<PAGE> 1
As filed with the Securities and Exchange Commission on December 17, 1998
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 registrant 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)
SELSIUS SYSTEMS INC.
1997 STOCK INCENTIVE PLAN
(Full title of the Plans)
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA
95134-1706 (Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
1997 STOCK INCENTIVE PLAN
Common Stock 507,771 shares $6.32 $3,209,112.72 $892.13
Aggregate Registration Fee $892.13
===================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Selsius
Systems Inc. 1997 Stock Incentive Plan, by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the Registrant's 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 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 25, 1998 filed with the Commission on September 25,
1998, pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934 Act").
(b) The Registrant's Current Reports on Form 8-K filed with the
Commission on October 13, 1998, November 20, 1998 (for period
date November 2, 1998) and November 20, 1998 (for period date
November 4, 1998).
(c) The Registrant's Quarterly Report on Form 10-Q for the period
ended October 24, 1998 filed with the Commission on December 8,
1998.
(d) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with Commission on January 11, 1990, together with
Amendment No.1 on Form 8-A/A filed with the Commission on
February 15, 1990, and including any other amendments or reports
filed for the purpose of updating such description, in which
there is described the terms, rights and provisions applicable
to the Registrant's Common Stock.
(e) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with the Commission on June 11, 1998, including any
amendments or reports filed for the purpose of updating such
description, in which there is described the terms, rights and
provisions applicable to the Registrant's Preferred Stock
Purchase Rights.
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 de-registers 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.
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
II-1
<PAGE> 3
Securities Act of 1933, as amended, (the "1933 Act"). The Registrant's Restated
Articles of Incorporation, as amended, and Amended and Restated Bylaws provide
for indemnification of its directors, officers, employees and other agents to
the maximum extent permitted by the California Corporations Code. In addition,
the Registrant has entered into Indemnification Agreements with each of its
directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statements No. 000-18225 on
Form 8-A, together with the amendments and exhibits thereto,
which are incorporated herein by reference pursuant to Items
3(c) and 3(d).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Selsius Systems Inc. 1997 Stock Incentive Plan.
99.2 Form of Incentive Stock Option Award.
99.3 Form of Nonqualified Stock Option Award
99.4 Form of Terms and Conditions to the Incentive Stock Option
Award.
99.5 Form of Terms and Conditions to the Nonqualified Stock Option
Award.
99.6 Form of Schedule I - Incentive Stock Option Award
99.7 Form of Schedule I - Nonqualified Stock Option Award.
99.8 Form of Disclosure Statement (Exhibit A - Waiver Letter).
99.9 Form of Stock Option Assumption Agreement.
</TABLE>
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this 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 this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
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 clauses 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 this 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 Selsius System
Inc. 1997 Stock Incentive Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this 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 indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is
II-2
<PAGE> 4
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 certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and 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
17th day of December, 1998.
CISCO SYSTEMS, INC.
By: /s/ John T. Chambers
--------------------------------------
John T. Chambers
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints John T. Chambers and Larry R.
Carter, and each of them, as such person's true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for such person and
in such person's name, place and stead, 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 lawfully 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 below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John T. Chambers President, Chief Executive December 17,, 1998
- ----------------------------- Office and Director
John T. Chambers (Principal Executive Officer)
/s/ Larry R. Carter Senior Vice President, Finance December 17, 1998
- ----------------------------- and Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting
Officer)
/s/ John P. Morgridge Chairman of the Board and December 17, 1998
- ----------------------------- Director
John P. Morgridge
/s/ Donald T. Valentine Vice Chairman and Director December 17, 1998
- -----------------------------
Donald T. Valentine
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ James F. Gibbons Director December 17, 1998
- -----------------------------
James F. Gibbons
/s/ Robert L. Puette Director December 17, 1998
- -----------------------------
Robert L. Puette
/s/ Masayoshi Son Director December 17, 1998
- -----------------------------
Masayoshi Son
/s/ Steven M. West Director December 17, 1998
- -----------------------------
Steven M. West
/s/ Edward R. Kozel Director December 17, 1998
- -----------------------------
Edward R. Kozel
/s/ Carol A. Bartz Director December 17, 1998
- -----------------------------
Carol A. Bartz
/s/ James C. Morgan Director December 17, 1998
- -----------------------------
James C. Morgan
/s/ Mary Cirillo Director December 17, 1998
- -----------------------------
Mary Cirillo
/s/ Arun Sarin Director December 17, 1998
- -----------------------------
Arun Sarin
</TABLE>
II-5
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CISCO SYSTEMS, INC.
