<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1997
REGISTRATION NO. 333-___
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CISCO SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 77-0059951
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
--------------
255 WEST TASMAN DRIVE
SAN JOSE, CALIFORNIA 95134
(408) 526-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
LARRY R. CARTER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CISCO SYSTEMS, INC.
255 WEST TASMAN DRIVE
SAN JOSE, CALIFORNIA 95134
(408) 526-4000
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
--------------
Copy to:
EDWARD M. LEONARD, ESQ.
BROBECK, PHLEGER & HARRISON LLP
TWO EMBARCADERO PLACE
2200 GENG ROAD
PALO ALTO, CALIFORNIA 94303
(415) 424-0160
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Title of Each Amount Proposed Maximum Proposed Maximum Amount
Class of Securities to Be Offering Aggregate of Registration
to be Registered Registered Price Per Share(1) Offering Price(1) Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 29,686 Shares $70.31 $2,087,223 $633
no par value per share
================================================================================================================
</TABLE>
(1) The price of $70.31, which was the average of the high and low prices of
the Common Stock on the Nasdaq National Market System on January 16, 1997, is
set forth solely for the purpose of computing the registration fee pursuant to
Rule 457(c) based on the average of the high and low prices of the Registrant's
Common Stock as reported on the Nasdaq National Market on January 16, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JANUARY 22, 1997
29,686 SHARES
CISCO SYSTEMS, INC.
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of 29,686 shares of Common Stock, no par value per share, of Cisco
Systems, Inc. ("Cisco", the "Company" or the "Registrant"). All 29,686 shares
(the "Shares") may be offered by certain shareholders of the Company or by
pledgees, donees, transferees or other successors in interest that receive such
shares as a gift, partnership distribution or other non-sale related transfer
(the "Selling Shareholders"). All of the Shares were originally issued by the
Company in connection with the purchase by the Company of all the outstanding
stock of Metaplex, Inc. ("Metaplex"). The Shares were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(2) thereof. The Shares are
being registered by the Company pursuant to section 7.1 of the Stock Purchase
Agreement by and among Cisco and Metaplex.
The Shares may be offered by the Selling Shareholders from time to time
in transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear all expenses in connection with the
registration of the Shares being offered and sold by the Selling Shareholders.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act.
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "CSCO." On January 16, 1997 the average of the high and low
price for the Common Stock was $70.31.
The Selling Shareholders and any broker-dealers or agents that
participate with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January ___, 1997
<PAGE> 3
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, any Selling Shareholder or by any other person. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that information herein is correct as of any time
subsequent to the date hereof. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any security other than the securities
covered by this Prospectus, nor does it constitute an offer to or solicitation
of any person in any jurisdiction in which such offer or solicitation may not
lawfully be made.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 75 Park Place,
New York, New York 10007 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained by mail from the
Public Reference Branch of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock of the Company is
quoted on the Nasdaq National Market, and such material may also be inspected at
the offices of Nasdaq Operations, 1735 K Street N.W. Washington, D.C. 20006. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's web site is
http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information regarding the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules filed therewith. The Registration
Statement, including the exhibits and schedules thereto, may be inspected at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of all or any part thereof may
be obtained from such office upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-18225)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
July 28, 1996;
2. The Company's Current Report on Form 8-K filed October 1, 1996, as
amended on Form 8-K/A filed on October 15, 1996;
3. Definitive Proxy Statement dated October 7, 1996, filed in
connection with the Company's 1996 Annual Meeting of Shareholders;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
October 26, 1996;
2.
<PAGE> 4
5. The description of the Company's Common Stock, no par value per
share, contained in its Registration Statement on Form 8-A dated January 8,
1990, including any amendment or report filed for the purpose of updating such
description; and
6. All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering.
Any statement contained in a document incorporated by reference herein
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the date of filing of such documents. Any statement modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. The Company will provide without charge to
each person to whom this Prospectus is delivered a copy of any or all of such
documents which are incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into the documents that this Prospectus incorporates). Written requests for
copies should be directed to Larry R. Carter, Vice President and Chief Financial
Officer, at the principal executive offices of Cisco Systems, Inc., 255 West
Tasman Drive, San Jose, California 95134. The Company's telephone number is
(408) 526-4000.
3.
<PAGE> 5
THE COMPANY
The principal executive offices of Cisco are located at 255 West Tasman
Drive, San Jose, California, 95134. Cisco's telephone number is (408) 526-4000.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Shareholders from time to time in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). Accordingly sales prices and proceeds
to the Selling Shareholders will depend upon price fluctuations and the manner
of sale. In addition, any Shares which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Shareholders and any broker-dealers or agents that
participate with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
All expenses in connection with the registration of the Shares will be
borne by the Company.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock of the Company for
a period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Shareholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares of Common Stock
owned by each of the Selling Shareholders. Except as indicated, none of the
Selling Shareholders has had a material relationship with the Company within the
past three years other than as a result of the ownership of the Shares or other
securities of the Company. Because the Selling Shareholders may offer all or
some of the Shares which they hold pursuant to the offering contemplated by this
Prospectus, and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the Shares, no estimate can be
given as to the amount of Shares that will be held by the Selling Shareholders
after completion of this offering. The Shares offered by this Prospectus may be
offered from time to time by the Selling Shareholders named below.
4.
<PAGE> 6
<TABLE>
<CAPTION>
Number of Number of
Shares Percent of Shares
Beneficially Outstanding Registered for
Name of Selling Shareholder Owned Shares Sale Hereby(1)
- --------------------------- ----- ------ -----------
<S> <C> <C> <C>
Paul A. Wood(2) 44,076 * 14,843
Pamela R. Wood 14,843 * 14,843
------ ------
Total 58,919 * 29,686
</TABLE>
- ----------------------------------
* Represents beneficial ownership of less than 1%.
(1) This Registration Statement shall also cover any additional shares of Common
Stock which become issuable in connection with the shares registered for sale
hereby by reason of any stock divided, 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) Includes 29,233 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California.
EXPERTS
The consolidated balance sheets as of July 28, 1996 and July 30, 1995 and
the consolidated statements of income, retained earnings, and cash flows for
each of the three years in the period ended July 28, 1996, incorporated by
reference in this prospectus, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
5.
<PAGE> 7
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration fee $ 633
Legal fees and expenses 15,000
Accounting fees and expenses 5,000
Miscellaneous 4,367
-------
Total $25,000
=======
</TABLE>
ITEM 15. 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. The Registrant's Restated Articles of
Incorporation, as amended and Amended 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 Company has entered into
Indemnification Agreements with each of its directors and officers.
ITEM 16. EXHIBITS
2.1 Stock Purchase Agreement by and among Cisco and Metaplex.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison (included in the Opinion of
Counsel filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (included on page II-3 of this Registration
Statement).
ITEM 17. UNDERTAKINGS
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 Securities 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 (i) and (ii)
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed with or furnished to the
II-1
<PAGE> 8
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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 offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in 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.
II-2
<PAGE> 9
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 22nd day of January, 1997.
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 January 22, 1997
- ---------------------------------- Officer and Director (Principal
Executive Officer)
John T. Chambers
/s/ Larry R. Carter Vice President, Finance and January 22, 1997
- ---------------------------------- Administration, Chief Financial
Officer and Secretary
(Principal Financial and Accounting Officer)
Larry R. Carter
/s/ John P. Morgridge Chairman of the Board January 22, 1997
- ---------------------------------- and Director
John P. Morgridge
</TABLE>
II-3
<PAGE> 10
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Donald T. Valentine Director January 22, 1997
- ----------------------------------
Donald T. Valentine
/s/ James F. Gibbons Director January 22, 1997
- ----------------------------------
James F. Gibbons
/s/ Robert L. Puette Director January 22, 1997
- ----------------------------------
Robert L. Puette
/s/ Masayoshi Son Director January 22, 1997
- ----------------------------------
Masayoshi Son
/s/ Steven M. West Director January 22, 1997
- ----------------------------------
Steven M. West
/s/ Richard M. Moley Director January 22, 1997
- ----------------------------------
Richard M. Moley
/s/ Edward R. Kozel Director January 22, 1997
- ----------------------------------
Edward R. Kozel
/s/ Carol Bartz Director January 22, 1997
- ----------------------------------
Carol Bartz
</TABLE>
II-4
<PAGE> 11
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
- ------ -------------
<S> <C>
2.1 Stock Purchase Agreement by and among Cisco and Metaplex.
5.1 Opinion of Brobeck, Phleger & Harrison LLP
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the
Opinion of Counsel filed as Exhibit 5.1)
24.1 Power of Attorney (included on page II-3 of this Registration
Statement)
</TABLE>
<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
CISCO SYSTEMS, INC.,
METAPLEX, INC.
and the Shareholders of METAPLEX, INC.
October 29, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 PURCHASE AND SALE OF STOCK........................................................... 1
1.1 Purchase and Sale.................................................................... 1
1.2 Purchase Price....................................................................... 1
1.3 Exemption from Registration; California Permit....................................... 2
1.4 Directors and Officers of Metaplex................................................... 2
ARTICLE 2 CLOSING.............................................................................. 2
2.1 Time of Closing...................................................................... 2
2.2 Deliveries by Metaplex and the Shareholders.......................................... 2
2.3 Deliveries by Cisco.................................................................. 3
2.4 Further Assurances................................................................... 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF METAPLEX
AND THE SHAREHOLDERS................................................................. 3
3.1 Organization, Standing and Power..................................................... 4
3.2 Capital Structure.................................................................... 4
3.3 Authority............................................................................ 4
3.4 Financial Statements................................................................. 5
3.5 Balance Sheet........................................................................ 5
3.6 IBM Revenues......................................................................... 6
3.7 Absence of Certain Changes........................................................... 6
3.8 Absence of Undisclosed Liabilities................................................... 6
3.9 Litigation........................................................................... 6
3.10 Restrictions on Business Activities.................................................. 7
3.11 Governmental Authorization........................................................... 7
3.12 Title to Property.................................................................... 7
3.13 Intellectual Property................................................................ 8
3.14 Environmental Matters................................................................ 9
3.15 Taxes................................................................................ 10
3.16 Employee Benefit Plans............................................................... 12
3.17 Employee Matters..................................................................... 14
3.18 Interested Party Transactions........................................................ 14
3.19 Insurance............................................................................ 15
3.20 Compliance With Laws................................................................. 15
3.21 Minute Books......................................................................... 15
3.22 Complete Copies of Materials......................................................... 15
3.23 Brokers' and Finders' Fees........................................................... 15
3.24 Permit Application................................................................... 15
3.25 Board Approval....................................................................... 16
3.26 Representations Complete............................................................. 16
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS.................................................................. 16
4.1 Authorization........................................................................ 16
4.2 Compliance With Other Instruments.................................................... 16
4.3 Governmental Consents................................................................ 17
4.4 Litigation........................................................................... 17
4.5 Title to Stock....................................................................... 17
4.6 Disclosure........................................................................... 17
4.7 Intellectual Property of the Shareholders............................................ 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CISCO.............................................. 18
5.1 Organization, Standing and Power..................................................... 18
5.2 Capital Structure.................................................................... 19
5.3 Authority............................................................................ 20
5.4 SEC Documents; Financial Statements.................................................. 20
5.5 Litigation........................................................................... 21
5.6 Governmental Authorization........................................................... 21
5.7 Compliance With Laws................................................................. 21
5.8 Broker's and Finders' Fees........................................................... 22
5.9 Permit Application................................................................... 22
5.10 Board Approval....................................................................... 22
5.11 Representations Complete............................................................. 22
ARTICLE 6 COVENANTS OF CISCO, METAPLEX AND THE
SHAREHOLDERS......................................................................... 22
6.1 Conduct of Business of Metaplex and Cisco............................................ 22
6.2 Conduct of Business of Metaplex...................................................... 23
6.3 No Solicitation...................................................................... 26
6.4 Indemnification...................................................................... 26
ARTICLE 7 CONDITIONS TO OBLIGATIONS OF CISCO, METAPLEX
AND THE SHAREHOLDERS................................................................. 27
7.1 Consents and Approvals............................................................... 27
7.2 Representations, Warranties and Agreements........................................... 27
7.3 Certificate.......................................................................... 27
7.4 Opinions of Counsel.................................................................. 27
7.5 No Material Adverse Changes.......................................................... 27
7.6 No Actions........................................................................... 28
7.7 Proceedings and Documents............................................................ 28
7.8 Accuracy of Documents and Information................................................ 28
7.9 Blue Sky Approvals................................................................... 28
7.10 Contracts............................................................................ 28
7.11 Documents............................................................................ 28
7.12 Additional Conditions to the Obligations of Cisco.................................... 28
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 8 INDEMNIFICATION...................................................................... 29
8.1 Indemnification...................................................................... 29
8.2 Claims............................................................................... 29
8.3 Objections to Claims................................................................. 30
8.4 Resolution of Conflicts; Arbitration................................................. 30
8.5 Shareholders' Agent.................................................................. 31
8.6 Actions of the Shareholders' Agent................................................... 32
8.7 Third-Party Claims................................................................... 32
8.8 Further Limitations.................................................................. 32
ARTICLE 9 TERMINATION.......................................................................... 33
9.1 Termination by Mutual Consent........................................................ 33
9.2 Termination by Cisco or Metaplex..................................................... 33
9.3 Effect of Termination................................................................ 33
ARTICLE 10 MISCELLANEOUS........................................................................ 33
10.1 Notices.............................................................................. 33
10.2 Entire Agreement; Modifications; Waiver.............................................. 34
10.3 Captions............................................................................. 34
10.4 Counterparts......................................................................... 34
10.5 Publicity............................................................................ 34
10.6 Successors and Assigns............................................................... 34
10.7 Governing Law........................................................................ 35
10.8 Further Assurances................................................................... 35
10.9 Confidentiality and Nondisclosure Agreements......................................... 35
10.10 Attorneys' Fees...................................................................... 35
10.11 Transfer of Metaplex Books and Assets................................................ 35
10.12 Arbitration.......................................................................... 36
10.13 Exhibits............................................................................. 36
10.14 Severability......................................................................... 36
</TABLE>
iii.
