<PAGE> 1
As filed with the Securities and Exchange Commission on December 5, 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)
NETSYS TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
(Full title of the plan)
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------- ---
<S> <C> <C> <C> <C>
1995 Stock Option Plan
- ----------------------
Options to Purchase Common Stock 163,200 N/A N/A N/A
Common Stock 163,200 $1.83 $298,656 $91
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Netsys Technologies, Inc.
1995 Stock Option Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of
the Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Cisco Systems, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended July 28, 1996 filed with the Commission on October
25, 1996, pursuant to Section 13 of the Securities Exchange
Act of 1934 (the "1934 Act").
(b) The Registrant's report on Form 8-K filed with the Commission on
October 1, 1996.
(c) The Registrant's Registration Statement No. 0-18225 on Form 8-A
filed with the Commission on January 11, 1990, together with
Amendment No. 1 on Form 8-A filed with the Commission on February
15, 1990, in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended and
Restated Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
4.0 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-18225 on
Form 8-A which is incorporated herein by reference pursuant to
Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Netsys Technologies, Inc. 1995 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Stock Option Agreement - Acceleration.
99.4 Form of Exercise Notice and Restricted Stock Purchase
Agreement.
99.5 Form of Stock Option Assumption Agreement.
99.6 Form of Stock Option Assumption Agreement - Acceleration.
99.7 Memorandum re Assumption of Stock Options under the Netsys
Technologies, Inc. 1995 Stock Option Plan.
99.8 Memorandum re Assumption of Stock Options under the Netsys
Technologies, Inc. 1995 Stock Option Plan - Acceleration.
99.9 Form of Assignment of Repurchase Right.
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
II-2.
<PAGE> 4
be deemed to be a new Registration Statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and (3) to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the Netsys Technologies, Inc. 1995 Stock
Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-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 2nd day of December, 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 December 2, 1996
- -------------------------------------
John T. Chambers Officer and Director (Principal
Executive Officer)
/s/ Larry R. Carter Vice President, Finance and December 2, 1996
- -------------------------------------
Larry R. Carter Administration, Chief Financial
Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ John P. Morgridge Chairman of the Board December 2, 1996
- -------------------------------------
John P. Morgridge and Director
</TABLE>
II-4.
<PAGE> 6
Signatures Title Date
- ---------- ----- ----
/s/ Donald T. Valentine Director December 2, 1996
- -------------------------------------
Donald T. Valentine
/s/ James F. Gibbons Director December 2, 1996
- -------------------------------------
James F. Gibbons
/s/ Robert L. Puette Director December 2, 1996
- -------------------------------------
Robert L. Puette
Director
- -------------------------------------
Masayoshi Son
/s/ Steven M. West Director December 2, 1996
- -------------------------------------
Steven M. West
/s/ Richard M. Moley Director December 2, 1996
- -------------------------------------
Richard M. Moley
/s/ Edward Kozel Director December 2, 1996
- -------------------------------------
Edward Kozel
/s/ Carol Barts Director December 2, 1996
- -------------------------------------
Carol Barts
II-5.
<PAGE> 7
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
4.0 Instruments Defining Rights of Shareholders. Reference is made
to Registrant's Registration Statement No. 0-18225 on Form 8-A
which is incorporated herein by reference pursuant to Item
3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Netsys Technologies, Inc. 1995 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Stock Option Agreement - Acceleration.
99.4 Form of Exercise Notice and Restricted Stock Purchase
Agreement.
99.5 Form of Stock Option Assumption Agreement.
99.6 Form of Stock Option Assumption Agreement - Acceleration.
99.7 Memorandum re Assumption of Stock Options under the Netsys
Technologies, Inc. 1995 Stock Option Plan.
99.8 Memorandum re Assumption of Stock Options under the Netsys
Technologies, Inc. 1995 Stock Option Plan - Acceleration.
99.9 Form of Assignment of Repurchase Right.
<PAGE> 1
EXHIBIT 5.0
December 3, 1996
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 163,200 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 163,200 shares of
the common stock ("Common Stock") of Cisco Systems, Inc. (the "Company")
issuable under the Netsys Technologies, Inc. 1995 Stock Option Plan (the
"Plan"). We advise you that, in our opinion, when such shares have been issued
and sold pursuant to the applicable provisions of the Plan and in accordance
with the Registration Statement, such shares will be validly issued, fully paid
and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Cisco Systems, Inc. for the registration of 163,200 shares of its
common stock and 163,200 options to purchase shares of its common stock, of our
reports dated August 13, 1996, except for Note 3 for which the date is October
14, 1996, on our audits of the consolidated financial statements and schedule
of Cisco Systems, Inc. as of July 28, 1996 and July 30, 1995, and for the years
ended July 28, 1996, July 30, 1995 and July 31, 1994 which reports are included
in the Company's 1996 Annual Report on Form 10K, filed with the Securities and
Exchange Commission.
/s/ Coopers & Lybrand L.L.P.
------------------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
December 4, 1996
<PAGE> 1
EXHIBIT 99.1
NETSYS TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or nonstatutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions
shall apply:
(a) "Administrator" means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the Board
of Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the
Company.
(f) "Company" means NETSYS Technologies, Inc., a
California corporation.
(g) "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant"
means that the employment or consulting relationship with the Company, any
Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, any Subsidiary, or any
successor. A leave of absence approved by the Company shall include
<PAGE> 2
sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed 90 days, unless reemployment upon expiration
of such leave is guaranteed by statute or contract, including Company policies.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 91st day of such leave any Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option.
(i) "Employee" means any person, including Officers and
directors,employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(k) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the Nasdaq National Market thereof or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination,
or;
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
(l) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
2.
<PAGE> 3
(n) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Option" means a stock option granted pursuant to
the Plan.
(p) "Optioned Stock" means the Common Stock subject to
an Option.
(q) "Optionee" means an Employee or Consultant who
receives an Option.
(r) "Parent" means a "parent corporation", whether now
or hereafter existing, as defined in Section 424(e) of the Code.
(s) "Plan" means this 1995 Stock Option Plan.
(t) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 11 below.
(u) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 2,025,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if unvested Shares are
repurchased by the Company at their original purchase price, and the original
purchaser of such Shares did not receive any benefits of ownership of such
Shares, such Shares shall become available for future grant under the Plan. For
purposes of the preceding sentence, voting rights shall not be considered a
benefit of Share ownership.
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any,
upon which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.
3.
<PAGE> 4
(b) Plan Procedure after the Date, if any, upon which
the Company Becomes Subject to the Exchange Act.
(i) Administration with Respect to Directors and
Officers. With respect to grants of Options to Employees who are also Officers
or directors of the Company, the Plan shall be administered by (A) the Board if
the Board may administer the Plan in compliance with Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3") with respect to a
plan intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.
(ii) Multiple Administrative Bodies. If
permitted by Rule 16b-3, the Plan may be administered by different bodies with
respect to directors, non-director Officers and Employees who are neither
directors nor Officers.
(iii) Administration With Respect to Consultants
and Other Employees. With respect to grants of Options to Employees or
Consultants who are neither directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted in such a manner as to satisfy the
legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate and securities laws, of the Code, and of
any applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(c) Powers of the Administrator. Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, including the approval, if required, of any stock exchange
upon which the Common Stock is listed, the Administrator shall have the
authority, in its discretion:
4.
<PAGE> 5
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to
whom Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent
Options are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions of any
award granted hereunder;
(vii) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(f) instead of
Common Stock;
(viii) to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option has declined since the date the Option was granted;
and
(ix) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option may, if
otherwise eligible, be granted additional Options.
(b) Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value:
(i) of Shares subject to an Optionee's Incentive
Stock Options granted by the Company, any Parent or Subsidiary, which
5.
<PAGE> 6
(ii) become exercisable for the first time during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(c) The Plan shall not confer upon any Optionee any
right with respect to continuation of employment or consulting relationship with
the Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
(d) Upon the Company or a successor corporation issuing
any class of common equity securities required to be registered under Section 12
of the Exchange Act or upon the Plan being assumed by a corporation having a
class of common equity securities required to be registered under Section 12 of
the Exchange Act, the following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal
year of the Company, Options to purchase more than 200,000 Shares.