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statements No. 000-18225 on
Form 8-A, together with the amendments and exhibits thereto,
which are incorporated herein by reference pursuant to Items
3(c) and 3(d).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Selsius Systems Inc. 1997 Stock Incentive Plan.
99.2 Form of Incentive Stock Option Award.
99.3 Form of Nonqualified Stock Option Award.
99.4 Form of Terms and Conditions to the Incentive Stock Option
Award.
99.5 Form of Terms and Conditions to the Nonqualified Stock Option
Award
99.6 Form of Schedule I - Incentive Stock Option Award.
99.7 Form of Schedule I - Nonqualified Stock Option Award.
99.8 Form of Disclosure Statement (Exhibit A - Waiver Letter).
99.9 Form of Stock Option Assumption Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
December 17, 1998
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134-1706
Re: Cisco Systems, Inc. - Registration Statement for Offering of an
Aggregate of 507,771 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to Cisco Systems, Inc., a California
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
an aggregate of 507,771 shares of common stock and related stock options
(the "Shares") under the Selsius Systems Inc. 1997 Stock Incentive Plan ( the
"Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the assumption of the Plans
and the options outstanding thereunder. Based on such review, we are of the
opinion that if, as and when the Shares are issued and sold (and the
consideration therefor received) pursuant to the provisions of option agreements
duly authorized under the Plans and in accordance with the Registration
Statement, such Shares will be duly authorized, legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plans or the Shares.
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 507,771 common shares
in connection with the acquisition of Selsius System Inc., of our reports dated
August 4, 1998, on our audits of the consolidated financial statements and
financial statement schedule of Cisco Systems, Inc. as of July 25, 1998 and July
26, 1997, and for each of the three years in the period ended July 25, 1998
which reports are included in Cisco Systems, Inc.'s 1998 Annual Report on Form
10-K, filed with the Securities and Exchange Commission.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
San Jose, California
December 16, 1998
<PAGE> 1
EXHIBIT 99.1
SELSIUS SYSTEMS INC.
1997 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Selsius Systems Inc., a
Delaware corporation (the "Company"), by providing an incentive to certain of
its employees and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to such employees of the Company and
its subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through subsidiaries an added long-term incentive for high
levels of performance and unusual efforts through the grant of Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Performance
Awards and Restricted Stock (as each term is herein defined.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (a) the highest prices per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control and (b) the highest Fair Market Value of a Share during
the 90 day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means, unless otherwise defined in the agreement evidencing
a particular Option or Award or unless otherwise defined in any separate
employment agreement between an Eligible Individual and the Company or a
Subsidiary, an Eligible Individual's (i) intentional failure to perform
reasonable assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties of the Company or any of its Subsidiaries thereof which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar offenses).
<PAGE> 2
2.6 "Change in Capitalization" means any increase or reduction in the.
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the term of
the Plan and following an Initial Public Offering of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Exchange Act),Other than Intecom Inc. or Lagardere SCA or
any of their affiliates (individually or in the aggregate), immediately
after which such Person has "Beneficial Ownership" (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty-one percent
(51%) or-more of the combined power of the Company's then outstanding
Voting Securities; provided, however, in determining whether a Change in
Control has occurred, voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute
an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary") (ii) the Company or its Subsidiaries, or (iii) any Person
in connection with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of July 24, 1997, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened. "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(c) Approval by stockholders of the Company of:
2
<PAGE> 3
(i) A merger, consolidation or reorganization involving the
Company, unless
(A) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the ,members of the board of
directors of the Surviving Corporation or a corporation
beneficially owning a majority of the Voting Securities of the
Surviving Corporation,
(C) no Person other than the Company. any Subsidiary,
any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of
fifty-one percent (51%) or more of the then outstanding Voting
Securities has directly or indirectly, fifty-one percent (51%)
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities, and
(D) a transaction described in clauses (A) through (C)
shall herein be referred to as a "Non-Control Transaction;"
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets, of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities then outstanding, increases
the number of shares Beneficially Owned by the Subject Persons, provided that if
a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by
3
<PAGE> 4
the Company. the Subject Persons becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Persons, Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means a committee, as described in Section: 3.1,
appointed by the Board to administer the Plan and to perform the functions set
forth herein.
2.10 "Company" means Selsius Systems Inc.
2.11 "Disinterested Director" means a director of the Company
who is a "non-employee director" as defined in Rule 16b-3(b)(3) as promulgated
under the Exchange Act.
