<PAGE> 1
As filed with the Securities and Exchange Commission on August 14, 1997
Registration No. 333-_____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
(Exact name of issuer as specified in its charter)
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
-----------------
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
(Full title of the plan)
-----------------
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ardent Communications Corporation
1996 Stock Option Plan
Common Stock 574,750 $1.36 $781,660 $237
=====================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Ardent Communications
Corporation 1996 Stock Option Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Cisco Systems, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended July 28, 1996 filed with the Commission on October 25, 1996,
pursuant to Section 13 of the Securities Exchange Act of 1934 (the
"1934 Act").
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended October 26, 1996, January 25, 1997 and April 26,
1997, filed with the Commission on December 10, 1996, March 10, 1997
and June 10, 1997, respectively, and any amendments thereto.
(c) The Registrant's reports on Form 8-K filed with the Commission
on October 1, 1996 and January 22, 1997, respectively.
(d) The Registrant's Registration Statement No. 0-18225 on Form 8-A
filed with the Commission on January 11, 1990, together with
Amendment No. 1 on Form 8-A filed with the Commission on February
15, 1990, in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
II-1.
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended and
Restated Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
4.0 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement No. 0-18225 on
Form 8-A which is incorporated herein by reference pursuant to
Item 3(d).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Ardent Systems Corporation 1996 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option and Stock Option
Agreement in connection with the Ardent Communications
Corporation 1996 Stock Option Plan.
99.3 Form of Stock Option Assumption Agreement.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
into the Registration Statement; (2) that for the purpose of determining any
liability under the 1933 Act each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the Ardent Communications Corporation 1996
Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
II-2.
<PAGE> 4
the 1934 Act that is incorporated by reference into the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Jose,
State of California, on this 14th day of August, 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 August 14, 1997
John T. Chambers Officer and Director (Principal
Executive Officer)
/s/ Larry R. Carter
- ------------------------ Vice President, Finance and August 14, 1997
Larry R. Carter Administration, Chief Financial
Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ John P. Morgridge
- ------------------------ Chairman of the Board August 14, 1997
John P. Morgridge and Director
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Donald T. Valentine
- ------------------------ Director August 14, 1997
Donald T. Valentine
/s/ James F. Gibbons
- ------------------------ Director August 14, 1997
James F. Gibbons
/s/ Robert L. Putte
- ------------------------ Director August 14, 1997
Robert L. Puette
- ------------------------ Director 1997
Masayoshi Son
/s/ Steven M. West
- ------------------------ Director August 14, 1997
Steven M. West
/s/ Richard M. Moley
- ------------------------ Director August 14, 1997
Richard M. Moley
/s/ Edward Kozel
- ------------------------ Director August 14, 1997
Edward Kozel
/s/ Carol Bartz
- ------------------------ Director August 14, 1997
Carol Bartz
</TABLE>
II-5.
<PAGE> 7
EXHIBIT INDEX
Exhibit Number Exhibit
4.0 Instruments Defining Rights of Shareholders. Reference
is made to Registrant's Registration Statement No.
0-18225 on Form 8-A which is incorporated herein by
reference pursuant to Item 3(d).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand
L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained
in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
99.1 Ardent Systems Corporation 1996 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option and Stock
Option Agreement in connection with the Ardent
Communications Corporation 1996 Stock Option Plan.
99.3 Form of Stock Option Assumption Agreement.
<PAGE> 1
EXHIBIT 5
August 14, 1997
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 574,750 shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 574,750 shares of
the common stock ("Common Stock") of Cisco Systems, Inc. (the "Company")
issuable under the Ardent Communications Corporation 1996 Stock Option Plan (the
"Plan") as assumed by the Company. We advise you that, in our opinion, when such
shares have been issued and sold pursuant to the applicable provisions of the
Plan and in accordance with the Registration Statement, such shares will be
validly issued, fully paid and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
Brobeck, Phleger & Harrison LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Cisco Systems, Inc. for the registration of 574,750 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 appearing in Cisco Systems, Inc.'s 1996 Annual Report on
Form 10-K filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1934.
/s/ Coopers & Lybrand L.L.P.
San Jose, California
August 13, 1997
<PAGE> 1
EXHIBIT 99.1
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 1996 Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Committee appointed by the Board
of Directors in accordance with Section 4(a) of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Ardent Communications Corporation, a
California corporation.