<PAGE> 5
EXHIBITS AND SCHEDULES
Exhibit 1.1 List of Shareholders
Exhibit 1.2 Distribution of Purchase Price
Exhibit 7.4(a) Form of Opinion of Counsel to Cisco
Exhibit 8.3 Form of Escrow Agreement
Schedule 3.7 Changes Since March 31, 1996
Schedule 3.12 List of Real Property Owned or Leased
Schedule 3.13 List of Intellectual Property
Schedule 3.16 List of Employee Benefit Plans
Schedule 3.22 List of Material Contracts
iv.
<PAGE> 6
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of
October 29, 1996, by and between Cisco Systems, Inc., a California corporation
("Cisco"), Metaplex, Inc., a North Carolina corporation ("Metaplex") and the
shareholders of Metaplex, listed on Exhibit 1.1 hereto (each of whom is herein
referred to as a "Shareholder" and collectively as the "Shareholders").
WHEREAS, Metaplex is engaged in, among other things, the
business of developing network software (such business is referred to herein
collectively as the "Business");
WHEREAS, Cisco desires to purchase all the shares of capital
stock of Metaplex held by the Shareholders, subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, Cisco agrees to purchase at the Closing (as hereinafter
defined), and each of the Shareholders agrees to sell to Cisco at the Closing,
all the outstanding shares of capital stock (the "Capital Stock") of Metaplex,
which consists of 200 shares of common stock of Metaplex and all rights existing
with respect thereto, held by the shareholders, as set forth on Exhibit 1.1
attached hereto.
1.2 Purchase Price. In consideration for the Capital Stock and
in full payment therefor, Cisco will pay to the Shareholders the following
amount (collectively the "Purchase Price"), to be allocated among the
Shareholders as set forth in Section 1.2(b) below:
(a) At the Time of Closing (as hereinafter defined),
the Shareholders shall be paid by delivery of certificate(s) for shares of Cisco
Common Stock with a market value of U.S. $1,540,000 (the "Cisco Shares") based
on the "Closing Price" of Cisco Common Stock of which $154,000 of the Cisco
Shares (the "Escrow Amount") shall be deposited in escrow (the "Escrow Fund").
For purposes of the above calculation, the "Closing Price" of Cisco Common Stock
shall be the closing price of Cisco Common Stock as reported on the Nasdaq
National Market of the National Association of Securities Dealers' Automated
Quotation System on September 5, 1996.
1.
<PAGE> 7
(b) The portion of the Purchase Price payable to each
Shareholder (the "Shareholder's Pro-Rata Amount") at the Closing and the Escrow
Amount with respect to each Shareholder is set forth in Exhibit 1.2 hereof.
1.3 Exemption from Registration; California Permit. The Cisco
Shares to be issued to the Shareholders will be issued in a transaction exempt
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), by reason of Section 3(a)(10) thereof. The Cisco Shares will be qualified
under California Law, pursuant to Section 25121 thereof, after a fairness
hearing has been held pursuant to the authority granted by Section 25142 of such
law. Each of Cisco and the Shareholders shall use their best efforts to (i) file
an application for issuance of a California permit to issue the Cisco Shares
within five (5) business days from the date of this Agreement and (ii) obtain
such permit.
1.4 Directors and Officers of Metaplex.
Effective as of the Time of Closing, (i) the following
directors and officers shall resign from their respective positions at Metaplex:
Paul A. Wood, Director and President
Pamela R. Wood, Director and Secretary
and (ii) the directors and officers of Metaplex shall be as follows until their
successors are elected or appointed and qualified:
John T. Chambers, Director and Chief Executive Officer
Larry Carter, Director and Chief Financial Officer
ARTICLE 2
CLOSING
2.1 Time of Closing. The transactions contemplated by this
Agreement shall be completed on the first business day on which the last of the
conditions contained in Article 7 hereof is fulfilled or waived (the "Time of
Closing"), with the expectation that the Closing shall occur on or before
December 1, 1996 at 1:00 P.M., P.S.T. The Closing shall take place at the
offices of Brobeck, Phleger & Harrison LLP, 2200 Geng Road, Palo Alto,
California. The "Closing" shall mean the deliveries to be made by the parties
hereto at the Time of Closing in accordance with this Agreement.
2.2 Deliveries by Metaplex and the Shareholders. At the
Closing, Metaplex and each Shareholder, as applicable, shall deliver to Cisco
all duly and
2.
<PAGE> 8
properly executed, a certificate or certificates representing the Capital Stock
that Cisco is purchasing hereunder, as evidenced by a notarial copy of a stock
power in proper form, which is valid evidence of the transfer.
2.3 Deliveries by Cisco. At the Closing, Cisco shall deliver
or cause to be delivered, to Metaplex and the Shareholders, as applicable, all
duly and properly executed, the following:
(a) Certificate(s) representing the Cisco shares
issuable to each respective Shareholder, as provided in Section 1.2(a) of this
Agreement.
(b) An opinion of Brobeck, Phleger & Harrison LLP,
counsel to Cisco, dated the date of the Closing, in the form attached hereto as
Exhibit 7.4(c).
2.4 Further Assurances. At or after the Time of Closing, each
party shall prepare, execute, and deliver, at the preparer's expense, such
further instruments of conveyance, sale, assignment, or transfer, and shall take
or cause to be taken such other or further action, as any party shall reasonably
request of any other party at any time or from time to time in order to
consummate, in any other manner, the terms and provisions of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF METAPLEX
AND THE SHAREHOLDERS
In this Agreement, any reference to any event, change,
condition or effect being "material" with respect to any entity or group of
entities means any material event, change, condition or effect related to the
financial condition, properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such entity or
group of entities. In this Agreement, any reference to a "Material Adverse
Effect" with respect to any entity or group of entities means any event, change
or effect that is materially adverse to the financial condition, properties,
assets, liabilities, business, operations or results of operations of such
entity and its subsidiaries, taken as a whole.
In this Agreement, any reference to a party's "knowledge"
means such party's actual knowledge or, if such party shall be a corporation or
other similar entity, such party's actual knowledge after reasonable inquiry of
officers, directors and other employees of such party reasonably believed to
have knowledge of such matters.
Except as disclosed in a document of even date herewith and
delivered by Metaplex and the Shareholders to Cisco prior to the execution and
delivery of this Agreement and referring to the representations and warranties
in this Agreement (the
3.
<PAGE> 9
"Metaplex Disclosure Schedule"), Metaplex and the Shareholders represent and
warrant to Cisco as follows:
3.1 Organization, Standing and Power. Metaplex is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Metaplex has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good standing
would have a Material Adverse Effect on Metaplex. Metaplex has delivered a true
and correct copy of the Articles of Incorporation and Bylaws or other charter
documents, as applicable, of Metaplex, each as amended to date, to Cisco.
Metaplex is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents. Metaplex is the
owner of all outstanding shares of capital stock of each of its subsidiaries and
all such shares are duly authorized, validly issued, fully paid and
nonassessable. Other than its subsidiaries, Metaplex does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
3.2 Capital Structure. The authorized capital stock of
Metaplex consists of 10,000,000 shares of Common Stock, of which there were
issued and outstanding as of the date hereof, 200 shares of Common Stock held by
the Shareholders in the amounts set forth on Exhibit 1.1 hereto. There are no
other outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting
securities. All outstanding shares of Metaplex Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any
liens or encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof, and are not subject to preemptive rights or rights of
first refusal created by statute, the Articles of Incorporation or Bylaws of
Metaplex or any agreement to which Metaplex is a party or by which it is bound.
There are no contracts, commitments or agreements relating to voting, purchase
or sale of Metaplex's capital stock (i) between or among Metaplex and the
Shareholders and (ii) between or among any of the Shareholders. All outstanding
Capital Stock was issued in compliance with all applicable federal and state
securities laws.
3.3 Authority. Metaplex has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Metaplex. This Agreement has
been duly executed and delivered by Metaplex and constitutes the valid and
binding obligation of Metaplex enforceable against Metaplex in accordance with
its terms, except that such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
4.
<PAGE> 10
creditors' rights generally, and is subject to general principles of equity. The
execution and delivery of this Agreement by Metaplex does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any material obligation or loss of any material benefit under
(i) any provision of the Articles of Incorporation or Bylaws of Metaplex or any
of its subsidiaries, as amended, or (ii) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Metaplex or any of its subsidiaries or any of their properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Metaplex or any of its subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) a fairness hearing held
pursuant to the authority granted by Section 25142 of California Law and the
issuance of a permit pursuant to Section 25121 of California Law, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the
securities laws of any foreign country, and (iii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Metaplex and would not
prevent, or materially alter or delay any of the transactions contemplated by
this Agreement.
3.4 Financial Statements. Metaplex has delivered to Cisco its
unaudited financial statements for each of the fiscal years ended December 31,
1993, 1994 and 1995, respectively, and its unaudited financial statements
(balance sheet, statement of operations and statement of cash flows) on a
consolidated basis as at, and for the three-month period ended March 31, 1996
(collectively, the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles (except that the
unaudited financial statements do not have notes thereto) applied on a
consistent basis throughout the periods indicated and with each other. The
Financial Statements accurately set out and describe in all material respects
the financial condition and operating results of Metaplex as of the dates, and
for the periods, indicated therein, subject to normal year-end adjustments.
Metaplex maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
3.5 Balance Sheet. Metaplex will deliver to Cisco two (2) days
prior to the Closing a balance sheet dated as of the Closing (the "Closing
Balance Sheet"). The Closing Balance Sheet will be audited by Cisco, and
Metaplex and the Shareholders agree that any liabilities on the Closing Balance
Sheet not matched by cash or accounts receivable from Cisco on the Closing
Balance Sheet, excluding $1,000 of cash reserved
5.
<PAGE> 11
for post-closing expenses, will result in a dollar for dollar reduction of the
Purchase Price.
3.6 IBM Revenues. After the Closing, Cisco will be entitled to
all royalties due, or which become due, pursuant to that certain contract with
IBM dated April 14, 1994 as amended March 22, 1995.
3.7 Absence of Certain Changes. Since March 31, 1996, (the
"Metaplex Balance Sheet Date"), except as set forth or referred to on Schedule
3.7 or some other disclosure schedule hereto, Metaplex has conducted its
business in the ordinary course consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result in, a
Material Adverse Effect to Metaplex; (ii) any acquisition, sale or transfer of
any material asset of Metaplex or any of its subsidiaries other than in the
ordinary course of business and consistent with past practice; (iii) any
material change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Metaplex or any revaluation
by Metaplex of any of its or any of its subsidiaries' assets; (iv) any
declaration, setting aside, or payment of a dividend or other distribution with
respect to the shares of Metaplex, or any direct or indirect redemption,
purchase or other acquisition by Metaplex of any of its shares of capital stock;
(v) any material contract entered into by Metaplex or any of its subsidiaries,
other than in the ordinary course of business and as provided to Cisco, or any
material amendment or termination of, or default under, any material contract to
which Metaplex or any of its subsidiaries is a party or by which it is bound;
(vi) any material amendment or change to the Articles of Incorporation or Bylaws
of Metaplex; (vii) any increase in or modification of the compensation or
benefits payable or to become payable by Metaplex to any of its directors or
employees other than in the ordinary course of business and consistent with past
practice or (viii) any negotiation or agreement by Metaplex or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with Cisco and its representatives
regarding the transactions contemplated by this Agreement).
3.8 Absence of Undisclosed Liabilities. Metaplex has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
balance sheet for the period ended March 31, 1996 (the "Metaplex Balance
Sheet"), (ii) those incurred in the ordinary course of business and not required
to be set forth in the Metaplex Balance Sheet under generally accepted
accounting principles, (iii) those incurred in the ordinary course of business
since the Metaplex Balance Sheet Date and consistent with past practice; and
(iv) those incurred in connection with the execution of this Agreement.
3.9 Litigation. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Metaplex or any
of its subsidiaries,
6.
<PAGE> 12
threatened against Metaplex or any of its subsidiaries or any of their
respective properties or any of their respective officers or directors (in their
capacities as such) that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Metaplex. There is no judgment,
decree or order against Metaplex or any of its subsidiaries, or, to the
knowledge of Metaplex and its subsidiaries, any of their respective directors or
officers (in their capacities as such), that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Metaplex. All litigation to which Metaplex is a party (or, to the
knowledge of Metaplex, threatened to become a party) is disclosed in the
Metaplex Disclosure Schedule.
3.10 Restrictions on Business Activities. There is no
agreement, judgment, injunction, order or decree binding upon Metaplex or any of
its subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any current or future business practice of
Metaplex or any of its subsidiaries, any acquisition of property by Metaplex or
any of its subsidiaries or the conduct of business by Metaplex or any of its
subsidiaries as currently conducted or as proposed to be conducted by Metaplex
or any of its subsidiaries.
3.11 Governmental Authorization. Metaplex and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Metaplex or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Metaplex's or any of its subsidiaries' business
or the holding of any such interest ((i) and (ii) herein collectively called
"Metaplex Authorizations"), and all of such Metaplex Authorizations are in full
force and effect, except where the failure to obtain or have any such Metaplex
Authorizations could not reasonably be expected to have a Material Adverse
Effect on Metaplex.
3.12 Title to Property. Metaplex and its subsidiaries have
good and marketable title to all of their respective properties, interests in
properties and assets, real and personal, reflected in the Metaplex Balance
Sheet or acquired after the Metaplex Balance Sheet Date (except properties,
interests in properties and assets sold or otherwise disposed of since the
Metaplex Balance Sheet Date in the ordinary course of business), or with respect
to leased properties and assets, valid leasehold interests in, free and clear of
all mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties and (iii) liens securing debt which is reflected on the Metaplex
Balance Sheet. The plants, property and equipment of Metaplex and its
subsidiaries that are used in the operations of their businesses are in all
material respects in good operating condition and repair ordinary
7.