2.12 "Division" means any of the operating units or divisions of
the Company designated as a Division by the Committee.
2.13 "Eligible Individual" means any officer or employee of the
Company or a Subsidiary, or any consultant or advisor who is receiving cash
compensation from the Company or a Subsidiary, designated by the Committee as
eligible to receive Options or Awards subject to the conditions set forth
herein.
2.14 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
2.15 "Fair Market Value" on any date means the average of the
high and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares-are listed or admitted to trading, or,
if such Shares are not so listed or admitted to trading, the arithmetic mean of
the per Share closing bid price and per Share closing asked price on such date
as quote on the National Association of Securities Dealers Automated Quotation
System or such market in which such prices are regularly quoted, or, if there
have been no published bid or asked quotations with respect to Shares on such
date, the Fair Market Value shall be the value established by the Board in good
faith and, in the case of an Incentive Stock Option, in accordance with Section
422 of the Code.
2.16 "Grantee" means a person to whom an Award has been granted
under the Plan.
2.17 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.18 "Initial Public Offering" means the consummation of the
first public offering of Shares pursuant to a registration statement (other than
on Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.
2.19 "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.
4
<PAGE> 5
2.20 "Option" means a Nonqualified Stock Option, an Incentive
Stock Option, or either or both of them.
2.21 "Optionee" means a person to whom an Option has been
granted under the Plan.
2.22 "Outside Director" means a director of the Company who is
an "outside director" within the meaning Section 1.162-27(e) of the regulations
as promulgated under the Code.
2.23 "Parent" means any corporation that is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.24 "Performance Awards" means Performance Units, Performance
Shares (as each term is hereinafter defined), or either or both of them.
2.25 "Performance Cycle" means the time period specified by the
Committee at the time Performance Shares are granted during which the
performance of the Company, a Subsidiary, or a Division will be measured.
2.26 "Performance Objectives" has the meaning set forth in
Section 8.
2.27 "Performance Shares" means Shares issued or transferred to
an Eligible Individual under Section 8.
2.28 "Performance Unit" means Performance Units granted to an
Eligible Individual under Section 8.
2.29 "Plan" means this Selsius Systems Inc. 1997 Stock Incentive
Plan.
2.30 "Pooling Period" means, with respect to a Pooling
Transaction, the period ending on the first date on which the combined entity
resulting from such Pooling Transaction publishes thirty days of combined
operating results.
2.31 "Pooling Transaction" means an acquisition of the Company
in a transaction which is intended to be treated as a "pooling of interests"
under generally accepted accounting principles.
2.32 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 7.
2.33 "Shares" means the common stock, par value $.01 per share,
of the Company.
2.34 "Stock Appreciation Right" means a right to receive all or
some portion of the increase in the value of the Shares as provided in Section 6
hereof.
5
<PAGE> 6
2.35 "Subsidiary" means any corporation that is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company
2.36 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, that issues
or assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
2.37 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, the Parent, or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not. fewer than two members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall be
as fully effective as if made by a majority vote at a meeting duly called and
held, Prior to the date of an Initial Public Offering, the Committee shall
consist of at least two directors of the Company and may consist of the entire
Board. From and after the date of an Initial Public Offering, the Committee
shall consist of at least two directors of the Company each of whom shah be a
Disinterested Director and an Outside Director. No member of the Committee shall
be liable for any action, failure to act, determination interpretation made in
good faith with respect to this Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, gross negligence or
reckless disregard of his or her duties. The Company hereby agrees to identify
each member of the Committee for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise dealing
with any claim, cause of action, or dispute of any kind arising in connection
with any actions in administering this Plan or in authorizing or denying
authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:
(a) Determine those Eligible Individuals to whom Options
shall be granted under the Plan and the number of such Options to be granted,
prescribe the terms and conditions (which need not be identical) of each such
Option, including the purchase price per Share subject to each Option, and make
any amendment or modification to any Option Agreement consistent with the terms
of the Plan;
(b) select those Eligible Individuals to whom Awards
shall be granted under the Plan, determine the number of Stock Appreciation
Rights, Performance Awards, and/or Shares of Restricted Stock to be granted
pursuant to each Award, the terms and conditions of each Award, including the
restrictions or Performance Objectives relating to
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Shares, and the maximum value of each Performance Share, and make any amendment
or modification to any Agreement consistent with the terms of the Plan;
(c) construe and interpret the Plan and the Options and
Awards granted hereunder and establish, amend, and revoke rules and regulations
for the administration of the plan, including, but not limited to, correcting
any defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement in the manner and to the extent it deems necessary or
advisable so that the Plan complies with applicable law (including Rule 16b-3
under the Exchange Act and the Code to the extent applicable), and otherwise
making the Plan fully effective. All decisions and determinations by the
Committee in the exercise of this power shall be final, binding, and conclusive
upon the Company, its Subsidiaries, the Optionees, the Grantees, and all other
persons having any interest therein;
(d) determine the duration and purposes for leaves of
absence that may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan
(e) exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan; and
(f) generally, exercise such powers and perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 233,956, provided, however. that in
the aggregate, not more than one-third of the number of allotted shares may be
made the subject of Restricted Stock Awards under Section 7 of the Plan and,
provided, further, that the maximum number of Shares that any Eligible
Individual may receive during the term of the Plan in respect of Options and
Awards may not exceed 25,000 Shares and the maximum dollar amount that any
Eligible Individual may receive during the term of the Plan in respect of
Performance Units denominated in dollars may not exceed $100,000. Upon a Change
in Capitalization the maximum number of Shares shall be adjusted in number and
kind pursuant to Section 10. The Company shall reserve for the purpose of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares as shall be
determined by the Board.