(g) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of
<PAGE> 2
the Company or between the Company, its Subsidiaries or their respective
successors. For purposes of this Plan, a change in status from an Employee to a
Consultant or from a Consultant to an Employee will not constitute an
interruption of Continuous Status as an Employee or Consultant.
(i) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company,
with the status of employment determined based upon such minimum number of hours
or periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment of a director's fee to a
Director shall not be sufficient to constitute "employment" of such Director by
the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(k) "Fair Market Value" means, as of any date, the fair market
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange, or the exchange with the
greatest volume of trading in Common Stock for the last market trading day prior
to the time of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(l) "Incentive Stock Option" means an Option intended to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code, as designated in the applicable written option agreement.
(m) "Nonstatutory Stock Option" means an Option not intended
to qualify
2.
<PAGE> 3
as an Incentive Stock Option, as designated in the applicable written
option agreement.
(n) "Option" means a stock option granted pursuant to the
Plan.
(o) "Optioned Stock" means the Common Stock subject to an
Option.
(p) "Optionee" means an Employee or Consultant who receives an
Option.
(q) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.
(r) "Plan" means this 1996 Stock Option Plan.
(s) "Reporting Person" means an officer, director, or greater
than ten percent shareholder of the Company within the meaning of Rule 16a-2
under the Exchange Act, who is required to file reports pursuant to Rule 16a-3
under the Exchange Act.
(t) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, as the same may be amended from time to time, or any successor
provision.
(u) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(v) "Stock Exchange" means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted at
any given time.
(w) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares that may be
optioned and sold under the Plan is 3,500,000 shares of Common Stock. The shares
may be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan. In
addition, any shares of Common Stock which are retained by the Company upon
exercise of an Option in order to satisfy the exercise or purchase price for
such Option or any withholding taxes due with respect to such exercise shall be
treated as not issued and shall continue to be available under the Plan.
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any, upon
which the
3.
<PAGE> 4
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.
(b) Plan Procedure After the Date, if any, Upon Which the
Company Becomes Subject to the Exchange Act.
(i) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees or Consultants who are not
Reporting Persons.
(ii) Administration With Respect to Reporting Persons.
With respect to grants of Options to Employees who are Reporting Persons, the
Plan shall be administered by (A) the Board if the Board may administer the Plan
in compliance with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted in such a manner as
to permit the Plan to comply with Rule 16b-3 with respect to a plan intended to
qualify thereunder as a discretionary plan. Once appointed, such committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended
to qualify thereunder as a discretionary plan. No person serving as a member of
an Administrator that has authority with respect to grants to Reporting Persons
shall be eligible to receive any grant under the Plan which would cause such
member to cease to be "disinterested" within the meaning of Rule 16b-3.
(iii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options to Employees or Consultants
who are not Reporting Persons, the Plan shall be administered by (A) the Board
or (B) a committee designated by the Board, which committee shall be constituted
in such a manner as to satisfy the legal requirements relating to the
administration of incentive stock option plans, if any, of California corporate
and securities laws, of the Code and of any applicable Stock Exchange (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.
(c) Powers of the Administrator. Subject to the provisions
of the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any Stock Exchange, the
Administrator shall have the authority, in its
4.
<PAGE> 5
discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
or any combination thereof are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such option granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any option granted hereunder;
(vii) to determine whether and under what circumstances
an Option may be settled in cash under Section 9(f) instead of Common Stock;
(viii) in order to fulfill the purposes of the Plan and
without amending the Plan, to modify grants of Options to participants who are
foreign nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options.
5. Eligibility.
(a) Recipients of Grants. Nonstatutory Stock Options may be
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option may,
if he or she is otherwise eligible, be granted additional Options.
(b) Type of Option. Each Option shall be designated in
the written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
5.
<PAGE> 6
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.
(c) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term
stated in the Option Agreement, provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof or such shorter term as
may be provided in the Option Agreement. However, in the case of an Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option that
is:
(A) granted to an Employee who, at the time
of the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B) granted to any other Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
that is:
(A) granted to a person who, at the time of
the grant
6.
<PAGE> 7
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant.