<PAGE> 13
wear and tear excepted. All properties used in the operations of Metaplex and
its subsidiaries are reflected in the Metaplex Balance Sheet to the extent
generally accepted accounting principles require the same to be reflected.
Schedule 3.12 identifies each parcel of real property owned or leased by
Metaplex or any of its subsidiaries.
3.13 Intellectual Property.
(a) Metaplex and its subsidiaries own, or are
licensed or otherwise possess legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used in the business of Metaplex and its subsidiaries as currently conducted
by Metaplex and its subsidiaries, except to the extent that the failure to have
such rights have not had and would not reasonably be expected to have a Material
Adverse Effect on Metaplex.
(b) Schedule 3.13 lists (i) all patents and patent
applications and all registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks, included
in the Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Metaplex is a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) all licenses, sublicenses and other agreements as to which Metaplex is a
party and pursuant to which Metaplex is authorized to use any third party
patents, trademarks or copyrights, including software ("Third Party Intellectual
Property Rights") which are incorporated in, are, or form a part of any Metaplex
product that is material to its business.
(c) To the best knowledge of Metaplex and its
subsidiaries, there is no material unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of Metaplex or any of its
subsidiaries, any trade secret material to Metaplex or any of its subsidiaries,
or any Intellectual Property right of any third party to the extent licensed by
or through Metaplex or any of its subsidiaries, by any third party, including
any employee or former employee of Metaplex or any of its subsidiaries. Neither
Metaplex nor any of its subsidiaries has entered into any agreement to indemnify
any other person against any charge of infringement of any Intellectual
Property, other than indemnification provisions contained in sales invoices
arising in the ordinary course of business.
(d) Metaplex is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations under this Agreement,
8.
<PAGE> 14
in breach of any license, sublicense or other agreement relating to the
Intellectual Property or Third Party Intellectual Property Rights, the breach of
which would have a Material Adverse Effect on Metaplex.
(e) All patents, registered trademarks, service marks
and copyrights held by Metaplex are valid and subsisting. Metaplex (i) has not
been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party; and (ii) has
not brought any action, suit or proceeding for infringement of Intellectual
Property or breach of any license or agreement involving Intellectual Property
against any third party. The manufacturing, marketing, licensing or sale of its
product does not infringe any patent, trademark, service mark, copyright, trade
secret or other proprietary right of any third party, where such infringement
would have a Material Adverse Effect on Metaplex.
(f) Metaplex has secured valid written assignments
from all consultants and employees who contributed to the creation or
development of Intellectual Property of the rights to such contributions that
Metaplex does not already own by operation of law, the absence of which would
have a Material Adverse Effect on Metaplex.
(g) All use, disclosure or appropriation of
Intellectual Property not otherwise protected by patents, patent applications or
copyright ("Confidential Information"), owned by Metaplex by or to a third party
has been pursuant to the terms of a written agreement between Metaplex and such
third party. All use, disclosure or appropriation of Confidential Information
not owned by Metaplex has been pursuant to the terms of a written agreement
between Metaplex and the owner of such Confidential Information, or is otherwise
lawful.
3.14 Environmental Matters.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall
mean any federal, state or local laws, ordinances, codes, regulations, rules,
policies and orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water, groundwater, solid
waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees, workers
or other persons, including the public.
(ii) "Hazardous Materials" shall mean any
toxic or hazardous substance, material or waste or any pollutant or contaminant,
or infectious or radioactive
9.
<PAGE> 15
substance or material, including without limitation, those substances, materials
and wastes defined in or regulated under any Environmental and Safety Laws.
(iii) "Property" shall mean all real
property leased or owned by Metaplex or its subsidiaries either currently or in
the past.
(iv) "Facilities" shall mean all buildings
and improvements on the Property of Metaplex or its subsidiaries.
(b) Metaplex and the Shareholders represent and
warrant as follows: (i) to Metaplex's knowledge, no methylene chloride or
asbestos is contained in or has been used at or released from the Facilities;
(ii) to Metaplex's knowledge, all Hazardous Materials and wastes have been
disposed of in accordance with all Environmental and Safety Laws; and (iii)
Metaplex and its subsidiaries have received no notice (written) of any
noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative actions or suits
are pending, or, to Metaplex's knowledge, threatened relating to a violation of
any Environmental and Safety Laws; (v) to Metaplex's knowledge, neither Metaplex
nor its subsidiaries are a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
or state analog statute, arising out of events occurring prior to the Closing
Date; (vi) to Metaplex's knowledge, there have not been in the past, and are not
now, any Hazardous Materials on, under or migrating to or from the Facilities or
Property; (vii) to Metaplex's knowledge, there have not been in the past, and
are not now, any underground tanks or underground improvements at, on or under
the Property including without limitation, treatment or storage tanks, sumps, or
water, gas or oil wells; (viii) Metaplex has not deposited, stored, disposed of
or located polychlorinated biphenyls (PCBs) on the Property or Facilities or any
equipment on the Property containing PCBs at levels in excess of 50 parts per
million; (ix) to Metaplex's knowledge, there is no formaldehyde on the Property
or in the Facilities, nor any insulating material containing urea formaldehyde
in the Facilities; (x) to Metaplex's knowledge, the Facilities and Metaplex's
and its subsidiaries uses and activities therein have at all times complied with
all Environmental and Safety Laws; and (xi) Metaplex and its subsidiaries have
all the permits and licenses required to be issued and are in full compliance
with the terms and conditions of those permits.
3.15 Taxes. Metaplex and each of its subsidiaries, and any
consolidated, combined or unitary group for Tax purposes of which Metaplex or
any of its subsidiaries is or has been a member have timely filed all Tax
Returns required to be filed by them and have paid all Taxes shown thereon to be
due. The Financial Statements (i) fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through March 31, 1996 and
Metaplex and each of its subsidiaries have not and will not incur any Tax
liability in excess of the amount reflected on the Financial Statements with
respect to such periods, and (ii) properly accrue in accordance with generally
accepted
10.
<PAGE> 16
accounting principles all liabilities for Taxes payable after March 31, 1996
with respect to all transactions and events occurring on or prior to such date.
No material Tax liability since March 31, 1996 has been incurred by Metaplex or
its subsidiaries other than in the ordinary course of business and adequate
provision has been made in the Financial Statements for all Taxes since that
date in accordance with generally accepted accounting principles on at least a
quarterly basis. Metaplex and each of its subsidiaries have withheld and paid to
the applicable financial institution or Tax Authority all amounts required to be
withheld. No notice of deficiency or similar document of any Tax Authority has
been received by either Metaplex or any of its subsidiaries, and there are no
liabilities for Taxes with respect to the issues that have been raised (and are
currently pending) by any Tax Authority that could, if determined adversely to
Metaplex and its subsidiaries, materially and adversely affect the liability of
Metaplex and its subsidiaries for Taxes. There is (i) no material claim for
Taxes that is a lien against the property of Metaplex or any of its subsidiaries
other than liens for Taxes not yet due and payable, (ii) Metaplex has received
no notification of any audit of any Tax Return of Metaplex or any of its
subsidiaries being conducted or pending by a Tax authority, (iii) no extension
or waiver of the statute of limitations on the assessment of any Taxes granted
by Metaplex or any of its subsidiaries and currently in effect, and (iv) no
agreement, contract or arrangement to which Metaplex or any of its subsidiaries
is a party that may result in the payment of any material amount that would not
be deductible by reason of Sections 280G or 404 of the Code. Metaplex will not
be required to include any material adjustment in Taxable income for any Tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to this Agreement.
Neither Metaplex nor any of its subsidiaries is a party to any tax sharing or
tax allocation agreement nor does Metaplex or any of its subsidiaries owe any
amount under any such agreement. For purposes of this Agreement, the following
terms have the following meanings: "Tax" (and, with correlative meaning, "Taxes"
and "Taxable") means (i) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax, custom,
duty or other tax governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Entity (a "Tax Authority")
responsible for the imposition of any such tax (domestic or foreign), (ii) any
liability for the payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period and (iii) any liability for the payment of any
amounts of the type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other person. As used herein, "Tax Return"
shall mean any return, statement, report or form (including, without
limitation,) estimated Tax returns and reports, withholding Tax returns and
reports and information reports and returns required to be filed with respect to
Taxes. Metaplex and each of its subsidiaries are in full compliance with all
terms and conditions of any Tax exemptions or other Tax-sparing agreement or
order of a foreign government applicable to them and
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the consummation of the transactions contemplated hereby shall not have any
adverse effect on the continued validity and effectiveness of any such Tax
exemptions or other Tax-sparing agreement or order.
3.16 Employee Benefit Plans.
(a) Schedule 3.16 lists, with respect to Metaplex,
any subsidiary of Metaplex and any trade or business (whether or not
incorporated) which is treated as a single employer with Metaplex (an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the Code,
(i) all material employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) each
loan to a non-officer employee in excess of $10,000, loans to officers and
directors and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements, (iii) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Metaplex and that do not
generally apply to all employees, and (v) any current or former employment or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of Metaplex of greater than $10,000 remain for the
benefit of, or relating to, any present or former employee, consultant or
director of Metaplex (together, the "Metaplex Employee Plans").
(b) Metaplex has furnished to Cisco a copy of each of
the Metaplex Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and, to the extent still in its
possession, any material employee communications relating thereto) and has, with
respect to each Metaplex Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500 reports filed for the last three
plan years. Any Metaplex Employee Plan intended to be qualified under Section
401(a) of the Code has either obtained from the Internal Revenue Service a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has applied to the Internal Revenue Service for such
a determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination, or has been established under a
standardized prototype plan for which an Internal Revenue Service opinion letter
has been obtained by the plan sponsor and is valid as to the adopting employer.
Metaplex has also furnished Cisco with the most recent Internal Revenue Service
determination or opinion letter issued with respect to each such Metaplex
Employee Plan, and nothing has occurred since the issuance of each
12.
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such letter which could reasonably be expected to cause the loss of the
tax-qualified status of any Metaplex Employee Plan subject to Code Section
401(a).
(c) (i) None of the Metaplex Employee Plans promises
or provides retiree medical or other retiree welfare benefits to any person;
(ii) there has been no "prohibited transaction," as such term is defined in
Section 406 of ERISA and Section 4975 of the Code, with respect to any Metaplex
Employee Plan, which could reasonably be expected to have, in the aggregate, a
Material Adverse Effect; (iii) each Metaplex Employee Plan has been administered
in accordance with its terms and in compliance with the requirements prescribed
by any and all statutes, rules and regulations (including ERISA and the Code),
except as would not have, in the aggregate, a Material Adverse Effect, and
Metaplex and each subsidiary or ERISA Affiliate have performed all material
obligations required to be performed by them under, are not in any material
respect in default under or violation of, and have no knowledge of any material
default or violation by any other party to, any of the Metaplex Employee Plans;
(iv) neither Metaplex nor any subsidiary or ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA with respect to any of the Metaplex Employee Plans; (v) all material
contributions required to be made by Metaplex or any subsidiary or ERISA
Affiliate to any Metaplex Employee Plan have been made on or before their due
dates and a reasonable amount has been accrued for contributions to each
Metaplex Employee Plan for the current plan years; (vi) with respect to each
Metaplex Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the thirty (30) day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 or ERISA has occurred; and
(vii) no Metaplex Employee Plan is covered by, and neither Metaplex nor any
subsidiary or ERISA Affiliate has incurred or expects to incur any liability
under Title IV of ERISA or Section 412 of the Code. With respect to each
Metaplex Employee Plan subject to ERISA as either an employee pension plan
within the meaning of Section 3(2) of ERISA or an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, Metaplex has prepared in good faith
and timely filed all requisite governmental reports (which were true and correct
as of the date filed) and has properly and timely filed and distributed or
posted all notices and reports to employees required to be filed, distributed or
posted with respect to each such Metaplex Employee Plan. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
Metaplex is threatened, against or with respect to any such Metaplex Employee
Plan, including any audit or inquiry by the IRS or United States Department of
Labor. Neither Metaplex nor any Metaplex subsidiary or other ERISA Affiliate is
a party to, or has made any contribution to or otherwise incurred any obligation
under, any "multiemployer plan" as defined in Section 3(37) of ERISA.
(d) With respect to each Metaplex Employee Plan,
Metaplex and each of its United States subsidiaries have complied with (i) the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation
13.
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Act of 1985 ("COBRA") and the proposed regulations thereunder and (ii) the
applicable requirements of the Family Leave Act of 1993 and the regulations
thereunder, except to the extent that such failure to comply would not, in the
aggregate, have a Material Adverse Effect.
(e) The consummation of the transactions contemplated
by this Agreement will not (i) entitle any current or former employee or other
service provider of Metaplex, any Metaplex subsidiary or any other ERISA
Affiliate to severance benefits or any other payment (including, without
limitation, unemployment compensation, golden parachute or bonus), except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting of any such benefits, or increase the amount of compensation due any
such employee or service provider.
(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by Metaplex, any
Metaplex subsidiary or other ERISA Affiliate relating to, or change in
participation or coverage under, any Metaplex Employee Plan which would
materially increase the expense of maintaining such Plan above the level of
expense incurred with respect to that Plan for the most recent fiscal year
included in Metaplex's financial statements.
3.17 Employee Matters. To Metaplex's best knowledge, Metaplex
is in compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and are not engaged in any unfair labor practice. To
Metaplex's best knowledge, there are no pending claims against Metaplex under
any workers compensation plan or policy or for long term disability. Metaplex
has no material obligations under COBRA with respect to any former employees or
qualifying beneficiaries thereunder. There are no proceedings pending or, to the
knowledge of Metaplex, threatened, between Metaplex and its employees, which
proceedings have or could reasonably be expected to have a Material Adverse
Effect on Metaplex. Metaplex is not a party to any collective bargaining
agreement or other labor unions contract nor does Metaplex know of any
activities or proceedings of any labor union or organize any such employees. In
addition, Metaplex has provided all employees, with all relocation benefits,
stock options, bonuses and incentives, and all other compensation that such
employee has earned up through the date of this Agreement or that such employee
was otherwise promised in their employment agreements with Metaplex.