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iii) If an Option is canceled in the same fiscal
year of the Company in which it was granted (other than in connection with a
transaction described in Section 11), the cancelled Option will be counted
against the limit set forth in Section 11. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company, as described in Section 17 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. However, in the case of
an Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.
6.
<PAGE> 7
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the
time of the grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time
of the grant of such Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant.
(B) granted to any person, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
7.
<PAGE> 8
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder.
Any Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan, but in no case at a rate of less than 20% per year over
five (5) years from the date the Option is granted,
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in
a decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment or Consulting
Relationship. In the event of termination of an Optionee's Continuous Status as
an Employee or Consultant with the Company (but not in the event of an
Optionee's change of status from Employee to Consultant (in which case an
Employee's Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status) or
from Consultant to Employee), such Optionee may, but only within such period of
time as is determined by the Administrator, of at least thirty (30) days, with
such determination in the case of an Incentive Stock Option not exceeding three
(3) months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
8.
<PAGE> 9
(c) Disability of Optionee. In the event of termination
of an Optionee's consulting relationship or Continuous Status as an Employee as
a result of his or her disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and
one day following such termination. To the extent that Optionee is not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time. specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(f) Buyout Provisions. The Administrator may at any
time offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options. Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
9.
<PAGE> 10
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.
(c) Merger. In the event of a merger of the Company
with or into another corporation, the Option may be assumed or an equivalent
option may be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. If, in such event, the Option is not
assumed or substituted, the Option shall terminate as of the date of the closing
of the merger. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger, the option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger was not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon the
exercise of the Option for each Share of Optioned Stock subject to the Option to
be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger.
10.
<PAGE> 11
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board. Notice of the determination shall be given to each Employee or Consultant
to whom an Option is so granted within a reasonable time after the date of such
grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any
time amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which would impair the
rights of any Optionee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain shareholder approval of
any Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted,
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of such Option
and the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any
11.
<PAGE> 12
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
16. Agreements. Options shall be evidenced by written
agreements in such form as the Board shall approve from time to time.
17. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable state and federal
law and the rules of any stock exchange upon which the Common Stock is listed.
18. Information to Optionees and Purchasers. The Company
shall provide to each Optionee, not less frequently than annually, copies of
annual financial statements. The Company shall also provide such statements to
each individual who acquires Shares pursuant to the Plan while such individual
owns such Shares. The Company shall not be required to provide such statements
to key employees whose duties in connection with the Company assure their access
to equivalent information.
12.
<PAGE> 1
EXHIBIT 99.2
NETSYS TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number ----------------
Date of Grant ----------------
Vesting Commencement Date ----------------
Exercise Price per Share $
Total Number of Shares Granted ----------------
Total Exercise Price $
Type of Option: ------ Incentive Stock Option
------ Nonstatutory Stock Option
Term/Expiration Date: ----------------
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
<PAGE> 2
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 6.25% of the Shares subject to the Option
shall vest each three- month period thereafter.
Termination Period:
This Option may be exercised for 45 days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. NETSYS Technologies, Inc., a California
corporation (the "Company"), hereby grants to the Optionee named in the Notice
of Grant (the "Optionee"), an option (the "Option") to purchase the total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the 1995 Stock
Option Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of a
Share.
(b) In the event of Optionee's death, disability or other
termination of the employment or consulting relationship, the exercisability of
the Option is governed by Sections 6, 7 and 8 below, subject to the limitation
contained in subsection 2(i)(c).
(c) In no event may this Option be exercised after the
date of expiration of the term of this Option as set forth in the Notice of
Grant.
2.
<PAGE> 3
(ii) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of such written notice accompanied by
the Exercise Price.
No Shares will be issued pursuant to the exercise of an
Option unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
4. Method of Payment. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of the Company
which (A) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by the Optionee for more than six (6) months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the Exercise Price.
3.
<PAGE> 4
5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set out in the Notice
of Grant. To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section
6 above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within six (6) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the day three
months and one day following such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
8. Death of Optionee. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.
9. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
4.
<PAGE> 5
10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a Nonstatutory Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then Fair Market Value of the
Shares over the exercise price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the
Optionee is an Employee, the Company will be required to withhold from
Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying disposition of an
Incentive Stock Option. The Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option out of Optionee's
compensation or by payment to the Company.
12. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal and state tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(i) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or state income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to the alternative minimum tax in the year of
exercise.
(ii) Exercise of ISO Following Disability. If the Optionee's
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within 90 days of such termination for the ISO to
be qualified as an ISO.
(iii) Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability and state income tax liability upon the
exercise of a Nonstatutory Stock Option. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a
5.
<PAGE> 6
former Employee, the Company will be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(iv) Disposition of Shares. In the case of an NSO, if Shares
are held for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal and state income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for at least one year after exercise and are disposed of at least two
years after the Date of Grant, any gain realized on disposition of the Shares
will also be treated as long-term capital gain for federal and state income tax
purposes. If Shares purchased under an ISO are disposed of within such one-year
period or within two years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the lesser
of (1) the Fair Market Value of the Shares on the date of exercise, or (2) the
sale price of the Shares.
(v) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
13. Entire Agreement; Governing Law. The Plan is incorporated herein
by reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
NETSYS TECHNOLOGIES, INC.
a California corporation
By:____________________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT
THE WILL OF THE
6.
<PAGE> 7
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.
Dated:__________________________ _________________________________________
Optionee
Residence Address:
_________________________________________
_________________________________________
_________________________________________
7.
<PAGE> 8
EXHIBIT A
1995 STOCK OPTION PLAN
EXERCISE NOTICE
NETSYS Technologies, Inc.
100 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
Attention: Secretary
1. Exercise of Option. Effective as of today, -------------, 19----,
the undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase ---------- shares of the Common Stock (the "Shares") of NETSYS
Technologies, Inc. (the "Company") under and pursuant to the 1995 Stock Option
Plan, as amended (the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock
Option Agreement dated------, 19---- (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
4. Company's Right of First Refusal. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
<PAGE> 9
(a) Notice of Proposed Transfer. The Holder of the Shares
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for
the Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall
again be offered the Right of First Refusal before any Shares held by the Holder
may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean
2.
<PAGE> 10
spouse, lineal descendant or antecedent, father, mother, brother or sister. In
such case, the transferee or other recipient shall receive and hold the Shares
so transferred subject to the provisions of this Section, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section.
(g) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares 90 days after the first sale of Common
Stock of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
5. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND A RIGHT OF FIRST REFUSAL HELD
BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
THE EXERCISE NOTICE BETWEEN THE ISSUER AND
THE ORIGINAL HOLDER OF THESE SHARES, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE
BINDING ON TRANSFEREES OF THESE SHARES.
3.
<PAGE> 11
IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
THE SECURITIES REPRESENTED HEREBY ARE
SUBJECT TO RESTRICTIONS ON TRANSFER FOR A
PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE
DATE OF THE COMPANY'S INITIAL UNDERWRITTEN
PUBLIC OFFERING AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF BY THE HOLDER
WITHOUT THE CONSENT OF THE COMPANY OR THE
MANAGING UNDERWRITER.
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS AGREEMENT, DATED AS OF
FEBRUARY 1, 1995, WHICH PLACES CERTAIN
RESTRICTIONS ON THE TRANSFER AND VOTING OF
THE SHARES REPRESENTED HEREBY. ANY PERSON
ACCEPTING ANY INTEREST IN SUCH SHARES SHALL
BE DEEMED TO AGREE TO AND SHALL BECOME
BOUND BY ALL THE PROVISIONS OF SUCH
AGREEMENT. A COPY OF SUCH AGREEMENT MAY
BE OBTAINED WITHOUT CHARGE UPON WRITTEN
REQUEST TO NETSYS TECHNOLOGIES, INC. AT ITS
PRINCIPAL PLACE OF BUSINESS.
THE HOLDER OF RECORD OF THESE SECURITIES,
AND SUCH HOLDER'S AGENTS AND ATTORNEYS,
MAY BE REQUIRED TO EXECUTE NON-DISCLOSURE
STATEMENTS PRIOR TO BEING PERMITTED TO
INSPECT CERTAIN RECORDS OF THE COMPANY AS
DESCRIBED IN ARTICLE 8 OF THE COMPANY'S
BYLAWS."