(B) granted to any other person, the per
Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender or such other period as may be required
to avoid a charge to the Company's earnings, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) authorization for the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (6) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price and any applicable
income or employment taxes, (7) delivery of an irrevocable subscription
agreement for the Shares that irrevocably obligates the option holder to take
and pay for the Shares not more than twelve months after the date of delivery of
the subscription agreement, (8) any combination of the foregoing methods of
payment, or (9) such other consideration and method of payment for the issuance
of Shares to the extent permitted under Applicable Laws. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise, Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan; provided that such Option shall become exercisable
at the rate of at least twenty percent (20%) per year over five (5) years from
the date the Option is granted.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the
7.
<PAGE> 8
person entitled to exercise the Option and the Company has received full payment
for the Shares with respect to which the Option is exercised. Full payment may,
as authorized by the Board, consist of any consideration and method of payment
allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, not withstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares that thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship.
Subject to Section 9(c), in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than thirty
(30) days as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option
and not exceeding three (3) months) after the date of such termination (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.
(c) Disability of Optionee.
(i) Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his or her total and permanent disability
(within the meaning of Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(ii) In the event of termination of an Optionee's
Continuous
8.
<PAGE> 9
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from
the date of such termination (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within six
months (6) from the date of termination, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an
Optionee during the period of Continuous Status as an Employee or Consultant, or
within thirty (30) days following the termination of the Optionee's Continuous
Status as an Employee or Consultant, the Option may be exercised, at any time
within six (6) months following the date of death (but in no event later than
the expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death or, if
earlier, the date of termination of the Continuous Status as an Employee or
Consultant. To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
(e) Rule 16b-3. Options granted to Reporting Persons
shall comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
for Plan transactions.
(f) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Stock Withholding to Satisfy Withholding Tax Obligations.
At the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with an Option, which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have
9.
<PAGE> 10
been owned by the Optionee for more than six months on the date of surrender,
and (ii) have a fair market value on the date of surrender equal to or less than
Optionee's marginal tax rate times the ordinary income recognized, or (d) by
electing to have the Company withhold from the Shares to be issued upon exercise
of the Option, if any, that number of Shares having a fair market value equal to
the amount required to be withheld. For this purpose, the fair market value of
the Shares to be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined (the "Tax Date").
Any surrender by a Reporting Person of previously owned Shares
to satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
All elections by an Optionee to have Shares withheld to
satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, the election shall be irrevocable as to
the particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is a Reporting Person, the election
must comply with the applicable provisions of Rule 16b-3 and shall be subject to
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
In the event the election to have Shares withheld is
made by an Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee shall
receive the full number of Shares with respect to which the Option is exercised
but such Optionee shall be unconditionally obligated to tender back to the
Company the proper number of Shares on the Tax Date.
11. Adjustment; Upon Changes in Capitalization, Merger or
Certain Other Transactions.
(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each
10.
<PAGE> 11
outstanding Option, and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.
(c) Merger or Sale of Assets. In the event of a proposed
sale of all or substantially all of the Company's assets or a merger of the
Company with or into another corporation where the successor corporation issues
its securities to the Company's shareholders, each outstanding Option shall be
assumed or an equivalent option or right shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
successor corporation does not agree to assume the Option or to substitute an
equivalent option, in which case such Option shall terminate upon the
consummation of the merger or sale of assets.
(d) Certain Distributions. In the event of any
distribution to the Company's shareholders of securities of any other entity or
other assets (other than dividends payable in cash or stock of the Company)
without receipt of consideration by the Company, the Administrator may, in its
discretion, appropriately adjust the price per share of Common Stock covered by
each outstanding Option to reflect the effect of such distribution.
12. Non-Transferability of Options. Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised or
purchased during the lifetime of the Optionee, only by the Optionee.
13. Time of Granting Options. The date of grant of an Option
shall, for
11.
<PAGE> 12
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Authority to Amend or Terminate. The Board may at any
time amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made that would impair the
rights of any Optionee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of any Stock Exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) Effect of Amendment or Termination. No amendment or
termination of the Plan shall adversely affect Options already granted, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares
shall not be issued pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any Stock Exchange.
As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by law.
16. Reservation of Shares. The Company, during
the term of this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
17. Agreements. Options shall be evidenced by
written agreements in such form as the Administrator shall approve from time to
time.
12.