3.18 Interested Party Transactions. Neither Metaplex nor any
of its subsidiaries is indebted to any director, officer, employee or agent of
Metaplex or any of its subsidiaries (except for amounts due as normal salaries
and bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to Metaplex or any of its subsidiaries.
14.
<PAGE> 20
3.19 Insurance. Metaplex and each of its subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of Metaplex
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid and Metaplex and its
subsidiaries are otherwise in compliance with the terms of such policies and
bonds. Metaplex has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
3.20 Compliance With Laws. To Metaplex's best knowledge, each
of Metaplex and its subsidiaries has complied with, are not in violation of, and
have not received any notices of violation with respect to, any federal, state,
local or foreign statute, law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Metaplex.
3.21 Minute Books. The minute books of Metaplex and its
subsidiaries made available to Cisco contain a complete and accurate summary of
all meetings of directors and shareholders or actions by written consent since
the time of incorporation of Metaplex and the respective subsidiaries through
the date of this Agreement, and reflect all transactions referred to in such
minutes accurately in all material respects.
3.22 Complete Copies of Materials. Metaplex has delivered or
made available true and complete copies of each document which has been
requested by Cisco or its counsel in connection with their legal and accounting
review of Metaplex and its subsidiaries. All the material contracts and
agreements (as such terms are defined in Regulation S-K promulgated under the
Securities Act) to which Metaplex is a party are listed in Schedule 3.22 hereto.
3.23 Brokers' and Finders' Fees. Metaplex has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.24 Permit Application. The information supplied by Metaplex
for inclusion in the application for issuance of a permit pursuant to Section
25121 of California Law pursuant to which the Cisco Shares to be issued pursuant
to this Agreement and qualified under California Law (the "Permit Application")
shall not at the time the fairness hearing is held pursuant to Section 25142 of
California Law and the time the qualification of such securities is effective
under Section 25122 of California Law contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding
15.
<PAGE> 21
the foregoing, Metaplex makes no representation, warranty or covenant with
respect to any information supplied by Cisco or Cisco which is contained in any
of the foregoing document.
3.25 Board Approval. The Board of Directors of Metaplex has
unanimously approved this Agreement.
3.26 Representations Complete. None of the representations or
warranties made by Metaplex and the Shareholders herein or in any Schedule or
Exhibit hereto, including the Metaplex Disclosure Schedule, or certificate
furnished by Metaplex pursuant to this Agreement or any written statement
furnished to Cisco pursuant hereto or in connection with the transactions
contemplated hereby, when all such documents are read together in their
entirety, contains or will contain at the Time of Closing any untrue statement
of a material fact, or omits or will omit at the Time of Closing to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading;
provided, however, that for purposes of this representation, any document
attached hereto and any document specifically referenced in the Metaplex
Disclosure Schedule as a "Superseding Document" (even if not attached hereto)
that provides information inconsistent with or in addition to any other written
statement furnished to Cisco in connection with the transaction contemplated
hereby, shall be deemed to supersede any other document or written statement
furnished to Cisco with respect to such inconsistent or additional information.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to
Cisco for himself and not for the other Shareholders as follows:
4.1 Authorization. All acts and conditions required by law on
the part of the Shareholder to authorize the execution and delivery of this
Agreement by such Shareholder and the transactions contemplated herein and the
performance of all obligations of such Shareholder hereunder have been duly
performed and obtained, and this Agreement constitutes a valid and legally
binding obligation of the Shareholder, enforceable in accordance with its terms,
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors'
rights generally, to general equitable principles and to limitations on the
enforceability of indemnification provisions as applied to certain types of
claims arising hereafter, if any, under the federal securities laws.
4.2 Compliance With Other Instruments. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated
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<PAGE> 22
hereby will not result in any violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which such Shareholder
is a party or by which he or she is bound, or require any consent under or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a violation or default under any such provision.
4.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, regional, state or local governmental authority of the
United States on the part of such Shareholder is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
filings, if any, required pursuant to applicable federal and state securities
laws, which filings will be made within the required statutory period.
4.4 Litigation. There is no action, suit, proceeding, or
investigation pending or, to such Shareholders' knowledge, currently threatened
against such Shareholder which questions the validity of this Agreement or the
right of such Shareholder to enter into this Agreement or to consummate the
transactions contemplated hereby.
4.5 Title to Stock. Such Shareholder has good title to the
Capital Stock to be transferred by such Shareholder to Cisco under this
Agreement, free and clear of any lien, pledge, security interest or other
encumbrance (other than restrictions on transfer arising under applicable
securities laws) and, upon delivery of the shares of Capital Stock at the
Closing as provided for in this Agreement, and assuming Cisco is acquiring the
Capital Stock in good faith and without notice of any adverse claim, Cisco will
acquire good title thereto, free and clear of any lien, pledge, security
interest or encumbrance (other than restrictions on transfer arising under
applicable securities laws).
4.6 Disclosure. Such Shareholder has fully provided Cisco and
Cisco's legal counsel with all the information in such Shareholders' possession
that Cisco has requested in determining whether to purchase the Capital Stock
offered by such Shareholder. Neither Article 4 of this Agreement nor any
schedule or exhibit attached to this Agreement nor any certificate delivered
pursuant hereto that, in any such case, has been or will be provided by or on
behalf of such Shareholder contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements made herein or
therein not misleading in light of the circumstances under which they were made.
4.7 Intellectual Property of the Shareholders. Each of the
Shareholders individually represents and warrants to the Purchaser as follows:
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<PAGE> 23
(a) The conduct of Metaplex's business as now
conducted does not violate, conflict with or infringe any Intellectual Property
of the Shareholder or any affiliate of the Shareholder.
(b) The Shareholder does not now conduct any business
that violates, conflicts with or infringes any Intellectual Property of Metaplex
directly or through an affiliate.
(c) Neither the Shareholder nor any affiliate of the
Shareholder (other than Metaplex) is a party to or otherwise bound by any
option, license or agreement of any kind (whether formal or informal) to which
Metaplex is a party or by which Metaplex is bound, which, in any such case (i)
conflicts with Metaplex's representation in Section 3.13 hereof or (ii) would
give the Shareholder any continuing interest in, or would give Metaplex any
continuing payment obligation to the Shareholder with respect to, any
Intellectual Property formerly owned by the Shareholder and currently used by
Metaplex.
(d) The Proprietary Information Agreement between the
Shareholder and Metaplex is in full force and effect, has not been amended or
modified in any respect and no provision of such agreement has been waived.
4.8 Tax Indemnification. The Shareholders represent that they
shall remain solely responsible for any personal tax liability resulting from
the transactions contemplated hereby and Cisco will not indemnify the
Shareholders for any such tax liability.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CISCO
Cisco hereby represents and warrants to Metaplex and the
Selling Shareholders as follows:
5.1 Organization, Standing and Power. Each of Cisco and its
subsidiaries, is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Cisco and
its subsidiaries has the corporate power to own its properties and to carry on
its business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Cisco. Cisco has delivered a true and correct copy of the
Articles of Incorporation and Bylaws or other charter documents, as applicable,
of Cisco and each of its subsidiaries, each as amended to date, to Metaplex.
Neither Cisco nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents. Cisco is the
18.
<PAGE> 24
owner of all outstanding shares of capital stock of each of its subsidiaries and
all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each such
subsidiary are owned by Cisco free and clear of all liens, charges, claims or
encumbrances or rights of others. There are no outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or convertible securities
or other commitments or agreements of any character relating to the issued or
unissued capital stock or other securities of any such subsidiary, or otherwise
obligating Cisco or any such subsidiary to issue, transfer, sell, purchase,
redeem or otherwise acquire any such securities. Except as disclosed in the
Cisco SEC Documents (as defined in Section 5.4), Cisco does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
5.2 Capital Structure. The authorized capital stock of Cisco
consists of 1,200,000,000 shares of Common Stock, no par value, and 5,000,000
shares of Preferred Stock, no par value, of which there were issued and
outstanding as of the close of business on August 2, 1996, 649,262,659 shares of
Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities of Cisco other than shares of Cisco
Common Stock issued after August 2, 1996 upon the exercise of options issued
under the Cisco Amended and Restated 1987 Stock Option Plan, Crescendo
Communications, Inc. 1990 Stock Option Plan, Newport Systems Solution, Inc. 1990
Stock Option Plan, Combinet, Inc. Incentive and Non-Qualified Stock Option Plan,
Grand Junction Networks, Inc. 1992 Stock Plan, Kalpana, Inc. 1989 Stock Option
Plan, TGV Software, Inc. 1990 Stock Option Plan and TGV Software, Inc. 1995
Stock Option Plan and StrataCom, Inc. Stock Option Plan (collectively, the
"Cisco Stock Option Plans"). All outstanding shares of Cisco have been duly
authorized, validly issued, fully paid and are nonassessable and free of any
liens or encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof, and are not subject to preemptive rights or rights of
first refusal created by statute, the Articles of Incorporation or Bylaws of
Cisco or any agreement to which Cisco is a party or by which it is bound. As of
the close of business on August 2, 1996, Cisco has reserved 239,922,216 shares
of Common Stock for issuance to employees, directors and independent contractors
pursuant to the Cisco Stock Option Plans, of which 79,264,288 shares are subject
to outstanding, unexercised options. Other than pursuant to this Agreement and
the Cisco 1989 Employee Stock Purchase Plan there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Cisco is a party or by which it is bound obligating Cisco to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the capital stock of Cisco or obligating Cisco to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement. The shares of Cisco Common Stock to be issued pursuant to this
Agreement will be duly authorized, validly issued, fully paid, and
non-assessable.
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<PAGE> 25
5.3 Authority. Cisco has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Cisco. This Agreement has been
duly executed and delivered by Cisco and constitutes the valid and binding
obligations of Cisco. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any material obligation or loss of a material benefit under (i)
any provision of the Articles of Incorporation or Bylaws of Cisco or any of its
subsidiaries, as amended, or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Cisco or any of its subsidiaries or their properties or assets. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, is required by or with respect to Cisco or
any of its subsidiaries in connection with the execution and delivery of this
Agreement by Cisco or the consummation by Cisco of the transactions contemplated
hereby, except for (i) a fairness hearing held pursuant to the authority granted
by Section 25142 of California Law and the issuance of a permit pursuant to
Section 25121 of California Law, (ii) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
(iii) the filing with the Nasdaq National Market of a Notification Form for
Listing of Additional Shares with respect to the Cisco Shares issuable pursuant
to this Agreement, and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Cisco and would not prevent, materially alter or
delay any of the transactions contemplated by this Agreement.
5.4 SEC Documents; Financial Statements. Cisco has made
available to Metaplex a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Securities Act), definitive proxy statement, and other filing
filed with the SEC by Cisco since June 30, 1993, and, prior to the Time of
Closing, Cisco will have furnished Metaplex with true and complete copies of any
additional documents filed with the SEC by Cisco prior to the Time of Closing
(collectively, the "Cisco SEC Documents"). In addition, Cisco has made available
to Metaplex all exhibits to the Cisco SEC Documents filed prior to the date
hereof, and will promptly make available to Metaplex all exhibits to any
additional Cisco SEC Documents filed prior to the Time of Closing. All documents
required to be filed as exhibits to the Cisco SEC Documents have been so filed,
and all material contracts so filed as exhibits are in full force and effect,
except those which have expired in accordance with their terms, and neither
Cisco nor any of its subsidiaries is in default thereunder. As of their
respective filing dates, the Cisco SEC Documents complied in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Securities Act, and none of the Cisco SEC
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Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Cisco SEC
Document prior to the date hereof. The financial statements of Cisco, including
the notes thereto, included in the Cisco SEC Documents (the "Cisco Financial
Statements") were complete and correct in all material respects as of their
respective dates, complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto as of their respective dates, and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Qs, as permitted by Form
10-Q of the SEC). The Cisco Financial Statements fairly present the consolidated
financial condition and operating results of Cisco and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments). There has been
no change in Cisco accounting policies except as described in the notes to the
Cisco Financial Statements.
5.5 Litigation. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Cisco or any of
its subsidiaries, threatened against Cisco or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Cisco. There is no
judgment, decree or order against Cisco or any of its subsidiaries or, to the
knowledge of Cisco or any of its subsidiaries, any of their respective directors
or officers (in their capacities as such) that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Cisco.
5.6 Governmental Authorization. Cisco and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Cisco or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Cisco's or any of its subsidiaries' business or
the holding of any such interest ((i) and (ii) herein collectively called "Cisco
Authorizations"), and all of such Cisco Authorizations are in full force and
effect, except where the failure to obtain or have any of such Cisco
Authorizations could not reasonably be expected to have a Material Adverse
Effect on Cisco.
5.7 Compliance With Laws. To Cisco's knowledge, each of Cisco
and its subsidiaries has complied with, are not in violation of, and have not
received any notices of violation with respect to, any federal, state, local or
foreign statute, law or
21.
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regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on Cisco.
5.8 Broker's and Finders' Fees. Cisco has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
5.9 Permit Application. The information supplied by Cisco for
inclusion in the Permit Application shall not, at the time the fairness hearing
is held pursuant to Section 25142 of California Law and the time the
qualification of such securities is effective under Section 25122 of California
Law, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Cisco make no representation, warranty or covenant with respect to
any information supplied by Metaplex which is contained in the foregoing
document.
5.10 Board Approval. The Board of Directors of Cisco have
unanimously approved this Agreement.