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit B, the Investment
Representation Statement.
4.
<PAGE> 12
(b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required
(i) to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii) to
treat as owner of such Shares or to accord the right to vote or pay dividends to
any purchaser or other transferee to whom such Shares shall have been so
transferred.
7. Market Standoff. Optionee hereby agrees that if so requested by
the Company or any representative of the underwriters in connection with any
registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "Act"), Optionee shall not sell or
otherwise transfer the Shares for a period of 180 days following the effective
date of a Registration filed under the Act; provided, that such restriction
shall apply only to the first registration statement of the Company to become
effective under the Act which include securities to be sold on behalf of the
Company in an underwritten offering under the Act. The Company may impose
stop-transfer instructions with respect to the Shares subject to the foregoing
restrictions until the end of each such 180-day period.
8. Shareholder Agreement. In connection with the exercise of the
Option and the purchase of the Shares, Purchaser hereby agrees to execute the
Shareholders Agreement dated as of February 1, 1995.
9. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
10. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
11. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
12. Notices. Any notice required or permitted hereunder shall be
given in writing
5.
<PAGE> 13
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States mail by certified mail, with postage and fees prepaid,
addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
13. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
14. Delivery of Payment. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
15. Entire Agreement. The Plan and Notice of Grant/Option Agreement
are incorporated herein by reference. This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser
Submitted by: Accepted by:
OPTIONEE: NETSYS TECHNOLOGIES, INC.
______________________________ By: ____________________________________
(Signature)
Its:____________________________________
Address: Address:
- ------------------------------ 100 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
- ------------------------------
6.
<PAGE> 14
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : NETSYS TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
<PAGE> 15
(c) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to the
first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
2.
<PAGE> 16
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
Date: __________________, 19______
3.
<PAGE> 17
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate
a sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section
25102 of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse,
or any custodian or trustee for the account of the
transferor or the transferor's ancestors, descendants, or
spouse; or to a transferee by a trustee or custodian for the
account of the transferee or the transferee's ancestors,
descendants or spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a
foreign state, territory or country who is neither domiciled in
this state to the knowledge of the broker-dealer, nor actually
present in this state if the sale of such securities is not in
violation of any securities law of the foreign state, territo or
country concerned;
(8) to a broker-dealer licensed under the Code in a
principal transaction, or as an underwriter or member of an
underwriting syndicate or selling group;
(9) if the interest sold or transferred is a pledge or
other lien given by the purchaser to the seller upon a sale of
the security for which the Commissioner's written consent is
obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112,
25113 or 25121 of the Code, of the securities to be transferred,
provided that no order under Section 25140 or subdivision (a) of
Section 25143 is in effect with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of corporation to
such corporation;
(12) by way of an exchange qualified under Section 25111,
25112 or 25113 of the Code, provided that no order under Section
25140 or subdivision (a) of Section 25143 is in effect with
respect to such qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this
state;
(14) to the State Controller pursuant to the Unclaimed
Property Law or to the administrator of the unclaimed property
law of another state; or
(15) by the State Controller pursuant to the Unclaimed
Property Law or by the administrator of the unclaimed property
law of another state if, in either such case, such person (i)
discloses to potential purchasers at the sale that transfer of
the securities is restricted under this rule, (ii) delivers to
each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer
does not involve a change in the beneficial ownership
of the securities;
(17) by way of an offer and sale of outstanding securities
in an issuer transaction that is subject to the qualification
requirement of Section 25110 of the Code but exempt from that
qualification requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to
such a restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently stamped or
printed thereon in capital letters of not less than 10-point size, reading as
follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
<PAGE> 1
EXHIBIT 99.3
NETSYS TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
- -------------------------------------
- -------------------------------------
- -------------------------------------
You have been granted an option to purchase Common Stock of
the Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Date of Grant --------------------
Vesting Commencement Date --------------------
Exercise Price per Share --------------------
Total Number of Shares Granted --------------------
Total Exercise Price --------------------
Type of Option: ------Incentive Stock Option
------Nonstatutory Stock Option
Term/Expiration Date: --------------------
Vesting Schedule:
This Option may be exercised, in whole or in part, in
accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve
months after the Vesting Commencement Date, and 6.25% of the Shares subject to
the Option shall vest each three-month period thereafter.
Notwithstanding the above, in the event of the sale of all or
substantially all of the assets of the Company, purchase or all or substantially
all of the outstanding shares of the Company or merger or the Company pursuant
to which shareholders of this Company receive cash and/or securities of a buyer
whose securities are publicly traded, all of the Shares shall become immediately
vested.
<PAGE> 2
Termination Period:
This Option may be exercised for 45 days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. NETSYS Technologies, Inc., a California corporation
(the "Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase the total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1995 Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
as defined in Section 422 of the Code. However, if this Option is intended to be
an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of
Code Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of
a Share.
(b) In the event of Optionee's death, disability or
other termination of the employment or consulting relationship, the
exercisability of the Option is governed by Sections 6, 7 and 8 below, subject
to the limitation contained in subsection 2(i)(c).
(c) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in the Notice of
Grant.
(ii) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice
2.
<PAGE> 3
shall be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be accompanied by
payment of the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
4. Method of Payment. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of the Company
which (A) in the case of Shares acquired pursuant to the exercise of a Company
option, have been owned by the Optionee for more than six (6) months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the Exercise Price.
5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the
3.
<PAGE> 4
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not entitled to exercise this Option at
the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section
6 above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within six (6) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the day three
months and one day following such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
8. Death of Optionee. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.
9. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a Nonstatutory Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then Fair Market Value of the
Shares over the exercise price. However, the
4.
<PAGE> 5
timing of this income recognition may be deferred for up to six months if
Optionee is subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). If the Optionee is an Employee, the Company will
be required to withhold from Optionee's compensation, or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income. Additionally, the Optionee may at some point be
required to satisfy tax withholding obligations with respect to the
disqualifying disposition of an Incentive Stock Option. The Optionee shall
satisfy his or her tax withholding obligation arising upon the exercise of this
Option out of Optionee's compensation or by payment to the Company.
12. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal and state tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(i) Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability or state income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to the alternative minimum tax in the year of
exercise.
(ii) Exercise of ISO Following Disability. If the Optionee's
Continuous Status as an Employee or Consultant terminates as a result of
disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Optionee must exercise an ISO within 90 days of such termination for the ISO to
be qualified as an ISO.
(iii) Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability and state income tax liability upon the
exercise of a Nonstatutory Stock Option. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(iv) Disposition of Shares. In the case of an NSO, if Shares
are held for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal and state income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for at least one year after exercise and are disposed of at least two
years after the Date of Grant, any gain realized on disposition of the Shares
will also be treated as
5.
<PAGE> 6
long-term capital gain for federal and state income tax purposes. If Shares
purchased under an ISO are disposed of within such one-year period or within two
years after the Date of Grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the difference between the Exercise Price and the lesser of (1) the Fair
Market Value of the Shares on the date of exercise, or (2) the sale price of the
Shares.
(v) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
13. Entire Agreement; Governing Law. The Plan is incorporated herein
by reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
NETSYS TECHNOLOGIES, INC.
a California corporation
By:_____________________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY
THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME,
WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents
that he is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of
6.
<PAGE> 7
the terms and provisions thereof. Optionee has reviewed the Plan and this Option
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions arising under the
Plan or this Option. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
Dated:____________________________ ________________________________________
Optionee
Residence Address:
________________________________________
________________________________________
________________________________________
7.
<PAGE> 8
EXHIBIT A
1995 STOCK OPTION PLAN
EXERCISE NOTICE
NETSYS Technologies, Inc.
100 Hamilton Avenue
Suite 175
Palo Alto, CA 94301
Attention: Secretary
1. Exercise of Option. Effective as of today,_____________, 19_____,
the undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase ___________ shares of the Common Stock (the "Shares") of NETSYS
Technologies, Inc. (the "Company") under and pursuant to the 1995 Stock Option
Plan, as amended (the "Plan") and the [ X ] Incentive [ ] Nonstatutory Stock
Option Agreement dated May 2, 1996 (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal hereunder. Upon such exercise, Optionee
shall have no further rights as a holder of the Shares so purchased except the
right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
4. Company's Right of First Refusal. Before any Shares held by
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall
1.