<PAGE> 13
18. Shareholder Approval. Continuance of the
Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months before or after the date the Plan is adopted. Such
shareholder approval shall be obtained in the degree and manner required under
applicable state and federal law and the rules of any Stock Exchange. All
Options issued under the Plan shall become void in the event such approval is
not obtained.
19. Information to Optionees. The Company shall
provide financial statements at least annually to each Optionee during the
period such Optionee has one or more Options outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
13.
<PAGE> 1
EXHIBIT 99.2
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
NOTICE OF STOCK OPTION GRANT
[NAME]
[ADDRESS]
You have been granted an option to purchase Common Stock of Ardent
Communications Corporation (the "Company") as follows:
<TABLE>
<S> <C>
Board Approval Date:
Date of Grant (Later of Board
Approval Date or Commencement
of Employment/Consulting):
Vesting Commencement Date:
Exercise Price per Share: $
Total Number of Shares Granted:
Total Exercise Price: $
Type of Option:
Term/Expiration Date:
Vesting Schedule: This Option may be exercised, in whole or
in part, in accordance with the following
schedule: 1/5th of the Shares subject to
the Option shall vest on the 12th month
anniversary of the Vesting
Commencement Date, and 1/60th of the
total number of Shares subject to the
Option shall vest on the last day of each
month thereafter; provided, however, that
in the event first customer shipment of the
Company's first product occurs by
_____________, as determined by the
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Board of Directors of the Company, then such
Shares shall instead vest on the following
schedule: 1/5th of the Shares subject the Option
shall vest on the 12th month anniversary of the
Vesting Commencement Date, 1/60th of the total
number of Shares subject to the Option shall vest
on the last day of each month thereafter (but with
an additional 10% of the total Shares released at
the second anniversary of the Vesting Commencement
Date), and then 1/24th of the remaining Shares shall
vest at the end of each month after the second
anniversary of the Vesting Commencement Date.
Termination Period: Option may be exercised for thirty (30) days after
termination of employment or consulting relationship
except as set out in Sections 7 and 8 of the Stock
Option Agreement (but in no event later than the
Expiration Date).
</TABLE>
By your signature and the signature of the Company's
representative below, you and the Company agree that this option is granted
under and governed by the terms and conditions of the 1996 Stock Option Plan and
the Stock Option Agreement, both of which are attached and made a part of this
document.
[NAME]: ARDENT COMMUNICATIONS CORPORATION
- ------------------------------------- By:
Signature --------------------------------
- ------------------------------------- --------------------------------
Print Name Print Name and Title
2.
<PAGE> 3
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Ardent Communications Corporation, a
California corporation (the "Company"), hereby grants to ______________
("Optionee"), an option (the "Option") to purchase a total number of shares of
Common Stock (the "Shares") set forth in the Notice of Stock Option Grant, at
the exercise price per share set forth in the Notice of Stock Option Grant (the
"Exercise Price") subject to the terms, definitions and provisions of the Ardent
Communications Corporation 1996 Stock Option Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option.
If designated an Incentive Stock Option, this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.
2. EXERCISE OF OPTION. This Option shall be exercisable during its
Term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Grant and with the provisions of Section 9 of the Plan as follows:
(a) RIGHT TO EXERCISE.
(i) This Option may not be exercised for a fraction of
a share.
(ii) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in Section
2(a)(i).
(iii) In no event may this Option be exercised after the
date of expiration of the Term of this Option as set forth in the Notice of
Stock Option Grant.
(b) METHOD OF EXERCISE. This Option shall be exercisable by
execution and delivery of the Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Exercise Agreement") or of any
other form of written notice approved for such purpose by the Company which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The written notice
3.
<PAGE> 4
shall be accompanied by payment of the Exercise Price. This Option shall be
deemed to be exercised upon receipt by the Company of such written notice
accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of applicable law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to Optionee on the date on which the
Option is exercised with respect to such Shares.
3. METHOD OF PAYMENT. Payment of the Exercise Price shall
be by any of the following, or a combination thereof, at the election of
Optionee:
(a) cash;
(b) check;
(c) surrender of other shares of Common Stock of the
Company which (i) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by Optionee for more than six (6) months on the
date of surrender, and (ii) have a fair market value on the date of surrender
equal to the Exercise Price of the Shares as to which the Option is being
exercised; or
(d) if there is a public market for the Shares and
they are registered under the Securities Act, delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds required to pay the
exercise price.