5.11 Representations Complete. None of the representations or
warranties made by Cisco herein or certificate furnished by Cisco pursuant to
this Agreement, or the Cisco SEC Documents, or any written statement furnished
to Metaplex pursuant hereto or in connection with the transactions contemplated
hereby, when all such documents are read together in their entirety, contains or
will contain at the Time of Closing any untrue statement of a material fact, or
omits or will omit at the Time of Closing to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE 6
COVENANTS OF CISCO, METAPLEX AND THE SHAREHOLDERS
6.1 Conduct of Business of Metaplex and Cisco. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Time of Closing, each of Metaplex and Cisco
agrees (except to the extent expressly contemplated by this Agreement or as
consented to in writing by the other), to carry on its and its subsidiaries'
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay and to cause its subsidiaries to pay
debts and Taxes when due subject (i) to good faith disputes over such debts or
Taxes and (ii) in the case of Taxes of Metaplex or any of its subsidiaries, to
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Cisco's consent to the filing of material Tax Returns if applicable, to pay or
perform other obligations when due, and to use all reasonable efforts to
preserve intact its present business organizations, keep available the services
of its and its subsidiaries' present officers and key employees and preserve its
and its subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
subsidiaries, to the end that its and its subsidiaries' goodwill and ongoing
businesses shall be unimpaired at the Time of Closing. Each of Metaplex and
Cisco agrees to promptly notify the other of (x) any event or occurrence not in
the ordinary course of its or its subsidiaries' business, and of any event which
could have a Material Adverse Effect and (y) any material change in its
capitalization as set forth in Sections 3.2 and 5.2, respectively. Without
limiting the foregoing, except as expressly contemplated by this Agreement or
the Metaplex Disclosure Schedule, neither Metaplex nor Cisco, respectively,
shall do, cause or permit any of the following, or allow, cause or permit any of
its subsidiaries to do, cause or permit any of the following, without the prior
written consent of the other:
(a) Charter Documents. Cause or permit any amendments
to its Articles of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. Except as
disclosed on Schedule 3.7, declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except from
former employees, directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any termination of
service to it or its subsidiaries;
(c) Other. Take, or agree in writing or otherwise to
take, any of the actions described in Sections 6.1(a) and (b) above, or any
action which would cause a material breach of its representations or warranties
contained in this Agreement or prevent it from materially performing or cause it
not to materially perform its covenants hereunder.
6.2 Conduct of Business of Metaplex. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Time of Closing, except as expressly contemplated by
this Agreement or the Metaplex Disclosure Schedule, Metaplex and the
Shareholders shall not do, cause or permit any of the following, or allow, cause
or permit any of its subsidiaries to do, cause or permit any of the following,
without the prior written consent of Cisco:
(a) Material Contracts. Enter into any material
contract or commitment, or violate, amend or otherwise modify or waive any of
the terms of any of
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its material contracts, other than in the ordinary course of business consistent
with past practice;
(b) Issuance of Securities. Issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities.
(c) Intellectual Property. Transfer to any person or
entity any rights to its Intellectual Property other than in the ordinary course
of business consistent with past practice;
(d) Exclusive Rights. Enter into or amend any
material agreements pursuant to which any other party is granted exclusive
marketing or other exclusive rights of any type or scope with respect to any of
its products or technology;
(e) Dispositions. Sell, lease, license or otherwise
dispose of or encumber any of its properties or assets which are material,
individually or in the aggregate, to its and its parent's/subsidiaries'
business, taken as a whole, except in the ordinary course of business consistent
with past practice;
(f) Indebtedness. Incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(g) Leases. Enter into any operating lease in excess
of $10,000;
(h) Payment of Obligations. Pay, discharge or satisfy
in an amount in excess of $10,000 in any one case or $100,000 in the aggregate,
any claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Metaplex Financial Statements;
(i) Capital Expenditures. Make any capital
expenditures, capital additions or capital improvements except in the ordinary
course of business and consistent with past practice;
(j) Insurance. Materially reduce the amount of any
material insurance coverage provided by existing insurance policies;
(k) Termination or Waiver. Terminate or waive any
right of substantial value, other than in the ordinary course of business;
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(l) Employee Benefit Plans; New Hires; Pay Increases.
Adopt or amend any employee benefit or stock purchase or option plan, or hire
any new officer level employee, or increase the salaries or wage rates of its
employees except in the ordinary course of business in accordance with its
standard past practice;
(m) Severance Arrangements. Grant any severance or
termination pay (i) to any director or officer or (ii) to any other employee
except (A) payments made pursuant to written agreements outstanding on the date
hereof or (B) grants which are made in the ordinary course of business in
accordance with its standard past practice;
(n) Lawsuits. Commence a lawsuit other than (i) for
the routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with Cisco prior
to the filing of such a suit, or (iii) for a breach of this Agreement;
(o) Acquisitions. Acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to its and its parent's/subsidiaries' business, taken as a whole;
(p) Taxes. Other than in the ordinary course of
business, make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any material Tax Return
or any amendment to a material Tax Return, enter into any closing agreement,
settle any material claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any material claim or
assessment in respect of Taxes;
(q) Notices. Metaplex shall give all notices and
other information required to be given to the employees of Metaplex, any
collective bargaining unit representing any group of employees of Metaplex, and
any applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus Budget
Reconciliation Act, and other applicable law in connection with the transactions
provided for in this Agreement;
(r) Revaluation. Revalue any of its assets, including
without limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; or
(s) Other. Take or agree in writing or otherwise to
take, any of the actions described in Sections 6.2(a) through (r) above, or any
action which would
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cause a material breach of its representations or warranties contained in this
Agreement or prevent it from materially performing or cause it not to materially
perform its covenants hereunder.
6.3 No Solicitation. Metaplex and its subsidiaries and the
officers, directors, employees or other agents of Metaplex and its subsidiaries
will not, directly or indirectly, (i) take any action to solicit, initiate or
encourage any Takeover Proposal (defined below) or (ii) subject to the terms of
the immediately following sentence, engage in negotiations with, or disclose any
nonpublic information relating to Metaplex or any of it subsidiaries to, or
afford access to the properties, books or records of Metaplex or any of its
subsidiaries to, any person that has advised Metaplex that it may be considering
making, or that has made, a Takeover Proposal. Notwithstanding the immediately
preceding sentence, if an unsolicited Takeover Proposal, or an unsolicited
written expression of interest that can reasonably be expected to lead to a
Takeover Proposal, shall be received by the Board of Directors of Metaplex,
then, to the extent the Board of Directors of Metaplex believes in good faith
(after consultation with its financial advisor) that such Takeover Proposal
would, if consummated, result in a transaction more favorable to Metaplex's
shareholders from a financial point of view than the transaction contemplated by
the Agreement (any such more favorable Takeover Proposal being referred to in
this Agreement as a "Superior Proposal") and the Board of Directors of Metaplex
determines in good faith after consultation with outside legal counsel that it
is necessary for the Board of Directors of Metaplex to comply with its fiduciary
duties to shareholders under applicable law, Metaplex and its officers,
directors, employees, investment bankers, financial advisors, attorneys,
accountants and other representatives retained by it may furnish in connection
therewith information and take such other actions as are consistent with the
fiduciary obligations of Metaplex's Board of Directors, and such actions shall
not be considered a breach of this Section 6.3 or any other provisions of this
Agreement. Metaplex will promptly notify Cisco after receipt of any Takeover
Proposal or any notice that any person is considering making a Takeover Proposal
or any request for nonpublic information relating to Metaplex or any of its
subsidiaries or for access to the properties, books or records of Metaplex or
any of its subsidiaries by any person that has advised Metaplex that it may be
considering making, or that has made, a Takeover Proposal and will keep Cisco
fully informed of the status and details of any such Takeover Proposal notice or
request. For purposes of this Agreement, "Takeover Proposal" means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving Metaplex or any of its subsidiaries or the acquisition of
any significant equity interest in, or a significant portion of the assets of,
Metaplex or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
6.4 Indemnification. After the Time of Closing, Cisco will and
will cause Metaplex to indemnify and hold harmless the present and former
officers, directors, employees and agents of Metaplex (the "Indemnified
Parties") in respect of acts or omissions occurring on or prior to the Time of
Closing to the extent provided
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under Metaplex's Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws, both as in effect on the date hereof, or any
indemnification agreement with Metaplex officers and directors to which Metaplex
is a party, in each case in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF CISCO, METAPLEX AND
THE SHAREHOLDERS
The obligations of Cisco on the one hand, and Metaplex and the
Shareholders, on the other hand, to consummate the transactions contemplated
hereby are subject to satisfaction of the following conditions on or prior to
the Closing:
7.1 Consents and Approvals. The parties hereto shall have
obtained all consents and approvals of third parties and Governmental
Authorities (including obtaining a permit under Section 25121 of the California
Corporations Code for the issuance of the Cisco Shares) required to consummate
the transactions contemplated by this Agreement. Upon obtaining a permit under
Section 25121 of the California Corporations Code, if Brobeck, Phleger &
Harrison LLP counsel to Cisco shall have determined pursuant to the amendment of
Section 18 of the Securities Act of 1933, as amended, dated October 15, 1996,
that Brobeck, Phleger & Harrison LLP is unable to issue the opinion set forth in
Section 7.4 below, then both parties agree to waive the closing conditions set
forth in this Section 7.1 and Section 7.4. However, in such event, the parties
agree to negotiate in good faith with respect to registering the resale of the
Cisco Shares on a Form S-3 registration statement, on terms and conditions
substantially similar to those used in prior Cisco acquisitions of private
companies and reasonably satisfactory to Seller's counsel. Cisco shall pay all
expenses associated with the preparation and filing of the Form S-3 pursuant to
this Section 7.1.
7.2 Representations, Warranties and Agreements. All
representations and warranties made herein by Cisco, Metaplex and the
Shareholders, and the Shareholders, respectively, shall be true, accurate and
correct in all respects as of the date made and as of the Closing. Cisco,
Metaplex, and the Shareholders, shall have performed all obligations and
agreements undertaken by each of them herein to be performed at or prior to the
Closing.
7.3 Certificate. Cisco shall have received from Metaplex and
the Shareholders, and Metaplex and the Shareholders shall have received from
Cisco, a certificate, dated as of the Closing and executed by the President and
Secretary of Cisco or Metaplex and by the Shareholders, as the case may be, to
the effect that the conditions set forth in Sections 7.1 and 7.2 respectively,
shall have been satisfied.
7.4 Opinions of Counsel. Metaplex shall have received at the
Closing the opinion of Brobeck, Phleger & Harrison LLP, counsel to Cisco, in the
form set forth in Exhibit 7.4(a).
7.5 No Material Adverse Changes. There shall not have occurred
any material adverse change in the financial condition, properties, assets
(including intangible assets), liabilities, business, operations or results of
operations of Cisco and Metaplex and their subsidiaries, taken as a whole.
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7.6 No Actions. Consummation of the transactions contemplated
by this Agreement shall not violate any order, decree or judgment of any court
or governmental body having jurisdiction.
7.7 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be in form and
substance reasonably satisfactory to counsel for each of the parties hereto, and
each such party (or its counsel) shall have received all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
7.8 Accuracy of Documents and Information. The copies of all
material instruments, agreements, other documents and written information
delivered to any party by any other party or its representatives shall be
complete and correct in all material respects as of the Closing.
7.9 Blue Sky Approvals. Cisco shall have obtained all
necessary blue sky approvals, for the issuance of the Cisco Shares pursuant to
this Agreement required to be obtained prior to the Time of Closing.
7.10 Contracts. Cisco shall be satisfied that Metaplex shall
have amended or obtained waivers in respect of any and all rights pursuant to
contract that will be necessary in order to consummate this Agreement and to
enable Cisco to conduct Metaplex's business and operations after the Time of
Closing substantially as Metaplex did immediately preceding the Time of Closing.
7.11 Documents. Cisco shall have received copies of all
written documentation requested by it confirming the Intellectual Property
rights of Metaplex and the transfer to Cisco, including (a) Proprietary
Information Agreements from all employees, consultants, service providers,
officers and directors of Metaplex and (b) patents, trademarks, and license or
technology agreements with which Metaplex has contractual arrangements.
7.12 Additional Conditions to the Obligations of Cisco. The
obligations of Cisco to consummate the transactions contemplated hereby, shall
be subject to the satisfaction at or prior to the Time of Closing of (i) the
execution of the asset purchase agreement between Metaplex Pty Ltd. and Cisco
Systems Australia Pty Ltd. and (ii) the execution of the cancellation and
release agreement between Cisco and Metaplex Pty Ltd.
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ARTICLE 8
INDEMNIFICATION
8.1 Indemnification. The Shareholders will indemnify and hold
harmless, up to the Escrow Amount, Cisco and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control Cisco
within the meaning of the Securities Act from and against any and all losses,
costs, damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees, net of
any recoveries under existing insurance policies, tax benefits received by Cisco
or its affiliates as a result of such damages, indemnities from third parties or
in the case of third party claims, by any amount actually recovered by Cisco or
its affiliates pursuant to counterclaims made by any of them directly relating
to the facts giving rise to such third party claims (collectively, "Damages")
arising out of any misrepresentation or breach of or default in connection with
any of the representations, warranties, covenants and agreements given or made
by Metaplex or the Shareholders in this Agreement or by Metaplex Pty Limited or
the Owners in the Asset Purchase Agreement between Metaplex Pty Limited, Cisco
Systems Australia Pty Ltd and the Owners dated October ___, 1996 (the "Asset
Purchase Agreement"), the Metaplex Disclosure Schedules to this Agreement or the
Asset Purchase Agreement or any exhibit or schedule to this Agreement or the
Asset Purchase Agreement. Cisco and its affiliates shall act in good faith and
in a commercially reasonable manner to mitigate any Damages they may suffer. The
Escrow Fund shall be the sole and exclusive remedy for any claims, demands,
actions or other causes of action brought against Metaplex or its shareholders,
officers or directors pursuant to this Agreement.