4.2 Upon the granting of an Option or an Award the number of
Shares available under Section 4.1 for the granting of further Option and Awards
shall be reduced as follows:
(a) In connection with the granting of an Option or an
Award (other than the granting of a Performance Unit denominated in dollars), by
the number of Shares in respect of which the Option or Award is granted or
denominated.
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(b) In connection with the granting of a Performance
Unit denominated in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion
thereof expires, is canceled, or is otherwise terminated for any reason without
having been exercised or payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, canceled, or otherwise
terminated portion of the Option or Award may again be the subject of Options or
Awards granted hereunder.
4.4 Notwithstanding anything contained in this Section 4, the
number of Shares available for Options and Awards at any time under the Plan
shall be reduced to such lesser amount as may be required pursuant to the
methods of calculation necessary so that the exemptions provided pursuant to
Rule 16b-3 under the Exchange Act will continue to be available for transactions
involving all current and future Options and Awards. In addition, during the
period that any Options and Awards remain outstanding under the Plan, the
Committee may make good faith adjustments with respect to the number of Shares
attributable to such Options and Awards for purposes of calculating the maximum
number of Shares available for the granting of future Options and Awards under
the Plan, provided that following such adjustments the exemptions provided
pursuant to Rule 16b-3 under the Exchange Act will continue to be available for
transactions involving all current and future Options and Awards.
5. Option Grants.
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, the terms and conditions of which shall be
set forth in an Agreement; provided, however, no person shall receive any
Incentive Stock Options unless he or she is an employee of the Company, or a
Subsidiary at the time the Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price or the manner in which
the purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
the purchase price per Share under each Incentive Stock Option shall not be less
than 100 % of the Fair Market Value of a Share on the date the Incentive Stock
Option is granted (110 % in the case of Incentive Stock Option granted to a
Ten-Percent Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for
such term as the Committee determines. provided that an Incentive Stock Option
shall not be exercisable after the expiration of ten years from the date it is
granted (five years in the case of an Incentive Stock Option granted to
Ten-Percent Stockholder) and a Nonqualified Stock Option shall not be
exercisable after the expiration of ten years from the date it is granted.
Subsequent to the granting of any Option, the Committee may extend the term
thereof but in no event shall the term as so extended exceed the maximum term
provided in the preceding sentence.
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5.4 Vesting. Subject to Section 5.9, each Option shall become
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee and set forth in the Agreement. To the extent
not exercised, installments shall accumulate and be exercisable, as a whole or
in part, at any time after becoming. exercisable, but not later than the date
the Option expires. The Committee may accelerate the time of exercise of any
Option or portion thereof at any time.
5.5 Modification. No modification of an Option shall adversely
alter or impair any rights or obligations under the Option without the
Optionee's consent.
5.6 Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding, and conclusive
upon the beneficiaries, executors, administrators, heirs, and successors of the
Optionee.