4. RESTRICTIONS ON EXERCISE. This Option may not be
exercised until such time as the Plan has been approved by the shareholders of
the Company, or if the issuance of such Shares upon such exercise or the method
of payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
5. TERMINATION OF RELATIONSHIP. In the event of termination
of Optionee's Continuous Status as an Employee or Consultant, Optionee may, to
the extent otherwise so entitled at the date of such termination (the
"Termination Date"), exercise this Option during the Termination Period set
forth in the Notice of Stock Option Grant. To the extent that Optionee was not
entitled to exercise this Option at such Termination Date, or if
4.
<PAGE> 5
Optionee does not exercise this Option within the Termination Period, the Option
shall terminate.
6. DISABILITY OF OPTIONEE.
(a) Notwithstanding the provisions of Section 6
above, in the event of termination of Continuous Status as an Employee or
Consultant as a result of Optionee's total and permanent disability (as defined
in Section 22(e)(3) of the Code), Optionee may, but only within twelve (12)
months from the Termination Date (but in no event later than the Expiration Date
set forth in the Notice of Stock Option Grant and in Section 9 below), exercise
this Option to the extent Optionee was entitled to exercise it as of such
Termination Date. To the extent that Optionee was not entitled to exercise the
Option as of the Termination Date, or if Optionee does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.
(b) Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's consulting relationship or
Continuous Status as an Employee as a result of any disability not constituting
a total and permanent disability (as set forth in Section 22(e)(3) of the Code),
Optionee may, but only within six (6) months from the Termination Date (but in
no event later than the Expiration Date set forth in the Notice of Stock Option
Grant and in Section 9 below), exercise this Option to the extent Optionee was
entitled to exercise it as of such Termination Date; provided, however, that if
this is an Incentive Stock Option and Optionee fails to exercise this Incentive
Stock Option within three (3) months from the Termination Date, this Option will
cease to qualify as an Incentive Stock Option (as defined in Section 422 of the
Code) and Optionee will be treated for federal income tax purposes as having
received ordinary income at the time of such exercise in an amount generally
measured by the difference between the Exercise Price for the Shares and the
fair market value of the Shares on the date of exercise. To the extent that
Optionee was not entitled to exercise the Option at the Termination Date, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified in this Section 6(b), the Option shall terminate.
7. DEATH OF OPTIONEE. In the event of the death of
Optionee (a) during the Term of this Option and while an Employee or Consultant
of the Company and having been in Continuous Status as an Employee or Consultant
since the date of grant of the Option, or (b) within thirty (30) days after
Optionee's Termination Date, the Option may be exercised at any time within six
(6) months following the date of death (but in no event later than the
Expiration Date set forth in the Notice of Stock Option Grant and in Section 9
below), by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the Termination Date.
8. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be
5.
<PAGE> 6
exercised during the lifetime of Optionee only by him or her. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
9. TERM OF OPTION. This Option may be exercised only
within the Term set forth in the Notice of Stock Option Grant, subject to the
limitations set forth in Section 7 of the Plan.
10. TAX CONSEQUENCES. Set forth below is a brief summary
as of the date of this Option of certain of the federal and California tax
consequences of exercise of this Option and disposition of the Shares under the
laws in effect as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISE OF INCENTIVE STOCK OPTION. If this
Option qualifies as an Incentive Stock Option, there will be no regular federal
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price will be treated as an adjustment to the alternative
minimum tax for federal tax purposes and may subject Optionee to the alternative
minimum tax in the year of exercise.
(b) EXERCISE OF NONSTATUTORY STOCK OPTION. If this
Option does not qualify as an Incentive Stock Option, there may be a regular
federal income tax liability and a California income tax liability upon the
exercise of the Option. Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of
the fair market value of the Shares on the date of exercise over the Exercise
Price. If Optionee is an employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(c) DISPOSITION OF SHARES. In the case of a
Nonstatutory Stock Option, if the Shares are held for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal and California income tax purposes. In the case of an Incentive
Stock Option, if Shares transferred pursuant to the Option are held for at least
one year after exercise and are disposed of at least two years after the Date of
Grant, any gain realized on disposition of the Shares will also be treated as
long-term capital gain for federal and California income tax purposes. If Shares
purchased under an Incentive Stock Option are disposed of within such one-year
period or within two years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the lesser
of (i) the fair market value of the Shares on the date of exercise, or (ii) the
sale price of the Shares.