8.2 Claims. Cisco shall deliver to the Shareholder's Agent (as
defined below) a certificate signed by the President or Chief Financial Officer
of Cisco (an "Officer's Certificate"):
(a) stating that Damages exist, and
(b) specifying in reasonable detail the individual items of
such Damages included in the amount so stated, the date each such item
was paid, or properly accrued or arose, the nature of the
misrepresentation, breach of warranty or claim to which such item is
related.
8.3 Objections to Claims. At the time of delivery of any
Officer's Certificate to the Shareholders Agent, and for a period of thirty (30)
days after such delivery, the amount of the Damages shall remain in the Escrow
Fund unless Cisco and the Escrow Agent (as defined in the Escrow Agreement)
shall have received written authorization from the Shareholders' Agent to
withdraw the funds from the Escrow Fund. After the expiration of such thirty
(30) day period, Cisco shall be entitled to
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withdraw the funds from escrow in accordance with Escrow Agreement a form of
which is attached hereto as Exhibit 8.3, provided that no such withdrawal may be
made if the Shareholders' Agent shall object in a written statement to the claim
made in the Officer's Certificate, and such statement shall have been delivered
to Cisco prior to the expiration of such thirty (30) day period.
8.4 Resolution of Conflicts; Arbitration.
(a) In case the Shareholders' Agent shall so object in writing
to any claim or claims by Cisco made in any Officer's Certificate,
Cisco shall have thirty (30) days to respond in a written statement to
the objection of the Shareholders' Agent. If after such thirty (30) day
period there remains a dispute as to any claims, the Shareholders'
Agent and Cisco shall attempt in good faith for sixty (60) days to
agree upon the rights of the respective parties with respect to each of
such claims. If the Shareholders' Agent and Cisco should so agree, a
memorandum setting forth such agreement shall be prepared and signed by
both parties and delivered to the Escrow Agent. Distribution of funds
from the Escrow Fund shall be made in accordance with the terms thereof
of such memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Cisco or the Shareholders' Agent may, by written
notice to the other, demand arbitration of the matter unless the amount
of the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted
by three arbitrators. Within fifteen (15) days after such written
notice is sent, Cisco and the Shareholders' Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitrators as to the validity and
amount of any claim in such Officer's Certificate shall be binding and
conclusive upon the parties to this Agreement, and Cisco shall be
entitled to act in accordance with such decision and the Escrow Agent
shall be authorized to withdraw or distribute funds from the Escrow
Fund in accordance therewith.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be
held in Santa Clara, California under the commercial rules then in
effect of the American Arbitration Association. For purposes of this
Section 8.4(c), in any arbitration hereunder in which any claim or the
amount thereof stated in the Officer's Certificate is at issue, Cisco
shall be deemed to be the Non-Prevailing Party unless the arbitrators
award Cisco more than one-half (1/2) of the amount in dispute, plus any
amounts not in dispute; otherwise, the Shareholders shall be deemed to
be the Non-Prevailing Party. The Non-Prevailing Party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the
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administrative fee of the American Arbitration Association, and the
expenses, including without limitation, attorneys' fees and costs,
incurred by the other party to the arbitration.
8.5 Shareholders' Agent.
(a) Paul A. Wood, an individual, shall be constituted and
appointed as agent ("Shareholders' Agent") for and on behalf of the
Shareholders to give and receive notices and communications, to
authorize offset of Payments by Cisco, and/or to authorize the Escrow
Agent to deliver funds out of escrow to Cisco to object to such
offsets, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards
of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Shareholders' Agent for
the accomplishment of the foregoing. Such agency may be changed by the
holders of a majority in interest of the Shareholders from time to time
upon not less than 10 days' prior written notice to Cisco. Notices or
communications to or from the Shareholders' Agent shall constitute
notice to or from each of the Shareholders.
(b) The Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Shareholders' Agent while acting in good
faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith. The Shareholders shall severally indemnify the
Shareholders' Agent and hold him harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part
of the Shareholders' Agent and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(c) The Shareholders' Agent shall have reasonable access to
information about Metaplex and the reasonable assistance of Metaplex's
officers and employees for purposes of performing its duties and
exercising its rights hereunder, provided that the Shareholders' Agent
shall treat confidentially and not disclose any nonpublic information
from or about Metaplex to anyone (except on a need to know basis to
individuals who agree to treat such information confidentially).
8.6 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all of the Shareholders and shall be final, binding and conclusive upon each
such Shareholder, and Cisco and the Escrow Agent may rely upon any decision,
act, consent or instruction of the Shareholders' Agent as being the decision,
act, consent or instruction of each and every such Shareholder. Cisco and the
Escrow Agent is hereby relieved from any liability to any person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Shareholders' Agent.
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8.7 Third-Party Claims. In the event Cisco becomes aware of a
third-party claim which Cisco believes may result in Damages, Cisco shall notify
the Shareholders' Agent of such claim, and the Shareholders' Agent and the
Shareholders shall be entitled, at their expense, to participate in any defense
of such claim. Cisco shall have the right in its sole discretion to settle any
such claim; provided, however, that Cisco may not affect the settlement of any
such claim without the consent of the Shareholders' Agent, which consent shall
not be unreasonably withheld. In the event that the Shareholders' Agent
withholds its consent to any settlement proposed by Cisco, and Cisco believes
that such withholding is unreasonable, Cisco and the Shareholders' Agent agree
to submit to arbitration the issue of whether the withholding of such consent by
the Shareholders' Agent was reasonable. Such arbitration shall be in accordance
with the rules of the American Arbitration Association before an arbitration
panel of three (3) arbitrators, one (1) arbitrator to be selected by Cisco, one
(1) arbitrator to be selected by the Shareholders' Agent, and the two (2)
arbitrators so selected shall select the third arbitrator. Such arbitration
shall take place in Santa Clara, California. Cisco and the Shareholders' Agent
acknowledge and agree that, due to the circumstances giving rise to the proposed
settlement, it is essential that the issue be resolved at the earliest possible
time; Cisco and the Shareholders' Agent therefore agree that any such
arbitration shall be conducted on an expedited basis, that there shall be no
adjournment of or discovery during such arbitration, and that the decision of
such arbitration panel must be rendered within fifteen (15) days after the
commencement of the hearing before the arbitration panel. The decision of the
arbitration panel shall be binding upon Cisco and the Shareholders' Agent. The
non-prevailing party to such arbitration shall pay its own expenses, the fees of
each arbitrator, the administrative fee of the American Arbitration Association,
and the expenses, including without limitation, attorneys' fees and costs,
incurred by the other party to the arbitration. In the event that the
arbitration panel determines that the withholding of the Shareholders' Agent's
consent was reasonable, Cisco shall continue to defend such claim, suit or
matter as provided in this Agreement. In the event that the arbitration panel
determines that the withholding of the Shareholders' Agent's consent was
unreasonable, Cisco shall have the right to proceed with the settlement on the
basis which had been proposed. In the event that the Shareholders' Agent has
consented to any such settlement, the Shareholders' Agent shall have no power or
authority to object under Section 8.3 or any other provision of this Article 8
to the amount of any claim by Cisco with respect to such settlement.
8.8 Further Limitations. Except as set forth below, the right
of set off set forth in this Article 8 shall be the exclusive remedy of Cisco
for breach of any representation, warranty, covenant or agreement of Metaplex or
any Shareholder contained herein. Damages shall only include Damages which arise
within one (1) year from the Time of Closing. The liability of Metaplex and the
Shareholders shall be limited to the Escrow Amount. Notwithstanding the
foregoing, with respect to Damages based on fraud by either Metaplex or the
Shareholders, none of the limitations set forth in this Section 8.8 shall be
applicable.
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ARTICLE 9
TERMINATION
9.1 Termination by Mutual Consent. At any time prior to the
Closing, this Agreement may be terminated by written consent of Cisco and
Metaplex.
9.2 Termination by Cisco or Metaplex.
(a) Cisco may terminate this Agreement at any time prior
to the Closing by delivery of written notice to Metaplex if: (1) Metaplex has
breached or violated any covenant or agreement contained in this Agreement in
any material respect and, if such breach or violation is curable, has failed to
cure such violation within ten (10) days of receiving written notice thereof;
(2) any representation or warranty made by Metaplex is false or inaccurate in
any material respect or there is any material misrepresentation or omission by
Metaplex; or (3) the Closing has not occurred by December 1, 1996.
(b) Metaplex may terminate this Agreement at any time
prior to the Closing by delivery of written notice to Cisco if: (1) Cisco has
breached or violated any covenant or agreement contained in this Agreement in
any material respect and, if such breach or violation is curable, has failed to
cure such violations within ten (10) days of receiving written notice thereof;
(2) any representation or warranty made by Cisco is false or inaccurate in any
material respect or there is any material misrepresentation or omission by
Cisco; or (3) the Closing has not occurred by December 1, 1996.
9.3 Effect of Termination. In the event of termination as
provided above, all parties hereto shall bear their own costs associated with
this Agreement and all transactions mentioned herein and there shall be no
obligation on the part of any party's officers, directors or shareholders;
provided, however, that (a) Sections 10.5, 10.9 and 10.10 shall survive such
termination and continue in full force and effect and (b) nothing herein will
relieve any party from liability for any breach of this Agreement prior to such
termination.
ARTICLE 10
MISCELLANEOUS
10.1 Notices. Any notice given hereunder shall be in writing
and shall be deemed effective upon the earlier of personal delivery (including
personal delivery by facsimile) or the third day after mailing by certified or
registered mail, postage prepaid, as follows:
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(a) If to Cisco:
Cisco Systems, Inc.
255 W. Tasman Drive
San Jose, CA 95134
Facsimile: (408) 526-4100
Attention: John T. Chambers
(b) If to Metaplex or the Shareholders:
Metaplex, Inc.
7412 Wingfoot Drive
Raleigh, NC 27615
Attention: Paul A. Wood
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above.
10.2 Entire Agreement; Modifications; Waiver. This Agreement
and the documents and instruments and other agreements specifically referred to
herein constitutes the final, exclusive and complete understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior agreements, understandings and discussions with respect thereto. No
variation or modification of this Agreement and no waiver of any provision or
condition hereof, or granting of any consent contemplated hereby, shall be valid
unless in writing and signed by the party against whom enforcement of any such
variation, modification, waiver or consent is sought. The rights and remedies
available to each party pursuant to this Agreement and all exhibits hereunder
shall be cumulative.
10.3 Captions. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
10.4 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall constitute an
original copy hereof, but all of which together shall constitute one agreement.
10.5 Publicity. Except for disclosure (if any) required by any
law to which any party is subject, the timing and content of any announcements,
press releases and public statements to be made prior to the Closing concerning
the transactions contemplated hereby shall be determined solely by Cisco in
consultation with Metaplex and the Shareholders.
34.
<PAGE> 40
10.6 Successors and Assigns. No party may, without the prior
express written consent of each other party, assign this Agreement in whole or
in part. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties hereto.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts between California residents made and to be performed entirely within
the State of California.
10.8 Further Assurances. At the request of any of the parties
hereto, and without further consideration, the other parties agree to execute
such documents and instruments and to do such further acts as may be necessary
or desirable to effectuate the transactions contemplated hereby.
10.9 Confidentiality and Nondisclosure Agreements. Except as
required by law, statute, rule or regulation, all confidential information which
shall have been furnished or disclosed by one party to the other pursuant to
this Agreement, including without limitation, computer programs, technical
drawings, algorithms and know-how, formulas, processes, ideas, inventions
(whether patentable or not), schematics and other technical, business,
financial, customer and product development plans, forecasts, strategies and
information, shall be held in confidence pursuant hereto and shall not be
disclosed to any person other than their respective employees, directors, legal
counsel, accountants or financial advisors, with a need to have access to such
information, and shall not make any use whatsoever of such information except to
evaluate such information internally. The confidentiality provisions set forth
herein shall survive until three (3) years from the date hereof, unless the
party desiring to disclose the information can document that (i) such
information is (through no improper action or inaction by such party or any
affiliate, agent, consultant or employee) generally available to the public, or
(ii) was in its possession or known by it prior to receipt from the other party,
or (iii) was rightfully disclosed to it by a third party, or (iv) was
independently developed by employees of such party who have had no access to
such information.
10.10 Attorneys' Fees. Except as provided in Section 8.4(c),
in the event of any suit or other proceeding to construe or enforce any
provision of this Agreement or any other agreement to be entered into pursuant
hereto, or otherwise in connection with this Agreement, the prevailing party's
or parties' reasonable attorneys' fees and costs (in addition to all other
amounts and relief to which such party or parties may be entitled) shall be paid
by the other party or parties.
10.11 Transfer of Metaplex Books and Assets. Metaplex agrees,
upon the request of Cisco to do, execute, acknowledge and deliver or to cause to
be done, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances, power of attorney and assurances as may be
required for the
35.
<PAGE> 41
better assigning, transferring, conveying and confirming to Cisco, or to its
successors and assigns, or for the aiding, assisting, collecting and reducing to
possession of any or all of the books, records and assets of Metaplex. Metaplex
shall provide, at any time after the Closing, Cisco and its counsel upon request
all documentation covering all aspects of Metaplex's business operations.
10.12 Arbitration. Other than as set forth in Article 8, any
controversy between the parties hereto involving the construction or application
of any terms, covenants or conditions of this Agreement, or any claims arising
out of or relating to this Agreement or the breach thereof, termination thereof
will be submitted to and settled by final and binding arbitration in Santa
Clara, California, in accordance with the rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. In the event
of any arbitration under this Agreement, the prevailing party shall be entitled
to recover from the losing party reasonable expenses, attorneys' fees, and costs
incurred therein or in the enforcement or collection of any judgment or award
rendered therein. The "prevailing party" means the party determined by the
arbitrator to have most nearly prevailed, even if such party did not prevail in
all matters, not necessarily the one in whose favor a judgment is rendered.
10.13 Exhibits. All of the exhibits referred to in this
Agreement are hereby incorporated in this Agreement by reference and shall be
deemed and construed to be a part of this Agreement for all purposes.
