregate exercise price payable for the shares of
Cisco common stock now subject to your option is the same as the price
that was in effect for the shares of Nashoba common stock purchasable
under your option immediately prior to the Merger. However, the
exercise price per share has been adjusted to reflect the Exchange
Ratio. Accordingly, the exercise price per share in effect under your
option immediately before the Merger has been divided by 0.2174317 to
establish the price per share payable for the Cisco common stock.
<PAGE> 2
3. By reason of the Merger, your assumed Nashoba Option has,
in accordance with the provisions of the Option Agreement, accelerated
and become immediately exercisable for one-third (1/3) of the option
shares as vested shares of Cisco stock. The balance of the option
shares shall remain exercisable in accordance with the same installment
exercise schedule in effect under the applicable Option Agreement(s)
immediately prior to the Merger, with the number of shares of Cisco
stock subject to each such installment adjusted to reflect the Exchange
Ratio. In addition, you will now earn vesting credit not only for the
period you continue in employment or service with Nashoba after the
Merger but also for any period of service you may complete as an
employee of Cisco or any other Cisco subsidiary should you subsequently
transfer within the Cisco organization.
Attached are two (2) copies of the Stock Option Assumption
Agreement pursuant to which Cisco has assumed your Nashoba options with the
adjustments discussed above. Please review the agreement carefully so that you
understand your rights to acquire Cisco shares. You should contact Christine
Calice at Cisco at (408) 526-4000 if you have any questions. After you have
reviewed the agreement, please sign one copy and return it to Ms. Calice in the
pre-addressed envelope enclosed.
The other copy of the Stock Option Assumption Agreement should
be attached to your existing option documentation so that you will have a
complete record of all the terms and provisions applicable to your option as now
assumed by Cisco.
2.
<PAGE> 1
EXHIBIT 99.7
FULLY VESTED
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF NASHOBA NETWORKS INC. SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 18th day of
September, 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 Nashoba
Networks Inc., a Delaware corporation ("Nashoba"), which were granted to
Optionee under the Nashoba Networks Inc. 1995 Employee, Director and Consultant
Stock Option Plan (the "Plan") and are evidenced by a Stock Option Agreement(s)
(the "Option Agreement(s)") between Nashoba and Optionee.
WHEREAS, Nashoba has this day been acquired by Cisco through
the merger of a wholly-owned Cisco subsidiary ("Acquisition Corporation") with
and into Nashoba (the "Merger") pursuant to the Agreement and Plan of Merger
dated August 5, 1996 by and among Cisco, Nashoba and Acquisition Corporation
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of Nashoba 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 0.2174317 of a share of Cisco
common stock ("Cisco Stock") for each outstanding share of 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.
<PAGE> 2
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Nashoba Stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Nashoba Options") and the exercise price payable per share are set forth
below. Cisco hereby assumes, as of the Effective Time, all the duties and
obligations of Nashoba under each of the Nashoba Options and hereby agrees to
issue up to the number of shares of Cisco Stock indicated below for each such
assumed option upon (i) exercise of that option in accordance with the
provisions of the Option Agreement applicable thereto (as supplemented hereby)
and (ii) payment of the adjusted exercise price per share set forth below.
<TABLE>
<CAPTION>
NASHOBA CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# OF SHARES # OF SHARES ADJUSTED
COMMON STOCK EXERCISE COMMON STOCK EXERCISE
NASHOBA PRICE/SHARE CISCO PRICE/SHARE
------------- ----------- ------------ -----------
<S> <C> <C> <C>
2 $4 6 $7
</TABLE>
2. The number of shares of Cisco Stock purchasable under each
Nashoba Option hereby assumed and the exercise price payable thereunder reflect
the Exchange Rate at which shares of Nashoba Stock were converted into shares of
Cisco Stock in consummation of the Merger. The intent of such adjustments is to
assure that the spread between the aggregate fair market value of the shares of
Cisco Stock purchasable under each assumed Nashoba 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 Nashoba Stock subject to the
Nashoba 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 Nashoba Option
immediately prior to the Merger.
3. The following provisions shall govern each Nashoba Option
hereby assumed by Cisco:
- Unless the context otherwise requires, all references to
the "Company" in each Option Agreement(s) and in the Plan (as incorporated into
such Option Agreement(s)) shall mean Cisco, all references to "Shares," "Stock"
or "Common Stock" shall mean shares of Cisco Stock, and all references to the
"Plan Administrator" or "Administration" shall mean the Compensation Committee
of the Cisco Board of Directors.
2.
<PAGE> 3
- The grant date and the expiration date of each assumed
Nashoba Option and all other provisions which govern either the exercisability
or the termination of the assumed Nashoba Option shall remain the same as set
forth in the Option Agreement(s) applicable to that option and shall accordingly
govern and control Optionee's rights under this Agreement to purchase Cisco
Stock.
- By reason of the Merger, your assumed Nashoba Option has,
in accordance with the provisions of the Option Agreement, accelerated and
become immediately exercisable for all the option shares as fully-vested shares
of Cisco Stock.
- For purposes of applying any and all provisions of the
Option Agreement(s) relating to Optionee's status as an employee with the
Company or his or her consulting or advisory relationship with the Company,
Optionee shall be deemed to continue in such status or relationship for so long
as Optionee renders services as an employee or consultant or advisor,
respectively, to Cisco or any present or future Cisco subsidiary, including
(without limitation) Nashoba. Accordingly, the provisions of the Option
Agreement(s) governing the termination of the assumed Nashoba Option upon the
Optionee's cessation of employee, consultant or advisor status with Nashoba
shall hereafter be applied on the basis of the Optionee's cessation of employee,
consultant or advisor status, as appropriate, with Cisco and its subsidiaries,
and each assumed Nashoba Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement(s) for that option,
following such cessation of employee, consultant or advisor status with Cisco
and its subsidiaries.