6.
<PAGE> 7
(d) NOTICE OF DISQUALIFYING DISPOSITION OF
INCENTIVE STOCK OPTION SHARES. If the Option granted to Optionee herein is an
Incentive Stock Option, and if Optionee sells or otherwise disposes of any of
the Shares acquired pursuant to such Incentive Stock Option on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after the date of exercise, Optionee shall immediately notify the Company
in writing of such disposition. Optionee acknowledges and agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized by Optionee from the early disposition by payment in cash or
out of the current earnings paid to Optionee.
11. WITHHOLDING TAX OBLIGATIONS. Optionee understands that,
upon exercising a Nonstatutory Stock Option, he or she will recognize income for
tax purposes in an amount equal to the excess of the then fair market value of
the Shares over the Exercise Price. However, the timing of this income
recognition may be deferred for up to six months if Optionee is subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If Optionee is an employee, the Company will be required to withhold from
Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, Optionee may at some point be required to satisfy tax withholding
obligations with respect to the disqualifying disposition of an Incentive Stock
Option. Optionee shall satisfy his or her tax withholding obligation arising
upon the exercise of this Option by one or some combination of the following
methods: (a) by cash payment, (b) out of Optionee's current compensation, (c) if
permitted by the Administrator, in its discretion, by surrendering to the
Company Shares which (i) in the case of Shares previously acquired from the
Company, have been owned by Optionee for more than six months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
or greater than Optionee's marginal tax rate times the ordinary income
recognized, or (d) by electing to have the Company withhold from the Shares to
be issued upon exercise of the Option that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").
If Optionee is subject to Section 16 of the Exchange Act (an
"Insider"), any surrender of previously owned Shares to satisfy tax withholding
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3").
All elections by Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
7.
<PAGE> 8
(b) once made, the election shall be irrevocable as to
the particular Shares of the Option as to which the election is made; and
(c) all elections shall be subject to the consent or
disapproval of the Administrator.
12. MARKET STANDOFF AGREEMENT. In connection with the
initial public offering of the Company's securities and upon request of the
Company or the underwriters managing any underwritten offering of the Company's
securities, Optionee hereby agrees not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Shares (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters and to execute an
agreement reflecting the foregoing as may be requested by the underwriters at
the time of the public offering.
[Signature Page Follows]
8.
<PAGE> 9
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one document.
Ardent Communications Corporation
By:
-------------------------------------
(Print name and title)
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR
CONSULTANCY AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY
THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME,
WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Dated:
-------------------------------- ----------------------------
[NAME]
9.
<PAGE> 1
EXHIBITI 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 25th day of
July, 1997 by Cisco Systems, Inc., a California corporation ("Cisco").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of the common stock of Ardent
Communications Corporation, a California corporation ("Ardent"), which were
granted to Optionee under the Ardent Communications Corporation 1996 Stock
Option Plan (the "Plan") and are evidenced by a Notice of Stock Option Grant and
Stock Option Agreement (together, the "Option Agreement") between Ardent and
Optionee.
WHEREAS, Ardent has this day been acquired by Cisco through
the merger of Ardent with and into Cisco (the "Merger") pursuant to the
Agreement of Merger dated July 25, 1997, by and between Cisco and Ardent (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of Ardent under all outstanding options under the Plan
at the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement,
the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.150916
of a share of Cisco common stock ("Cisco Stock") for each outstanding share of
Ardent common stock ("Ardent Stock").
WHEREAS, this Agreement is to become effective immediately
upon the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Ardent Stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Ardent Options") and the exercise price payable per share are set forth in
Exhibit A hereto. Cisco hereby assumes, as of the Effective Time, all the duties
and obligations of Ardent under each of
<PAGE> 2
the Ardent Options. In connection with such assumption, the number of shares of
Cisco Stock purchasable under each Ardent Option hereby assumed and the exercise
price payable thereunder have been adjusted to reflect the Exchange Ratio.