10.14 Severability. The invalidity or unenforceability of any
one (1) or more phrases, sentences, clauses or provisions of this Agreement
shall not affect the validity or enforceabilty of the remaining portions of this
Agreement or any part thereof.
36.
<PAGE> 42
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first above written.
CISCO SYSTEMS, INC.
By: /s/ Larry R. Carter
--------------------------
Name: Larry R. Carter
--------------------------
Title:
--------------------------
METAPLEX, INC.
/s/ Paul A. Wood
--------------------------
Paul A. Wood, President
SHAREHOLDERS:
/s/ Paul A. Wood
--------------------------
Paul A. Wood
/s/ Pamela R. Wood
--------------------------
Pamela R. Wood
37.
<PAGE> 43
EXHIBIT 1.1
List of Shareholders
<TABLE>
<CAPTION>
Shareholder Number of Metaplex Shares
- ----------- -------------------------
<S> <C>
Paul A. Wood 100
Pamela R. Wood 100
</TABLE>
<PAGE> 44
EXHIBIT 1.2
Distribution of Purchase Price
<TABLE>
<CAPTION>
Number of Number of
Cisco Shares Cisco Shares
Shareholder Received at Closing Held in Escrow
- ----------- ------------------- --------------
<S> <C> <C>
Paul A. Wood 13,358 1,485
Pamela R. Wood 13,358 1,485
--------- ----------
26,716 2,970
</TABLE>
<PAGE> 45
EXHIBIT 7.4(a)
Form of Opinion of Brobeck, Phleger & Harrison LLP
Based in part upon the representations Petree Stockton, L.L.P.
made in the affidavit of mailing, the shares of Cisco Common Stock to be issued
and delivered in exchange for shares of Metaplex Common Stock pursuant to the
Stock Purchase Agreement will, when issued, be exempt from registration under
Section 5 of the Securities Act of 1933, as amended (the "Act"), pursuant to
Section 3(a)(10) of the Act and may be resold in accordance with Rule 145(d) of
the Act.
<PAGE> 46
ESCROW AGREEMENT
This Escrow Agreement is made as of this 20th day of December,
1996, by and among State Street Bank and Trust Company of California, N.A.
("Escrow Agent"), Cisco Systems, Inc., a California corporation ("Cisco"), and
Paul A. Wood as agent ("Shareholders' Agent") of the former shareholders (the
"Shareholders') of Metaplex, Inc., a North Carolina corporation ("Metaplex").
Terms not otherwise defined herein shall have the meaning set forth in the Stock
Purchase Agreement (as defined below).
WITNESSETH
WHEREAS, Cisco, Metaplex and the Shareholders have entered
into that certain Stock Purchase Agreement (the "Stock Purchase Agreement"),
dated as of October 29, 1996, providing for the purchase by Cisco of all the
outstanding capital stock of Metaplex from the Shareholders (the "Stock Sale");
and
WHEREAS, pursuant to Article 8 of the Stock Purchase
Agreement, a copy of which is attached hereto as Appendix A ("Article 8"), an
escrow fund (the "Escrow Fund") will be established to compensate Cisco for
certain Damages (as defined in Article 8) arising out of any misrepresentation
or breach or default in connection with any of the representations, warranties,
covenants and agreements given or made by Metaplex or the Shareholders in the
Stock Purchase Agreement, the Metaplex Disclosure Schedule or any exhibit or
schedule to the Stock Purchase Agreement; and
WHEREAS, the Shareholders' Agent has been constituted as agent
for and on behalf of the Shareholders to undertake certain obligations specified
in Article 8; and
WHEREAS, Article 8 provides for an Escrow Fund of 2,970 shares
of Cisco Common Stock upon the Closing, such escrow to be held by the Escrow
Agent; and
WHEREAS, the parties hereto desire to set forth further terms
and conditions in addition to those set forth in the Stock Purchase Agreement
relating to the operation of the Escrow Fund.
NOW, THEREFORE, the parties hereto, in consideration of the
mutual covenants contained herein, and intending to be legally bound, hereby
agree as follows:
1. Escrow and Escrow Shares. Pursuant to the Stock Purchase
Agreement, Cisco shall deposit in escrow with the Escrow Agent as soon as
practicable after the Time of Closing (as defined in the Stock Purchase
Agreement) and in any event within five (5) business days of the Time of Closing
(as defined in the Stock Purchase Agreement) of the Stock Sale, a stock
certificate or certificates representing 2,970 shares of Cisco Common Stock (the
"Escrow Shares") which shall be registered in
<PAGE> 47
the name of the Escrow Agent, or its nominee, as nominee for the beneficial
owners of such shares. The Escrow Shares shall be held and distributed by the
Escrow Agent in accordance with the terms and conditions of Article 8 and this
Agreement, provided that in no event shall more than 2,970 shares of Cisco
Common Stock be distributed to Cisco. The number of Escrow Shares beneficially
owned by each Shareholder is set forth in Appendix B attached hereto.
2. Rights and Obligations of the Parties. The Escrow Agent
shall be entitled to such rights and shall perform such duties of the escrow
agent as set forth herein and in Article 8 (collectively, the "Duties"), in
accordance with the terms and conditions of this Agreement and Article 8. Cisco,
Metaplex and the Shareholders' Agent shall be entitled to their respective
rights and shall perform their respective duties and obligations as set forth
herein and in Article 8, in accordance with the terms hereof and thereof. In the
event that the terms of this Agreement conflict in any way with the provisions
of Article 8, Article 8 shall control.
3. Escrow Period. The Escrow Period shall terminate with
respect to the Escrow Shares upon the expiration of twelve (12) months from the
Time of Closing; provided, however, that a portion of the Escrow Shares, which,
in the reasonable judgment of Cisco, subject to the objection of the
Shareholders' Agent and the subsequent arbitration of the matter in the manner
provided in Section 8.4 of the Stock Purchase Agreement, is necessary to satisfy
any unsatisfied claims specified in any Officer's Certificate theretofore
delivered to the Escrow Agent prior to termination of the Escrow Period with
respect to facts and circumstances existing prior to expiration of the Escrow
Period, shall remain in the Escrow Fund until such claims have been resolved.
4. Duties of Escrow Agent. In addition to the Duties set forth
in Article 8, the Duties of the Escrow Agent shall include the following:
(a) The Escrow Agent shall hold and safeguard the Escrow
Shares during the Escrow Period, shall treat such Escrow Fund as a trust fund in
accordance with the terms of this Agreement and Article 8 of the Stock Purchase
Agreement and not as the property of Cisco, and shall hold and dispose of the
Escrow Shares only in accordance with the terms hereof.
(b) The Escrow Shares shall be voted by the Escrow Agent
in accordance with the instructions received by the Escrow Agent from the
beneficial owners of such Escrow shares. If no instructions are received from
the beneficial owners, such shares shall not be voted by the Escrow Agent.
(c) Promptly following termination of the Escrow Period as
set forth in Section 3 hereof, the Escrow Agent shall requisition from the stock
transfer
2.
<PAGE> 48
agent, if necessary, and deliver to the Shareholders the proper number
of Escrow Shares and other property in the Escrow Fund in excess of any amount
of such Escrow Shares or other property sufficient, in the reasonable judgment
of Cisco, subject to the objection of the Shareholders' Agent and the subsequent
arbitration of the matter in the manner provided in Section 8.4 of the Stock
Purchase Agreement, to satisfy any unsatisfied claims specified in any Officer's
Certificate theretofore delivered to the Escrow Agent prior to termination of
the Escrow Period with respect to facts and circumstances existing prior to
expiration of the Escrow Period, and to pay expenses as provided in Section
11(b) hereof. As soon as all such claims have been resolved, the Escrow Agent
shall requisition from the transfer agent, if necessary, and deliver to such
Shareholders all of the Escrow Shares and other property remaining in the Escrow
Fund and not required to satisfy such claims and expenses. Each Shareholder
shall receive that number of Escrow Shares which bears the same relationship to
the total number of Escrow Shares in the Escrow Fund and available for
distribution as the number of Escrow Shares set forth opposite the name of each
such Shareholder on Appendix B hereto bears to 2,970.
(d) To the extent directed to do so by the Shareholders'
Agent, the Escrow Agent shall sell up to 297 of the shares of Cisco Common Stock
held in the Escrow Fund (or such greater number as consented to in writing by
Cisco, which consent shall not be unreasonably withheld) and shall apply the
proceeds of such sale to pay expenses incurred by the Shareholders' Agent on
behalf of the Shareholders as provided in Section 11(b) hereof.
5. Distributions; Tax Allocations. Any cash dividends,
dividends payable in securities or other distributions of any kind (but
excluding any shares of Cisco capital stock received upon a stock split or stock
dividend) shall be promptly distributed by the Escrow Agent to, and for tax
reporting purposes shall be allocable to, the beneficial holder of the Escrow
Shares to which such distribution relates. Any shares of Cisco Common Stock
received by the Escrow Agent upon a stock split or stock dividend made in
respect of any securities in the Escrow Fund shall be added to the Escrow Fund
and become a part thereof. Any provision hereof or of Article 8 shall be
adjusted to appropriately reflect any stock split or reverse stock split. For
tax reporting purposes, all other income received by the Escrow Agent and
attributable to the Escrow Fund shall be allocable to Cisco.
6. Exculpatory Provisions.
(a) The Escrow Agent shall be obligated only for the
performance of such Duties as are specifically set forth herein and in Article 8
of the Stock Purchase Agreement and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties. The Escrow
Agent shall not be liable for forgeries or false personations. The Escrow Agent
shall not be liable for any act done or omitted hereunder by it in good faith as
escrow agent except for any liability
3.
<PAGE> 49
arising from its (i) own gross negligence, bad faith, or willful misconduct or
(ii) failure to comply with the terms of this Agreement and Article 8. The
Escrow Agent shall, in no case or event be liable for any representations or
warranties of Cisco, Metaplex or the Shareholders. Any act done or omitted
pursuant to the advice or opinion of counsel shall be conclusive evidence of the
good faith of the Escrow Agent.
(b) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law or arbitrations
as provided in Section 8.4 of the Stock Purchase Agreement, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court or rulings of any arbitrators. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court or such ruling of any
arbitrator, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person by reason of such compliance, notwithstanding any such
order, judgment, decree or arbitrators' ruling being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(c) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(d) The Escrow Agent shall not be liable for the outlawing
of any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
7. Alteration of Duties. The Duties may be altered, amended,
modified or revoked only by a writing signed by all of the parties hereto.
8. Resignation and Removal of the Escrow Agent. The Escrow
Agent or any Successor may resign as Escrow Agent at any time with or without
cause by giving at least thirty (30) days' prior written notice to each of Cisco
and the Shareholders' Agent, such resignation to be effective thirty (30) days
following the date such notice is given. In addition, Cisco and the
Shareholders' Agent may jointly remove the Escrow Agent as escrow agent at any
time with or without cause, by an instrument (which may be executed in
counterparts) given to the Escrow Agent, which instrument shall designate the
effective date of such removal. In the event of any such resignation or removal,
a successor escrow agent which shall be a bank or trust company organized under
the laws of the United States of America or any state thereof having a combined
capital and surplus of not less than $100,000,000, shall be appointed by the
Shareholders' Agent with the approval of Cisco, which approval shall not be
unreasonably withheld. Any such successor escrow agent shall deliver to Cisco
and the Shareholders' Agent a written instrument accepting such appointment, and
thereupon it shall succeed to all the rights and duties of the escrow agent
hereunder and shall be entitled to receive the Escrow
4.
<PAGE> 50
Fund. In the event no successor escrow agent is appointed by the effective date
of such resignation or removal, the Escrow Agent, the Shareholders' Agent or the
Cisco may apply to a court of competent jurisdiction (in which action the other
parties shall be afforded a reasonable opportunity to participate) for such
appointment.
9. Further Instruments. If the Escrow Agent reasonably
requires other or further instruments in connection with performance of the
Duties, the necessary parties hereto shall join in furnishing such instruments.
10. Disputes. 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 the Escrow Agent hereunder, the Escrow
Agent is authorized and directed to act in accordance with, and in reliance
upon, the terms hereof and of Article 8.
11. Escrow Fees and Expenses.
(a) Cisco shall pay the Escrow Agent such fees and
out-of-pocket expenses as are established by the Fee Schedule attached hereto as
Appendix C.
(b) Any out-of-pocket fees and expenses incurred by the
Shareholders' Agent shall be paid out of the Escrow Fund in preference to other
distributions from such Escrow Fund; provided, however, that the aggregate of
such payments shall not exceed the proceeds of sales of shares made pursuant to
Section 4(d) hereof if and to the extent that this would reduce the number of
shares distributed to Cisco, and provided further that under no circumstances
will the Shareholders' Agent have personal liability for any such fees and
expenses.
12. Indemnification. In consideration of the Escrow Agent's
acceptance of this appointment, the other parties hereto, jointly and severally,
agree to indemnify and hold the Escrow Agent harmless as to any liability
incurred by it to any person, firm or corporation by reason of its having
accepted such appointment or in carrying out the terms hereof and Article 8 of
the Stock Purchase Agreement, and to reimburse the Escrow Agent for all its
costs and expenses, including, among other things, counsel fees and expenses,
reasonably incurred by reason of any matter as to which an indemnity is paid;
provided, however, that no indemnity need be paid in case of the Escrow Agent's
gross negligence, bad faith, willful misconduct or breach of this Agreement. In
no event shall the Escrow Agent be liable for indirect, punitive, special or
consequential damages.
13. General.
(a) Any notice given hereunder shall be in writing and
shall be deemed effective upon the earlier of personal delivery or the third day
after mailing by certified or registered mail, postage prepaid as follows:
5.
<PAGE> 51
To Cisco:
Cisco Systems, Inc.