<PAGE> 9
have a right of first refusal to purchase the Shares on the
terms and conditions set forth in this Section (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares
shall deliver to the Company a written notice (the "Notice") stating: (1) the
Holder's bonafide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price ("Purchase Price")
for the Shares purchased by the Company or its assignee(s) under this Section
shall be the Offered Price. If the Offered Price includes consideration other
than cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Shares to that Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall
again be offered the Right of First Refusal before any Shares held by the Holder
may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions
2.
<PAGE> 10
of this Section. "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the
transferee or other recipient shall receive and hold the Shares so transferred
subject to the provisions of this Section, and there shall be no further
transfer of such Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of
First Refusal shall terminate as to any Shares 90 days after the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
5. Tax Consultation. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted with
any tax consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A
RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF EACH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.
3.
<PAGE> 11
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF
THIS SECURITY, OR ANY INTEREST THEREIN, OR TO
RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS
PERMITTED IN THE COMMISSIONER'S RULES.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
RESTRICTIONS ON TRANSFER FOR A PERIOD OF 180 DAYS
FOLLOWING THE EFFECTIVE DATE OF THE COMPANY'S
INITIAL UNDERWRITTEN PUBLIC OFFERING AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
THE CONSENT OF THE COMPANY OR THE MANAGING
UNDERWRITER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS AGREEMENT, DATED AS OF FEBRUARY 1,
1995, WHICH PLACES CERTAIN RESTRICTIONS ON THE
TRANSFER AND VOTING OF THE SHARES REPRESENTED
HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH
SHARES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME
BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED WITHOUT
CHARGE UPON WRITTEN REQUEST TO NETSYS TECHNOLOGIES,
INC. AT ITS PRINCIPAL PLACE OF BUSINESS.
THE HOLDER OF RECORD OF THESE SECURITIES, AND SUCH
HOLDER'S AGENTS AND ATTORNEYS, MAY BE REQUIRED TO
EXECUTE NONDISCLOSURE STATEMENTS PRIOR TO BEING
PERMITTED TO INSPECT CERTAIN RECORDS OF THE COMPANY
AS DESCRIBED IN ARTICLE 8 OF THE COMPANY'S BYLAWS."
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit B, the Investment
Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
4.
<PAGE> 12
(c) Refusal to Transfer. The Company shall not be required
(i) to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (ii) to
treat as owner of such Shares or to accord the right to vote or pay dividends to
any purchaser or other transferee to whom such Shares shall have been so
transferred.
7. Market Standoff. Optionee hereby agrees that if so requested by
the Company or any representative of the underwriters in connection with any
registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "Act"), Optionee shall not sell or
otherwise transfer the Shares for a period of 180 days following the effective
date of a Registration filed under the Act; provided, that such restriction
shall apply only to the first registration statement of the Company to become
effective under the Act witch include securities to be sold on behalf of the
Company in an underwritten offering under the Act. The Company may impose
stop-transfer instructions with respect to the Shares subject to the foregoing
restrictions until the end of each such 180-day period.
8. Shareholder Agreement. In connection with the exercise of the
Option and the purchase of the Shares, Purchaser hereby agrees to execute the
Shareholders Agreement dated as of February 1, 1995.
9. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
10. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
11. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
12. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
5.
<PAGE> 13
13. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
14. Delivery of Payment. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
Submitted by: Accepted by:
OPTIONEE: NETSYS TECHNOLOGIES, INC.
By:
- -------------------------- ------------------------------------------
Its:
-----------------------------------------
- --------------------------
(Signature)
Address: Address:
- -------- --------
- -------------------------- 100 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
- --------------------------
6.
<PAGE> 14
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: ____________________
COMPANY: NETSYS TECHNOLOGIES, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed
Securities, the undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Optionee's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
1.
<PAGE> 15
(c) Optionee is familiar with the provisions of Rule 701
and Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to the
first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such
2.
<PAGE> 16
transactions do so at their own risk. Optionee understands that no assurances
can be given that any such other registration exemption will be available in
such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
_______________________________________
Date:_________________________, 19_____
3.
<PAGE> 17
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to
consummate a sale or transfer of such security, or any interest therein, without
the prior written consent of the Commissioner (until this condition is removed
pursuant to Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section
25102 of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse,
or any custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee by a
trustee or custodian for the account of the transferee or the
transferee's ancestors, descendants or spouse; (5) to holders of
securities of the same class of the same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign
state, territory or country who is neither domiciled in this state to
the knowledge of the broker-dealer, nor actually present in this state
if the sale of such securities is not in violation of any securities
law of the foreign state, territory or country concerned;
(8) to a broker-dealer licensed under the Code in a
principal transaction, or as an underwriter or member of an
underwriting syndicate or selling group;
(9) if the interest sold or transferred is a pledge or
other lien given by the purchaser to the seller upon a sale of the
security for which the Commissioner's written consent is obtained or
under this rule not required;
(10) by way of a sale qualified under Sections 25111,
25112, 25113 or 25121 of the Code, of the securities to be transferred,
provided that no order under Section 25140 or subdivision (a) of
Section 25143 is in effect with respect to such qualification;
(11) by a corporation to wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111,
25112 or 25113 of the Code, provided that no order under Section 25140
or subdivision (a) of Section 25143 is in effect with respect to such
qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
4.
<PAGE> 18
(14) to the State Controller pursuant to the Unclaimed
Property Law or to the administrator of the unclaimed property law of
another state; or
(15) by the State Controller pursuant to the Unclaimed
Property Law or by the administrator of the unclaimed property law of
another state if, in either such case, such person (i) discloses to
potential purchasers at the sale that transfer of the securities is
restricted under this rule, (ii) delivers to each purchaser a copy of
this rule, and (iii) advises the Commissioner of the name of each
purchaser;
(16) by a trustee to a successor trustee when such
transfer does not involve a change in the beneficial ownership of the
securities;
(17) by way of an offer and sale of outstanding security
in an issuer transaction that is subject to the qualification
requirement of Section 25110 of the Code but exempt from that
qualification requirement by subdivision (f) of Section 25102; provided
that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the
legend required by this section.
(c) The certificates representing all such securities subject to
such a restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently stamped or
printed thereon in capital letters of not less than 10-point size, reading as
follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
5.
<PAGE> 1
EXHIBIT 99.4
NETSYS TECHNOLOGIES, INC.
1995 STOCK OPTION PLAN
EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
NETSYS Technologies, Inc.
100 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
Attention: Secretary
1. Exercise of Option. Effective as of today, November 20,
1995, 4 ("Optionee") hereby elects to exercise Optionee's option to purchase an
aggregate of 2 shares of the Common Stock (the "Shares") of NETSYS Technologies,
Inc. (the "Company") under and pursuant to the 1995 Stock Option Plan, as
amended (the "Plan") and the Incentive Stock Option Agreement dated 1 (the
"Option Agreement"), none of which shares have become vested under the vesting
schedule set forth in the Option Agreement and 2 of which shares have not yet
vested under such schedule. (Shares which at any time have vested under such
vesting schedule shall be then referred to as "Vested Shares" and shares which
at any time have not yet vested shall be then referred to as "Unvested Shares."
The Vested Shares and the Unvested Shares are sometimes collectively referred to
herein as the "Shares"). As set forth in the Plan and the Option Agreement, in
the event of Optionee's election to exercise the Option as to Unvested Shares,
this Agreement gives the Company the right, in the event of termination of the
Optionee's employment with the Company to repurchase at the Option Price (as
defined herein) any or all of the Shares that are Unvested Shares as of the date
of termination.
Subject to the terms and conditions of this Agreement, the
Company hereby agrees to sell the Shares to Optionee and Optionee agrees to
purchase the Shares from the Company on the Closing Date (as herein defined), at
a price of $0.16 per share (the "Option Price"), for an aggregate purchase price
of $3. The Shares are being purchased and sold in accordance with and subject to
the provisions of the Plan and the Option Agreement, each of which is
incorporated by reference.