Accordingly, the number of shares of Cisco Stock subject to each Ardent Option
hereby assumed shall be as specified for that option in attached Exhibit B, and
the adjusted exercise price payable per share of Cisco Stock under the assumed
Ardent Option shall be as indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
Ardent Option is to assure that the spread between the aggregate fair market
value of the shares of Cisco Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, equal the spread which
existed, immediately prior to the Merger, between the then aggregate fair market
value of the Ardent Stock subject to the Ardent Option and the aggregate
exercise price in effect at such time under the Option Agreement. Such
adjustments are also designed to preserve, immediately after the Merger, on a
per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Ardent Option immediately prior
to the Merger.
3. The following provisions shall govern each Ardent
Option hereby assumed by Cisco:
(a) Unless the context otherwise requires,
all references to the "Company" in each Option Agreement and
in the Plan (as incorporated into such Option Agreement) shall
mean Cisco, all references to "Common Stock," "Shares" or
"Optioned Stock" shall mean shares of Cisco Stock, all
references to the "Board of Directors" shall mean the Board of
Directors of Cisco, and all references to the "Committee"
shall mean the Compensation Committee of the Cisco Board of
Directors.
(b) The grant date and the expiration date
of each assumed Ardent Option and all other provisions which
govern either the exercisability or the termination of the
assumed Ardent Option shall remain the same as set forth in
the Option Agreement applicable to that option and shall
accordingly govern and control Optionee's rights under this
Agreement to purchase Cisco Stock.
(c) Pursuant to the terms of the Plan and
the Option Agreement, the installment exercise schedule in
effect under each Ardent Option will automatically convert, as
of the Effective Time, from a five (5)- year exercise schedule
to a four (4)-year exercise schedule, so that, as of such
Effective Time, each such Ardent Option will become
exercisable for the option shares as follows: (i) twenty-five
percent (25%) of the option shares upon Optionee's completion
of one (1) year of service measured from the
2.
<PAGE> 3
Optionee's vesting commencement date and (ii) the balance of
the option shares in a series of thirty-six (36) successive
equal monthly installments upon the Optionee's completion of
each additional month of service over the thirty-six (36)
month period measured from the first anniversary of the
Optionee's vesting commencement date. Each Ardent Option, as
so converted, will be assumed by Cisco as of the Effective
Time, adjusted in accordance with the provisions of paragraph
1 above.
(d) For purposes of applying any and all
provisions of the Option Agreement relating to Optionee's
status as an employee or a consultant of Ardent, Optionee
shall be deemed to continue in such status as an employee or a
consultant for so long as Optionee renders services as an
employee or a consultant to Cisco or any present or future
Cisco subsidiary. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed Ardent
Options upon Optionee's cessation of service as an employee or
a consultant of Ardent shall hereafter be applied on the basis
of Optionee's cessation of employee or consultant status with
Cisco and its subsidiaries, and each assumed Ardent Option
shall accordingly terminate, within the designated time period
in effect under the Option Agreement for that option,
following such cessation of service as an employee or a
consultant of Cisco and its subsidiaries. In accordance with
the Plan and the Option Agreement, a change in status from an
employee to a consultant or from a consultant to an employee
will not constitute an interruption of continuous status as an
employee or a consultant.
(e) The adjusted exercise price payable for
the Cisco Stock subject to each assumed Ardent Option shall be
payable in any of the forms authorized under the Option
Agreement applicable to that option. For purposes of
determining the holding period of any shares of Cisco Stock
delivered in payment of such adjusted exercise price, the
period for which such shares were held as Ardent Stock prior
to the Merger shall be taken into account.
(f) In order to exercise each assumed Ardent
Option, Optionee must deliver to Cisco a written notice of
exercise in which the number of shares of Cisco Stock to be
purchased thereunder must be indicated. The exercise notice
must be accompanied by payment of the adjusted exercise price
payable for the purchased shares of Cisco Stock and should be
delivered to Cisco at the following address:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attention: Option Plan Administrator
3.
<PAGE> 4
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the ____ day of ____________________, 1997.
CISCO SYSTEMS, INC.
By:
------------------------------------
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock
Option Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Ardent Options hereby assumed by Cisco are as set
forth in the Option Agreement, the Plan and such Stock Option Assumption
Agreement.
------------------------------------
1~, OPTIONEE
DATED: , 199_
-------------------
4.
<PAGE> 5
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of Ardent Communications Corporation
Common Stock (Pre-Merger)
<PAGE> 6
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