255 West Tasman Drive
San Jose, CA 95134
Attention: President
Fax: (415) 526-4100
Tel: (415) 526-4000
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94306
Attention: Jeffrey P. Higgins
Fax: (415) 496-2885
Tel: (415) 424-0160
To Shareholders' Agent:
Paul A. Wood
7412 Wingfoot Drive
Raleigh, NC 27615
Fax: (919) 878-0855
Tel: (919) 878-0811
With a copy to:
Petree Stockton, L.L.P.
4101 Lake Boone Trail, Suite 400
Raleigh, NC 27807-6519
Attention: Jim O'Connell
Fax: (919) 420-1800
Tel: (919) 420-1700
6.
<PAGE> 52
To the Escrow Agent:
State Street Bank and Trust Company of California, N.A.
725 South Figueroa Street, Suite 3100
Los Angeles, CA 90017
Attention: Corporate Trust Department
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above.
(b) The Officer's Certificate as defined in Article 8 may
be signed by the President, Vice President or Chief Financial Officer of Cisco.
(c) The captions in this Escrow Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Escrow Agreement.
(d) This Escrow Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
(e) No party may, without the prior express written
consent of each other party, assign this Escrow Agreement in whole or in part.
This Escrow Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.
(f) This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts made and to be performed entirely within the State of California. The
parties to this Escrow Agreement hereby agree to submit to personal jurisdiction
in the State of California.
7.
<PAGE> 53
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first above written.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Escrow Agent
By
------------------------------
Name:
Title:
CISCO SYSTEMS, INC.
By
------------------------------
Name: Larry R. Carter
Title: Chief Financial Officer
SHAREHOLDERS' AGENT
-----------------------------------
Paul A. Wood
[SIGNATURE PAGE TO ESCROW AGREEMENT]
8.
<PAGE> 54
APPENDIX A
ARTICLE 8 OF THE STOCK PURCHASE AGREEMENT
9.
<PAGE> 55
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification. The Shareholders will indemnify and hold
harmless, up to the Escrow Amount, Cisco and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control Cisco
within the meaning of the Securities Act from and against any and all losses,
costs, damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees, net of
any recoveries under existing insurance policies, tax benefits received by Cisco
or its affiliates as a result of such damages, indemnities from third parties or
in the case of third party claims, by any amount actually recovered by Cisco or
its affiliates pursuant to counterclaims made by any of them directly relating
to the facts giving rise to such third party claims (collectively, "Damages")
arising out of any misrepresentation or breach of or default in connection with
any of the representations, warranties, covenants and agreements given or made
by Metaplex or the Shareholders in this Agreement or by Metaplex Pty Limited or
the Owners in the Asset Purchase Agreement between Metaplex Pty Limited, Cisco
Systems Australia Pty Ltd and the Owners dated October ___, 1996 (the "Asset
Purchase Agreement"), the Metaplex Disclosure Schedules to this Agreement or the
Asset Purchase Agreement or any exhibit or schedule to this Agreement or the
Asset Purchase Agreement. Cisco and its affiliates shall act in good faith and
in a commercially reasonable manner to mitigate any Damages they may suffer. The
Escrow Fund shall be the sole and exclusive remedy for any claims, demands,
actions or other causes of action brought against Metaplex or its shareholders,
officers or directors pursuant to this Agreement.
8.2 Claims. Cisco shall deliver to the Shareholder's Agent (as
defined below) a certificate signed by the President or Chief Financial Officer
of Cisco (an "Officer's Certificate"):
(a) stating that Damages exist, and
(b) specifying in reasonable detail the individual items of
such Damages included in the amount so stated, the date each such item
was paid, or properly accrued or arose, the nature of the
misrepresentation, breach of warranty or claim to which such item is
related.
8.3 Objections to Claims. At the time of delivery of any
Officer's Certificate to the Shareholders Agent, and for a period of thirty (30)
days after such delivery, the amount of the Damages shall remain in the Escrow
Fund unless Cisco and the Escrow Agent (as defined in the Escrow Agreement)
shall have received written authorization from the Shareholders' Agent to
withdraw the funds from the Escrow Fund. After the expiration of such thirty
(30) day period, Cisco shall be entitled to
29.
<PAGE> 56
withdraw the funds from escrow in accordance with Escrow Agreement a form of
which is attached hereto as Exhibit 8.3, provided that no such withdrawal may be
made if the Shareholders' Agent shall object in a written statement to the claim
made in the Officer's Certificate, and such statement shall have been delivered
to Cisco prior to the expiration of such thirty (30) day period.
8.4 Resolution of Conflicts; Arbitration.
(a) In case the Shareholders' Agent shall so object in writing
to any claim or claims by Cisco made in any Officer's Certificate,
Cisco shall have thirty (30) days to respond in a written statement to
the objection of the Shareholders' Agent. If after such thirty (30) day
period there remains a dispute as to any claims, the Shareholders'
Agent and Cisco shall attempt in good faith for sixty (60) days to
agree upon the rights of the respective parties with respect to each of
such claims. If the Shareholders' Agent and Cisco should so agree, a
memorandum setting forth such agreement shall be prepared and signed by
both parties and delivered to the Escrow Agent. Distribution of funds
from the Escrow Fund shall be made in accordance with the terms thereof
of such memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Cisco or the Shareholders' Agent may, by written
notice to the other, demand arbitration of the matter unless the amount
of the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted
by three arbitrators. Within fifteen (15) days after such written
notice is sent, Cisco and the Shareholders' Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitrators as to the validity and
amount of any claim in such Officer's Certificate shall be binding and
conclusive upon the parties to this Agreement, and Cisco shall be
entitled to act in accordance with such decision and the Escrow Agent
shall be authorized to withdraw or distribute funds from the Escrow
Fund in accordance therewith.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be
held in Santa Clara, California under the commercial rules then in
effect of the American Arbitration Association. For purposes of this
Section 8.4(c), in any arbitration hereunder in which any claim or the
amount thereof stated in the Officer's Certificate is at issue, Cisco
shall be deemed to be the Non-Prevailing Party unless the arbitrators
award Cisco more than one-half (1/2) of the amount in dispute, plus any
amounts not in dispute; otherwise, the Shareholders shall be deemed to
be the Non-Prevailing Party. The Non-Prevailing Party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the
30.
<PAGE> 57
administrative fee of the American Arbitration Association, and the
expenses, including without limitation, attorneys' fees and costs,
incurred by the other party to the arbitration.
8.5 Shareholders' Agent.
(a) Paul A. Wood, an individual, shall be constituted and
appointed as agent ("Shareholders' Agent") for and on behalf of the
Shareholders to give and receive notices and communications, to
authorize offset of Payments by Cisco, and/or to authorize the Escrow
Agent to deliver funds out of escrow to Cisco to object to such
offsets, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards
of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Shareholders' Agent for
the accomplishment of the foregoing. Such agency may be changed by the
holders of a majority in interest of the Shareholders from time to time
upon not less than 10 days' prior written notice to Cisco. Notices or
communications to or from the Shareholders' Agent shall constitute
notice to or from each of the Shareholders.
(b) The Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Shareholders' Agent while acting in good
faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith. The Shareholders shall severally indemnify the
Shareholders' Agent and hold him harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part
of the Shareholders' Agent and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(c) The Shareholders' Agent shall have reasonable access to
information about Metaplex and the reasonable assistance of Metaplex's
officers and employees for purposes of performing its duties and
exercising its rights hereunder, provided that the Shareholders' Agent
shall treat confidentially and not disclose any nonpublic information
from or about Metaplex to anyone (except on a need to know basis to
individuals who agree to treat such information confidentially).
8.6 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all of the Shareholders and shall be final, binding and conclusive upon each
such Shareholder, and Cisco and the Escrow Agent may rely upon any decision,
act, consent or instruction of the Shareholders' Agent as being the decision,
act, consent or instruction of each and every such Shareholder. Cisco and the
Escrow Agent is hereby relieved from any liability to any person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Shareholders' Agent.
31.
<PAGE> 58
8.7 Third-Party Claims. In the event Cisco becomes aware of a
third-party claim which Cisco believes may result in Damages, Cisco shall notify
the Shareholders' Agent of such claim, and the Shareholders' Agent and the
Shareholders shall be entitled, at their expense, to participate in any defense
of such claim. Cisco shall have the right in its sole discretion to settle any
such claim; provided, however, that Cisco may not affect the settlement of any
such claim without the consent of the Shareholders' Agent, which consent shall
not be unreasonably withheld. In the event that the Shareholders' Agent
withholds its consent to any settlement proposed by Cisco, and Cisco believes
that such withholding is unreasonable, Cisco and the Shareholders' Agent agree
to submit to arbitration the issue of whether the withholding of such consent by
the Shareholders' Agent was reasonable. Such arbitration shall be in accordance
with the rules of the American Arbitration Association before an arbitration
panel of three (3) arbitrators, one (1) arbitrator to be selected by Cisco, one
(1) arbitrator to be selected by the Shareholders' Agent, and the two (2)
arbitrators so selected shall select the third arbitrator. Such arbitration
shall take place in Santa Clara, California. Cisco and the Shareholders' Agent
acknowledge and agree that, due to the circumstances giving rise to the proposed
settlement, it is essential that the issue be resolved at the earliest possible
time; Cisco and the Shareholders' Agent therefore agree that any such
arbitration shall be conducted on an expedited basis, that there shall be no
adjournment of or discovery during such arbitration, and that the decision of
such arbitration panel must be rendered within fifteen (15) days after the
commencement of the hearing before the arbitration panel. The decision of the
arbitration panel shall be binding upon Cisco and the Shareholders' Agent. The
non-prevailing party to such arbitration shall pay its own expenses, the fees of
each arbitrator, the administrative fee of the American Arbitration Association,
and the expenses, including without limitation, attorneys' fees and costs,
incurred by the other party to the arbitration. In the event that the
arbitration panel determines that the withholding of the Shareholders' Agent's
consent was reasonable, Cisco shall continue to defend such claim, suit or
matter as provided in this Agreement. In the event that the arbitration panel
determines that the withholding of the Shareholders' Agent's consent was
unreasonable, Cisco shall have the right to proceed with the settlement on the
basis which had been proposed. In the event that the Shareholders' Agent has
consented to any such settlement, the Shareholders' Agent shall have no power or
authority to object under Section 8.3 or any other provision of this Article 8
to the amount of any claim by Cisco with respect to such settlement.
8.8 Further Limitations. Except as set forth below, the right
of set off set forth in this Article 8 shall be the exclusive remedy of Cisco
for breach of any representation, warranty, covenant or agreement of Metaplex or
any Shareholder contained herein. Damages shall only include Damages which arise
within one (1) year from the Time of Closing. The liability of Metaplex and the
Shareholders shall be limited to the Escrow Amount. Notwithstanding the
foregoing, with respect to Damages based on fraud by either Metaplex or the
Shareholders, none of the limitations set forth in this Section 8.8 shall be
applicable.
32.
<PAGE> 59
APPENDIX B
LISTS OF SHAREHOLDERS AND THEIR RESPECTIVE ESCROW AMOUNTS
<TABLE>
<CAPTION>
Number of Cisco
Shareholder Shares Held in Escrow
----------- ---------------------
<S> <C>
Paul A. Wood 1,485
Pamela R. Wood 1,485
-----
2,970
=====
</TABLE>
10.
<PAGE> 60
APPENDIX C
FEE SCHEDULE
11.
<PAGE> 61
SCHEDULE 3.7
Changes Since March 31, 1996
Prior to the Closing, Metaplex will declare and pay bonuses
and dividends such that Metaplex will have a cash and accounts receivable from
Cisco of $1,000 in excess of liabilities in compliance with Section 3.5.
<PAGE> 62
SCHEDULE 3.12
List of Real Property Owned or Leased
Metaplex does not own or lease any real property.
<PAGE> 63
SCHEDULE 3.13
List of Intellectual Property
The following products are licensed by Metaplex from Metaplex
Pty, Ltd. and are in turn sublicensed by Metaplex to IBM under the terms of the
IBM Agreement:
(a) 3172 SNA Communications
(b) 3172 IP Channel Connect
(c) 3172 HPR Channel Connect
Pursuant to the IBM Agreement, Metaplex has indemnified IBM
against infringement of the Intellectual Property which is the subject of the
IBM Agreement.
<PAGE> 64
SCHEDULE 3.16
List of Employee Benefit Plans
Metaplex maintains the following plans:
1. SEP-IRA covering all three employees.
2. Medical Insurance Plans with Prudential covering Paul
Wood and his dependents.
<PAGE> 65
SCHEDULE 3.22
List of Material Contracts
1. IBM Contract for Licensing of Software to IBM RAL R94011
dated 4/14/94, as amended 3/22/95.
2. IBM Confidential Disclosure Agreement RAL R95217-00 dated
2/28/95.
3. IBM Equipment Loan Agreement POK 5247 dated 2/23/95,
expiring 2/23/01.
4. Unwritten contracts with Metaplex Pty, Ltd. to act as
subcontractor in all of the above contracts.
5. Exclusive Development Agreement with Cisco Systems, Inc.
dated 4/14/95.
<PAGE> 1
EXHIBIT 5.1
January 17, 1997
Cisco Systems, Inc.
255 West Tasman Drive
San Jose, CA 95134
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be
filed by you with the Securities and Exchange Commission on or about the date
hereof (the "Registration Statement"), in connection with the registration under
the Securities Act of 1933, as amended, of certain shares of Common Stock (the
"Shares") of Cisco Systems, Inc. (the "Company") to be issued to the
shareholders of Metaplex, Inc. ("Metaplex") in connection with the acquisition
of Metaplex by the Company. As your legal counsel, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the issuance of the Shares.
It is our opinion that, when issued in the manner referred to
in the Registration Statement and in accordance with resolutions adopted by the
Board of Directors of the Company, such Shares will be legally and validly
issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name whenever
appearing in the Registration Statement and any amendment thereto.
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 of
Cisco Systems, Inc. on Form S-3 for the registration of 29,686 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 financial statement 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 10-K, filed with the Securities and Exchange Commission. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
San Jose, California
January 21, 1997