The purchase and sale of the Shares shall occur at a closing
to be held at such time and place (the "Closing Date"), as designated by the
Company no less than two business days prior to the Closing Date. The closing
will take place at the principal office of the Company or at such other place as
shall be designated by the Company. At the closing, Optionee shall deliver to
the Company a check payable to the order of the Company in the amount of the
purchase price of the Shares and the Company will issue the Shares registered in
the name of the Optionee.
2. Company's Unvested Share Repurchase Option.
<PAGE> 2
(a) The Company shall have the right to
repurchase the Unvested Shares at the Option Price in the event of a
termination of the Optionee's employment with the Company prior to the date on
which they become Vested Shares pursuant to the vesting schedule set forth in
the Option Agreement (the "Unvested Share Repurchase Option").
(b) Within 45 days following a termination of
the Optionee's employment with the Company, the Company shall notify the
Optionee by written notice delivered or mailed as provided in Section 11, as to
whether it wishes to purchase the Unvested Shares pursuant to exercise of the
Unvested Share Repurchase Option. If the Company (or its assignee) elects to
purchase the Unvested Shares hereunder, it shall set a date for the closing of
the transaction at a place specified by the Company not later than 30 days from
the date of such notice. At such closing, the Company (or its assignee) shall
tender payment for the Unvested Shares and the certificates representing the
Unvested Shares so purchased shall be canceled. Optionee hereby authorizes and
directs the Secretary or Transfer Agent of the Company to transfer the Unvested
Shares as to which the Unvested Share Repurchase Option has been exercised from
the Optionee to the Company. The Option Price may be payable, at the option of
the Company, in cancellation of all or a portion of any outstanding indebtedness
of the Optionee to the Company or in cash (by check), or both.
3. Representations of Optionee. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the stock certificate
evidencing such Shares is issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Optionee shall enjoy rights as a shareholder until such time
as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal hereunder. Upon such exercise, Optionee
shall have no further rights as a holder of the Shares so purchased except the
right to receive payment for the Shares so purchased in accordance with the
provisions of this Agreement, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
5. Optionee's Representations. In connection with his or
her purchase of the Shares, Optionee hereby represents and warrants to the
Company as follows:
(a) Investment Intent; Capacity to Protect
Interests. Optionee is purchasing the Shares solely for his or her own account
for investment and not with a view to
2.
<PAGE> 3
or for sale in connection with any distribution of the Shares or any portion
thereof and not with any present intention of selling, offering to sell or
otherwise disposing of or distributing the Shares or any portion thereof in any
transaction other than a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Act"). Optionee also represents that
the entire legal and beneficial interest of the Shares is being purchased, and
will be held, for Optionee's account only, and neither in whole or in part for
any other person.
(b) Residence. Optionee's principal residence
is located at the address indicated beneath Optionee's signature below.
(c) Information Concerning Company. Optionee
has heretofore discussed the Company and its plans, operations and financial
condition with the Company's officers and has heretofore received all such
information as Optionee has deemed necessary and appropriate to enable Optionee
to evaluate the financial risk inherent in making an investment in the Shares,
and Optionee has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
(d) Economic Risk. Optionee realizes that the
purchase of the Shares will be a highly speculative investment and involves a
high degree of risk, and Optionee is able, without impairing financial
condition, to hold the Shares for an indefinite period of time and to suffer a
complete loss on Optionee's investment.
(e) Restricted Securities. Optionee understands
and acknowledges that:
(i) the sale of the Shares has not been
registered under the Act, and the Shares must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration is
available (such as Rule 144 or the resale provisions of Rule 701 under the Act)
and the Company is under no obligation to register the Shares;
(ii) the share certificate representing
the Shares will be stamped with the legends specified in Section 7 hereof, and
(iii) the Company will make a notation in
its records of the aforementioned restrictions on transfer and legends.
(f) Disposition under the Act. Optionee understands that
the Shares are restricted securities within the meaning of Rule 144 promulgated
under the Act; that the exemption from registration under Rule 144 will not be
available in any event for at least two years from the date of purchase and
payment of the Shares, and even then will not be available unless (i) a public
trading market then exists for the Common Stock of the Company, (ii) adequate
information concerning the Company is then available to the public, and (iii)
other terms and conditions of Rule 144 are complied with; and that any sale of
the Shares may be made only in limited amounts in accordance with such terms and
conditions. The Optionee further understands that the resale provisions of Rule
701 will not apply until 90 days after the Company
3.
<PAGE> 4
becomes subject to the reporting obligations under the Securities Exchange Act
of 1934 (the "Exchange Act") (typically upon the effective date of a Company's
initial public offering). There can be no assurance that the requirements of
Rule 144 or Rule 701 will be met, or that the Shares will ever be saleable.
(g) Further Limitations on Disposition. Without in any
way limiting his or her representations set forth above, Optionee further agrees
that it shall in no event make any disposition of all or any portion of the
Shares unless and until:
(i)(A) There is then in effect a
Registration Statement under the Act covering such proposed disposition and such
disposition is made in accordance with said Registration Statement; or, (B) The
resale provisions of Rule 701 or Rule 144(k) is available in the opinion of
counsel to the Company or (C)(1) Optionee shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (2)
Optionee shall have furnished the Company with an opinion of Optionee's counsel
to the effect that such disposition will not require registration of such shares
under the Act, and (3) such opinion of Optionee's counsel shall have been
concurred in by counsel for the Company and the Company shall have advised
Optionee of such concurrence; and,
(ii) The Shares proposed to be
transferred are no longer subject to the Unvested Share Repurchase Option set
forth in Section 2 hereof and Optionee shall have complied with the restrictions
on transfer set forth in Section 6 hereof.
(h) Tax Consequences. Optionee has reviewed with\
Optionee's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. Optionee is relying solely on such advisors and not on any statements
or representations of the Company or any of its agents. Optionee understands
that Optionee (and not the Company) shall be responsible for Optionee's own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. Optionee understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
both (i) the difference between the fair market value of the Shares when the
Company granted Optionee the right to purchase the Shares and the fair market
value of the Shares on the date of this Agreement, and (ii) the difference
between the amount paid for the Shares and the fair market value of the Shares
as of the date any restrictions on the Shares lapse. In this context,
"restriction" includes the right of the Company to buy back the Shares pursuant
to its repurchase option. In the event the Company has registered under the
Exchange Act, "restriction" with respect to officers, directors and 10%
shareholders also means the period after the purchase of the Shares during which
such officers, directors and 10% shareholders could be subject to suit under
Section 16(b) of the Exchange Act. Optionee understands that Optionee may elect
to be taxed at the time the Shares are purchased rather than when and as the
Company's repurchase option or the Section 16(b) period expires by filing an
election under Section 83(b) of the Code with the I.R.S. within 30 days from the
date of purchase. Even if the fair market value of the Shares equals the amount
paid for the Shares, the
4.
<PAGE> 5
election must be filed to avoid adverse tax consequences in the future. The form
for making this election is attached as Exhibit A hereto. Optionee understands
that failure to make this filing timely will result in the recognition of
ordinary income by Optionee, as the Unvested Share Repurchase Option lapses, or
after the lapse of the 6-month 16(b) period, on the difference between the
Option Price and the fair market value of the Shares at the time such
restrictions lapse.
OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS
FILING ON OPTIONEE'S BEHALF.
(i) Acknowledgement by Optionee. Optionee has reviewed the
Plan, the Option Agreement and this Agreement in their entireties, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement,
fully understands all provisions of the Plan, the Option Agreement and this
Agreement, and specifically acknowledges that the Company's repurchase rights
are absolute, regardless of the reason (or lack of reason) for termination of
employment.
6. Escrow. As security for the faithful performance of the
terms of this Agreement and to insure the availability for delivery of
Optionee's Shares upon exercise of the Unvested Share Repurchase Option herein
provided for, Optionee agrees to deliver to and deposit with the Secretary of
the Company, or such other person designated by the Company, as escrow agent in
this transaction ("Escrow Agent"), one Stock Assignment duly endorsed (with date
and number of shares blank) in the form attached hereto as Exhibit B, together
with the certificate or certificates evidencing the Shares; said documents are
to be held by the Escrow Agent and delivered by said Escrow Agent pursuant to
the Joint Escrow Instructions of the Company and Optionee set forth in Exhibit C
attached hereto and incorporated by this reference, which instructions shall
also be delivered to the Escrow Agent at the closing hereunder.