- The exercise price payable for the Cisco Stock subject to
each assumed Nashoba Option shall be payable in any of the forms authorized
under the Option Agreement(s) applicable to that option. For purposes of
determining the holding period of any shares of Cisco Stock delivered in payment
of such exercise price, the period for which such shares were held as Nashoba
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Nashoba 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 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
3.
<PAGE> 4
3. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option
Agreement(s) 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.
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 18th day of September, 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 Nashoba Options hereby assumed by Cisco Systems,
Inc. are as set forth in the Option Agreement(s), the Plan and such Stock Option
Assumption Agreement.
___________________________
1~, OPTIONEE
DATED: __________________, 1996
4.
<PAGE> 1
EXHIBIT 99.8
ONE-THIRD VESTED
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF NASHOBA NETWORKS INC. SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 18th day of
September, 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 Nashoba
Networks Inc., a Delaware corporation ("Nashoba"), which were granted to
Optionee under the Nashoba Networks Inc. 1995 Employee, Director and Consultant
Stock Option Plan (the "Plan") and are evidenced by a Stock Option Agreement(s)
(the "Option Agreement(s)") between Nashoba and Optionee.
WHEREAS, Nashoba has this day been acquired by Cisco through
the merger of a wholly-owned Cisco subsidiary ("Acquisition Corporation") with
and into Nashoba (the "Merger") pursuant to the Agreement and Plan of Merger
dated August 5, 1996 by and among Cisco, Nashoba and Acquisition Corporation
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of Nashoba 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 0.2174317 of a share of Cisco
common stock ("Cisco Stock") for each outstanding share of 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.
<PAGE> 2
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Nashoba Stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Nashoba Options") and the exercise price payable per share are set forth
below. Cisco hereby assumes, as of the Effective Time, all the duties and
obligations of Nashoba under each of the Nashoba Options and hereby agrees to
issue up to the number of shares of Cisco Stock indicated below for each such
assumed option upon (i) exercise of that option in accordance with the
provisions of the Option Agreement applicable thereto (as supplemented hereby)
and (ii) payment of the adjusted exercise price per share set forth below.
<TABLE>
<CAPTION>
NASHOBA CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# OF SHARES # OF SHARES ADJUSTED
COMMON STOCK EXERCISE COMMON STOCK EXERCISE
NASHOBA PRICE/SHARE CISCO PRICE/SHARE
- ------------ ----------- ------------ -----------
<S> <C> <C> <C>
2 $4 6 $7
</TABLE>
2. The number of shares of Cisco Stock purchasable under each
Nashoba Option hereby assumed and the exercise price payable thereunder reflect
the Exchange Rate at which shares of Nashoba Stock were converted into shares of
Cisco Stock in consummation of the Merger. The intent of such adjustments is to
assure that the spread between the aggregate fair market value of the shares of
Cisco Stock purchasable under each assumed Nashoba 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 Nashoba Stock subject to the
Nashoba 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 Nashoba Option
immediately prior to the Merger.
3. The following provisions shall govern each Nashoba Option
hereby assumed by Cisco:
- Unless the context otherwise requires, all references to
the "Company" in each Option Agreement(s) and in the Plan (as incorporated into
such Option Agreement(s)) shall mean Cisco, all references to "Shares," "Stock"
or "Common Stock" shall mean shares of Cisco Stock, and all references to the
"Plan Administrator" or "Administration" shall mean the Compensation Committee
of the Cisco Board of Directors.
2.
<PAGE> 3
- The grant date and the expiration date of each assumed
Nashoba Option and all other provisions which govern either the exercisability
or the termination of the assumed Nashoba Option shall remain the same as set
forth in the Option Agreement(s) applicable to that option and shall accordingly
govern and control Optionee's rights under this Agreement to purchase Cisco
Stock.
- By reason of the Merger, your assumed Nashoba Option has,
in accordance with the provisions of the Option Agreement, accelerated and
become immediately exercisable for one-third (1/3) of the option shares as
vested shares of Cisco Stock. The balance of the option shares shall remain
exercisable in accordance with the same installment exercise schedule in effect
under the applicable Option Agreement(s) 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.
- For purposes of applying any and all provisions of the
Option Agreement(s) relating to Optionee's status as an employee with the
Company or his or her consulting or advisory relationship with the Company,
Optionee shall be deemed to continue in such status or relationship for so long
as Optionee renders services as an employee or consultant or advisor,
respectively, to Cisco or any present or future Cisco subsidiary, including
(without limitation) Nashoba. Accordingly, the provisions of the Option
Agreement(s) governing the termination of the assumed Nashoba Option upon the
Optionee's cessation of employee, consultant or advisor status with Nashoba
shall hereafter be applied on the basis of the Optionee's cessation of employee,
consultant or advisor status, as appropriate, with Cisco and its subsidiaries,
and each assumed Nashoba Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement(s) for that option,
following such cessation of employee, consultant or advisor status with Cisco
and its subsidiaries.
- The exercise price payable for the Cisco Stock subject to
each assumed Nashoba Option shall be payable in any of the forms authorized
under the Option Agreement(s) applicable to that option. For purposes of
determining the holding period of any shares of Cisco Stock delivered in payment
of such exercise price, the period for which such shares were held as Nashoba
common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Nashoba 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 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
3.
<PAGE> 4
3. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option
Agreement(s) 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.
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 18th day of September, 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 Nashoba Options hereby assumed by Cisco Systems,
Inc. are as set forth in the Option Agreement(s), the Plan and such Stock Option
Assumption Agreement.
---------------------------
1~, OPTIONEE
DATED: , 1996
-------------------
4.