7. Company's Right of First Refusal. Before any Shares held
by Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating: (i)
the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii)
the name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
5.
<PAGE> 6
(b) Exercise of Right of First Refusal. At any
time within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (c) below.
(c) Purchase Price. The purchase price
("Purchase Price") for the Shares purchased by the Company or its assignee(s)
under this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in
good faith.
(d) Payment. Payment of the Purchase Price
shall be made, at the option of the Company or its assignee(s), in cash (by
check), by cancellation of all or a portion of any outstanding indebtedness of
the Holder to the Company (or, in the case of repurchase by an assignee, to the
assignee), or by any combination thereof within 30 days after receipt of the
Notice or in the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply to
the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
a new Notice shall be given to the Company, and the Company and/or its assignees
shall again be offered the Right of First Refusal before any Shares held by the
Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers.
Anything to the contrary contained in this Section notwithstanding, the transfer
of any or all of the Shares during the Optionee's lifetime or on the Optionee's
death by will or intestacy to the Optionee's immediate family or a trust for the
benefit of the Optionee's immediate family shall be exempt from the provisions
of this Section. "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the
transferee or other recipient shall receive and hold the Shares so transferred
subject to the provisions of this Section, and there shall be no further
transfer of such Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The
Right of First Refusal shall terminate as to any Shares 90 days after the first
sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
6.
<PAGE> 7
8. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees
that the Company shall cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A
RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF
THIS SECURITY, OR ANY INTEREST THEREIN, OR TO
RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS
PERMITTED IN THE COMMISSIONER'S RULES.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
RESTRICTIONS ON TRANSFER FOR A PERIOD OF 180 DAYS
FOLLOWING THE EFFECTIVE DATE OF THE COMPANY'S
INITIAL UNDERWRITTEN PUBLIC OFFERING AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
THE CONSENT OF THE COMPANY OR THE MANAGING
UNDERWRITER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
7.
<PAGE> 8
SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS AGREEMENT, DATED AS OF FEBRUARY 1,
1995, WHICH PLACES CERTAIN RESTRICTIONS ON THE
TRANSFER AND VOTING OF THE SHARES REPRESENTED
HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH
SHARES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME
BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED WITHOUT
CHARGE UPON WRITTEN REQUEST TO NETSYS TECHNOLOGIES,
INC. AT ITS PRINCIPAL PLACE OF BUSINESS.
THE HOLDER OF RECORD OF THESE SECURITIES, AND SUCH
HOLDER'S AGENTS AND ATTORNEYS, MAY BE REQUIRED TO
EXECUTE NON-DISCLOSURE STATEMENTS PRIOR TO BEING
PERMITTED TO INSPECT CERTAIN RECORDS OF THE COMPANY
AS DESCRIBED IN ARTICLE 8 OF THE COMPANY'S BYLAWS."
Optionee understands that transfer of the Shares may be
restricted by Section 260.141.11 of the Rules of the California Corporations
Commissioner, a copy of which is attached to Exhibit D, the Investment
Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not
be required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
9. Market Standoff. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters in connection
with any registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "Act"), Optionee shall not sell or
otherwise transfer the Shares for a period of 180 days following the effective
date of a Registration filed under the Act; provided, that such restriction
shall apply only to the first registration statement of the Company to become
effective under the Act which include securities to be sold on behalf of the
Company in an underwritten offering under the Act. The Company may impose
stop-transfer instructions with respect to the Shares subject to the foregoing
restrictions until the end of each such 180-day period.
8.
<PAGE> 9
10. Shareholder Agreement. In connection with the exercise of the
Option and the purchase of the Shares, Optionee hereby agrees to execute the
Shareholders Agreement dated as of February 1, 1995.
11. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
12. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
13. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
14. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
15. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
16. Delivery of Payment. Optionee herewith delivers to the Company the
full Exercise Price for the Shares.
17. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
9.
<PAGE> 10
Submitted by: Accepted by:
OPTIONEE: NETSYS TECHNOLOGIES, INC.
4
By:
---------------------------------
Its:
- --------------------------------- --------------------------------
Signature)
Address: Address:
- -------- --------
- --------------------------------- 1800 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
- ---------------------------------
10.
<PAGE> 11
EXHIBIT A
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in his or her gross income
for the current taxable year, the amount of any compensation taxable to him or
her in connection with his receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME 4_____________________ SPOUSE _________________________
ADDRESS ____________________ ADDRESS ________________________
____________________
____________________
IDENTIFICATION IDENTIFICATION
NUMBER _____________________ NUMBER _________________________
TAXABLE YEAR: 1995
2. The property with respect to which the election is made is described as
follows: 2 shares of Common Stock of NETSYS Technologies, Inc., a
California corporation (the "Company").
3. The date on which the property was transferred is: November 20, 1995.
4. The property is subject to the following restrictions: The right of the
Company to repurchase the shares, or a portion thereof, at the purchase
price of the shares. The right lapses as to a portion of the shares per
month according to a vesting schedule, based on continued employment.
5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms
will never lapse, of such property is: $____ per share.
6. The amount (if any) paid for such property: $____ per share.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above described property. The
<PAGE> 12
transferee of such property is the person performing the services in connection
with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated:________________________ , 19___ _________________________________
4, Taxpayer
Dated:________________________ , 19___ _________________________________
Spouse
<PAGE> 13
EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted
Stock Purchase Agreement dated as of November 20, 1995, 4 hereby sells, assigns
and transfers unto____________________________,________________________________
(________________________________) shares of the Common Stock of NETSYS
TECHNOLOGIES, INC., a California corporation standing in the undersigned's name
on the books of said corporation, represented by Certificate
No._________________ herewith, and does hereby irrevocably constitute and
appoint____________________________ attorney to transfer the said stock on the
books of the said corporation with full power of substitution in the premises.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS
THERETO.
Dated: __________________________________ ________________________________
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Company to exercise the Company
Option set forth in the Agreement without requiring additional signatures on the
part of Optionee.
<PAGE> 14
EXHIBIT C
JOINT ESCROW INSTRUCTIONS
February 5, 1996
Herbert S. Madan, Secretary
NETSYS Technologies, Inc.
100 Hamilton Avenue
Suite 175
Palo Alto, CA 94301
Dear Mr. Madan:
As Escrow Agent for both NETSYS Technologies, Inc., a
California corporation (the "Company"), and the undersigned purchaser of stock
of the Company (the "Optionee"), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement") between the Company and the undersigned,
to which a copy of these Joint Escrow Instructions is attached as Exhibit C, in
accordance with the following instructions:
1. In the event the Company and/or any assignee of the
Company (referred to collectively for convenience herein as the "Company")
exercises the Unvested Share Repurchase Option set forth in the Agreement, the
Company shall give to Optionee and you a written notice in compliance with the
relevant provisions of the Nonqualified Stock Option Agreement (the "Option
Agreement") referred to in the Agreement. Optionee and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price for the
number of shares of stock being purchased pursuant to the exercise of the
Unvested Share Repurchase Option.
3. Optionee irrevocably authorizes the Company to deposit
with you any certificates evidencing shares of stock to be held by you hereunder
and any additions and substitutions to said shares as defined in the Agreement.
Optionee does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the Securities. Subject to the provisions of this paragraph 3, Optionee shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.
<PAGE> 15
4. This escrow shall terminate at the time of termination
of the Unvested Share Repurchase Option. If at the time of termination of this
escrow you should have in your possession any documents, securities, or other
property belonging to Optionee, you shall deliver all of same to Optionee and
shall be discharged of all further obligations hereunder.
5. Your duties hereunder may be altered, amended, modified
or revoked only by a writing signed by all of the parties hereto.
6. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Optionee while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.
7. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and of the
arbitrator provided for in paragraph 10 of the Agreement, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court and of the arbitrator provided for in paragraph 9 of the Agreement. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
8. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
9. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow Instructions
or any documents deposited with you.
10. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary properly to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel, and
may pay such counsel reasonable compensation therefor.
11. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer of the Company or if you shall
resign by written notice to each party. In the event of any such termination,
the Company shall appoint a successor Escrow Agent.
12. If you reasonably require other or further instruments
in connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall
C-2
<PAGE> 16
join in furnishing such instruments.
13. It is understood and agreed that should any dispute
arise with respect to the delivery and/or ownership or right of possession of
the securities held by you hereunder, you are authorized and directed to retain
in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual written
agreement of the parties concerned or by a final order, decree or judgment of a
court of competent jurisdiction after the time for appeal has expired and no
appeal has been perfected, but you shall be under no duty whatsoever to
institute or defend any such proceedings.
14. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States Post Office, by registered or certified mail
with postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
COMPANY: NETSYS Technologies, Inc.
100 Hamilton Avenue, Suite 175
Palo Alto, CA 94301
Attn: Mr. Herbert S. Madan, President
Optionee: 4
ESCROW AGENT: Herbert S. Madan, Secretary
NETSYS Technologies, Inc.
100 Hamilton Avenue
Suite 175
Palo Alto, CA 94301
15. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
16. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
17. These Joint Escrow Instructions shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
Very truly yours,
COMPANY:
NETSYS TECHNOLOGIES, INC.,
a California corporation
C-3
<PAGE> 17
By:
---------------------------------------
Herbert S. Madan, President
Optionee:
------------------------------------------
4
ESCROW AGENT:
- -------------------------------
Herbert S. Madan, Secretary
NETSYS Technologies, Inc.
C-4
<PAGE> 18
EXHIBIT D
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE: 4
COMPANY: NETSYS TECHNOLOGIES, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.
<PAGE> 19
(c) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(c), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than two years after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than three years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to the
first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.
(e) Optionee further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such
D-2
<PAGE> 20
transactions do so at their own risk. Optionee understands that no assurances
can be given that any such other registration exemption will be available in
such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
____________________________________________
Date:_________________________, 19__________
D-3
<PAGE> 21
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer. (a) The issuer of any security upon which a
restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section
25102 of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse,
or any custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee by a trustee
or custodian for the account of the transferee or the transferee's ancestors,
descendants or spouse;
(5) to holders of securities of the same class of the
same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a
principal transaction, or as an underwriter or member of an underwriting
syndicate or selling group;
(9) if the interest sold or transferred is a pledge or
other lien given by the purchaser to the seller upon a sale of the security for
which the Commissioner's written consent is obtained or under this rule not
required;
(10) by way of a sale qualified under Sections 25111,
25112, 25113 or 25121
<PAGE> 22
of the Code, of the securities to be transferred, provided that no order under
Section 25140 or subdivision (a) of Section 25143 is in effect with respect to
such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111,
25112 or 25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed
Property Law or to the administrator of the unclaimed property law of another
state; or
(15) by the State Controller pursuant to the Unclaimed
Property Law or by the administrator of the unclaimed property law of another
state if, in either such case, such person (i) discloses to potential purchasers
at the sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such
transfer does not involve a change in the beneficial ownership of the
securities;
(17) by way of an offer and sale of outstanding securities
in an issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by
subdivision (f) of Section 25102; provided that any such transfer is on the
condition that any certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to
such a restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently stamped or
printed thereon in capital letters of not less than 10-point size, reading as
follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
<PAGE> 1
EXHIBIT 99.5
MEMORANDUM
TO: Holders of NETSYS Technologies, Inc. Stock Options
FROM: Cisco Systems, Inc.
DATE: November 15, 1996
RE: Assumption of Stock Options
As you know, NETSYS Technologies, Inc. ("NETSYS") was recently
acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on November
15, 1996 (the "Merger").
In connection with this transaction, Cisco has assumed all of
your outstanding NETSYS 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 NETSYS common stock were
exchanged for shares of Cisco common stock in the Merger. That ratio
was 0.147666 of a share of Cisco common stock for each share of NETSYS
common stock (the "Exchange Ratio"). Accordingly, the number of Cisco
shares now subject to your option is equal to the number of shares of
NETSYS 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 NETSYS 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 0.147666 to
establish the price per share payable for the Cisco common stock.
<PAGE> 2
3. No change has been made to the vesting schedule in effect
for your option. Your Cisco option will continue to vest in accordance
with the same installment vesting schedule in effect under your NETSYS
option, with the number of Cisco shares subject to each such
installment adjusted to reflect the Exchange Ratio. However, you will
now earn vesting credit not only for the period you continue in
employment or service with NETSYS after the Merger but also for any
period of service you may complete with 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 NETSYS 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
FULLY-VESTED
MEMORANDUM
TO: Holders of NETSYS Technologies, Inc. Stock Options
FROM: Cisco Systems, Inc.
DATE: November 15, 1996
RE: Assumption of Stock Options
As you know, NETSYS Technologies, Inc. ("NETSYS") was recently
acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on November
15, 1996 (the "Merger").
In connection with this transaction, Cisco has assumed all of
your outstanding NETSYS 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 NETSYS common stock
were exchanged for shares of Cisco common stock in the Merger. That
ratio was 0.147666 of a share of Cisco common stock for each share of
NETSYS common stock (the "Exchange Ratio"). Accordingly, the number of
Cisco shares now subject to your option is equal to the number of
shares of NETSYS 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 NETSYS 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 0.147666 to
establish the price per share payable for the Cisco common stock.
<PAGE> 2
3. By reason of the Merger, your assumed NETSYS 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 NETSYS 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
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1
NUMBER OF NETSYS TECHNOLOGIES, INC. SHARES: 2
GRANT DATE: 3
ORIGINAL EXERCISE PRICE: $4
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 15th day of
November, 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 NETSYS
Technologies, Inc., a California corporation ("NETSYS"), which were granted to
Optionee under the NETSYS Technologies, Inc. 1995 Stock Option Plan (the "Plan")
and are evidenced by a Stock Option Agreement(s) (the "Option Agreement(s)")
between NETSYS and Optionee.
WHEREAS, NETSYS has this day been acquired by Cisco through
the merger of NETSYS with Cisco (the "Merger") pursuant to the Agreement and
Plan of Merger dated October 11, 1996 by and between Cisco and NETSYS (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of NETSYS 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 0.147666 of a share of Cisco
common stock ("Cisco Stock") for each outstanding share of NETSYS common stock
(the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately
upon the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of NETSYS Stock subject to the
stock options held by Optionee under the Plan immediately prior to the Effective
Time (the "NETSYS
<PAGE> 2
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
NETSYS under each of the NETSYS 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>
NETSYS CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# OF SHARES # OF SHARES ADJUSTED
COMMON STOCK EXERCISE COMMON STOCK EXERCISE
NETSYS 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 NETSYS Option hereby assumed and the exercise price payable thereunder
reflect the Exchange Rate at which shares of NETSYS 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 NETSYS 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 NETSYS Stock
subject to the NETSYS 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
NETSYS Option immediately prior to the Merger.
3. The following provisions shall govern each NETSYS 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," "Optioned Stock" or "Common Stock" shall mean shares of Cisco
Stock, all references to the "Board" shall mean the Cisco Board of Directors,
and all references to "Committee" or "Administrator" shall mean the Compensation
Committee of the Cisco Board of Directors.
- The grant date and the expiration date of each
assumed NETSYS Option and all other provisions which govern either the
exercisability or the termination of the assumed NETSYS Option shall remain the
same as set forth in the
2.
<PAGE> 3
Option Agreement(s) applicable to that option and shall accordingly govern and
control Optionee's rights under this Agreement to purchase Cisco Stock.
- Each assumed NETSYS Option shall vest in
accordance with the same installment vesting schedule in effect under the
applicable Option Agreement immediately prior to the Effective Time, with the
number of shares of Cisco Stock subject to each such installment adjusted to
reflect the Exchange Rate. Accordingly, no acceleration of vesting of the NETSYS
Options shall be deemed to occur by reason of the Merger, and the vesting dates
under each applicable Option Agreement shall remain the same.
- 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) NETSYS. Accordingly, the provisions of the Option
Agreement(s) governing the termination of the assumed NETSYS Option upon the
Optionee's cessation of employee, consultant or advisor status with NETSYS 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 NETSYS 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 NETSYS 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
NETSYS common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed NETSYS
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. 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
3.
<PAGE> 4
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 15th day of November, 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 NETSYS 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
FULLY VESTED
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1
NUMBER OF NETSYS TECHNOLOGIES, INC. SHARES: 2
GRANT DATE: 3
ORIGINAL EXERCISE PRICE: $4
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 15th day of
November, 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 NETSYS
Technologies, Inc., a California corporation ("NETSYS"), which were granted to
Optionee under the NETSYS Technologies, Inc. 1995 Stock Option Plan (the "Plan")
and are evidenced by a Stock Option Agreement(s) (the "Option Agreement(s)")
between NETSYS and Optionee.
WHEREAS, NETSYS has this day been acquired by Cisco through
the merger of NETSYS with Cisco (the "Merger") pursuant to the Agreement and
Plan of Merger dated October 11, 1996 by and between Cisco and NETSYS (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of NETSYS 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 0.147666 of a share of Cisco
common stock ("Cisco Stock") for each outstanding share of NETSYS common stock
(the "Exchange Rate").
WHEREAS, this Agreement is to become effective immediately
upon the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of NETSYS Stock subject to the
stock options held by Optionee under the Plan immediately prior to the Effective
Time (the "NETSYS
<PAGE> 2
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
NETSYS under each of the NETSYS 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>
NETSYS CISCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# OF SHARES # OF SHARES ADJUSTED
COMMON STOCK EXERCISE COMMON STOCK EXERCISE
NETSYS 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 NETSYS Option hereby assumed and the exercise price payable thereunder
reflect the Exchange Rate at which shares of NETSYS 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 NETSYS 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 NETSYS Stock
subject to the NETSYS 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
NETSYS Option immediately prior to the Merger.
3. The following provisions shall govern each NETSYS
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," "Optioned Stock" or "Common Stock" shall mean shares of Cisco
Stock, all references to the "Board" shall mean the Cisco Board of Directors,
and all references to "Committee" or "Administrator" shall mean the Compensation
Committee of the Cisco Board of Directors.
- The grant date and the expiration date of
each assumed NETSYS Option and all other provisions which govern either the
exercisability or the termination of the assumed NETSYS Option shall remain the
same as set forth in the
2.
<PAGE> 3
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 NETSYS 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) NETSYS. Accordingly, the provisions of the Option
Agreement(s) governing the termination of the assumed NETSYS Option upon the
Optionee's cessation of employee, consultant or advisor status with NETSYS 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 NETSYS 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 NETSYS 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
NETSYS common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed NETSYS
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. 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.
3.
<PAGE> 4
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 15th day of November, 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 NETSYS 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
Exh. 99.9
MEMORANDUM
TO: 1-, Shareholder
FROM: Cisco Systems, Inc.
DATE: November 15, 1996
RE: Assignment of Repurchase Option
================================================================================
As you know, NETSYS Technologies, Inc. ("NETSYS") was recently acquired
by Cisco Systems, Inc. ("Cisco") through a merger effected pursuant to the
Agreement and Plan of Merger dated October 11, 1996 by and between Cisco and
NETSYS (the "Merger").
Immediately prior to the time of the Merger, NETSYS held certain rights
and options (the "Repurchase Options") to repurchase unvested shares of NETSYS
common stock issued and outstanding under its 1995 Stock Option Plan (the
"Plan"). In connection with the Merger, the Repurchase Options were assigned to
Cisco. At the time of the Merger, you were one of the holders of those unvested
shares, which you received by exercising unvested options granted to you by the
Board of Directors of NETSYS under the Plan and held subject to the terms of
the Restricted Stock Purchase Agreement between you and NETSYS entered into in
connection with such exercise (the "Restricted Stock Agreement").
The unvested shares of NETSYS common stock that you acquired under the
Restricted Stock Agreement were converted in the Merger into unvested shares of
Cisco common stock at the rate of 0.147666 a share of Cisco common stock for
each NETSYS share. The vesting of your NETSYS shares was not accelerated or in
any other way affected by the merger, and the shares of Cisco common stock
issued in exchange for those shares continue to remain subject to all the terms
and conditions of your Restricted Stock Agreement, your Stock Option Agreement,
and the 1995 Stock Option Plan, including (without limitation), the vesting
provisions and the Repurchase Option applicable to your shares.
The purpose of this Memorandum is to notify you that Cisco has, by
reason of the assignment from NETSYS in the Merger, become the holder of the
Repurchase Option which was originally granted to NETSYS pursuant to the
provisions of your Restricted Stock Agreement. Accordingly, the shares of Cisco
common stock that were issued to you in the Merger in exchange for your NETSYS
shares acquired pursuant to the Restricted Stock Agreement will be subject to
repurchase by Cisco in accordance with the
<PAGE> 2
terms and conditions of the Restricted Stock Agreement if your employment with
Cisco or any Cisco subsidiary terminates before such Repurchase Option lapses.
In addition to the assignment of the Repurchase Option to Cisco,
several other changes to your Restricted Stock Agreement have also become
necessary as a result of the Merger. These changes may be summarized as
follows:
1. Effective immediately, all references in the Restricted Stock
Agreement to the "Company" shall be deemed to also refer to Cisco, all
references to "Common stock", "Unvested Shares", "Shares", and "Vested Shares"
shall be deemed to refer to the shares of Cisco common stock issued in the
Merger in exchange for the NETSYS shares acquired pursuant to the Restricted
Stock Agreement, and all references to the "Board of Directors" or the "Board"
shall mean the Compensation Committee of the Board of Directors of Cisco.
2. For purposes of applying the termination of employment
provisions of the Restricted Stock Agreement, your employment with the Company
shall be deemed to continue, and no termination of employment shall accordingly
be deemed to occur under the Restricted Stock Agreement, for so long as you
remain in the employ of Cisco or any Cisco subsidiary, including (without
limitation) NETSYS.
3. The vesting schedule for the shares of Cisco common stock now
subject to your Restricted Stock Agreement shall remain the same as in effect
immediately prior to the Merger. There shall be no change in the award date
specified in your Restricted Stock Agreement and no accelerated vesting of the
shares.
4. All references in the Joint Escrow Instructions to the
"Company" shall be deemed to refer to Cisco, all references to "stock" or
"shares" shall be deemed to refer to the shares of Cisco common stock issued in
the Merger in exchange for the NETSYS shares acquired pursuant to the
Restricted Stock Agreement, and all references to "Escrow Agent" shall refer to
the Escrow Agent chosen by Cisco.
5. All notices to the Company required or permitted to be given to
the Company pursuant to the provisions of the Restricted Stock Agreement shall
be given to Cisco at the following address:
Cisco Systems, Inc.
170 W. Tasman Drive
San Jose, California 95134-1706
Attention: Corporate Secretary
6. Except to the extent specifically noted in this Memorandum, all
of the terms and conditions of your Restricted Stock Agreement as in effect
immediately
2.
<PAGE> 3
prior to the Merger shall continue in full force and effect and shall not in
any way be amended, revised or otherwise affected by the Merger.
Please review this Memorandum carefully so that you understand the
effect of the Merger upon the terms and provisions of your Restricted Stock
Agreement, including the assignment of the Repurchase Option to Cisco. Should
you have any questions, please contact Christine Calice of Cisco at (408)
526-4000. After you have completed your review, please sign the attached
second copy of this Memorandum and return it to:
Cisco Systems, Inc.
170 W. Tasman Drive
San Jose, California 95134-1706
Attention: Christine Calice
The other copy of this Memorandum should be attached to your Restricted
Stock Agreement so that you will have a complete record of all the terms and
provisions applicable to the shares of Cisco common stock now subject to that
Restricted Stock Agreement.
CISCO SYSTEMS, INC.
By:
-----------------------------------
ACKNOWLEDGEMENT
The undersigned hereby acknowledges receipt of the foregoing Memorandum
Re: Assignment of Repurchase Option and understands that Cisco Systems, Inc. is
now the legal holder of that right, with the same authority to exercise such
right as NETSYS Technologies, Inc. possessed prior to the Merger.
Dated: December ___, 1996 _______________________________________
SHAREHOLDER
3.