5.7 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full in cash upon such exercise. Notwithstanding the foregoing,
the Committee shall have discretion to determine at the time of grant of each
Option or at any later date (up to and including the date of exercise) that the
form of payment acceptable in respect of the exercise of such Option may consist
of either of the following (or any combination thereof): (i) cash or (ii) the,
transfer of Shares to the Company upon such terms and conditions as determined
by. the Committee. Any Shares transferred to the Company as payment of the
purchase price under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. In addition, Options may be
exercised through a registered broker-dealer pursuant to such cashless exercise
procedures (other than Share withholding) that are, from time to time, deemed
acceptable by the Committee. The Optionee shall deliver the Agreement evidencing
the Option to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
5.8 Rights of Optionees. No Optionee shall be deem for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option is exercised pursuant to the terms thereof, (b) the Company has
issued and delivered the Shares to the Optionee, and (c) the Optionee's name is
entered as a stockholder of record on the books of the Company. Thereupon, the
Optionee shall have full voting, dividend, and other ownership rights with
respect to such Shares, subject to such terms and conditions as may be set forth
in the applicable Agreement.
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5.9 Effect of Change in Control. In the event of a Change of
Control, all Options outstanding on the date of such Change in Control shall
become immediately and fully exercisable. In addition, to the extent set forth
in an Agreement evidencing the grant of an Option, an Optionee will be permitted
to surrender for cancellation within sixty (60) days after such Change in
Control any Option or portion of an Option to the extent not yet exercised and
the Optionee will be entitled to receive a cash payment in an amount equal to
the excess, if any, of (x)(A) in the case of a Nonqualified Stock Option, the
greater of (1) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option, the
Fair Market Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered, over (y) the aggregate
purchase price for such Shares under the Option or portion thereof surrendered;
provided, however, that in the case of an Option granted within six (6) months
prior to the Change in Control to any Optionee who may be subject to liability
under Section 16(b) of the Exchange Act, such Optionee shall be entitled to
surrender for cancellation his or her Option, during the sixty (60) day period
commencing upon the expiration of six (6) months from the date of grant of any
such Option. In the event an Optionee's employment with the Company is
terminated by the Company following a Change in Control each Option held by the
Optionee that was exercisable as of the date of termination of the Optionee's
employment shall remain exercisable for a period ending not before the earlier
of the first anniversary of the termination of the Optionee's employment or the
expiration of the stated term of the Option.
6. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in
connection with the grant of an Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser number
of Shares as the Committee may determine) and shall, except as provided in this
Section 6, be subject to the same terms and conditions as the related Option.
6.1 Time of Grant. A Stock Appreciation Right may be granted (a)
at any time if unrelated to an Option, or (b) if related to an Option, either at
the time of grant or at any time thereafter during the term of the Option.
6.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 6.8, a Stock
Appreciation Right granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related Options are
exercisable and shall not be transferable except to the extent the related
Option is transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if the Fair Market Value of a
Share on the date of exercise exceeds the purchase price specified in the
related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount
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determined by multiplying (i) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (ii) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit, in any manner, the
amount .payable with respect to any Stock Appreciation Right by including such a
limitation in the Agreement evidencing the Stock Appreciation Right at the time
it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right
or the surrender of such Option pursuant to Section 5.9, the Stock Appreciation
Right shall be canceled to the extent of the number of Shares as to which the
option is exercised or surrendered.
6.3 Stock Appreciation Right Unrelated to an Option. The
Committee grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options- Stock Appreciation Rights unrelated to Options shall contain such terms
and conditions as to exercisability (subject to Section 6.8), vesting and
duration as the Committee determines, but in no event shall they have a term of
greater than ten years. Upon exercise of a Stock Appreciation Right unrelated to
an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on the date
preceding the date of exercise of such Stock Appreciation Right over the Fair
Market Value of a Share on the date the Stock Appreciation Right was granted, by
(b) the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit, in any
manner, the amount payable with respect to any Stock Appreciation Right by
including such limitation in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
6.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by mail
to the Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such Agreement
to the Grantee.
6.5 Form of Payment. Payment of the amount determined under
Sections 6.2(b) or 6.3 may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee decides to make
full payment in Shares and the amount payable results in a fractional Share
payment for the fractional Share shall be made in cash. Notwithstanding the
foregoing, no payment in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Sections 6.2(b) or 6.3 to an officer of the
Company or a Subsidiary who is subject to liability under Section 16(b),of the
Exchange Act unless the exercise of such Stock Appreciation Right is made either
(a) during the period beginning on the third business day and ending on the
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twelfth business day following the date of release for publication of the
Company's quarterly or annual statements of earnings or (b) pursuant to an
irrevocable election to receive cash made at least six months prior to the
exercise of such Stock Appreciation Right.
6.6 Restrictions. No Stock Appreciation Right may be exercised
before the date six months after the date it is granted.
6.7 Modification. No modification of an Award shall adversely
alter or impair any rights or obligations under the Agreement without the
Grantee's consent.
6.8 Effect of Change in Control. In the event of a Change in
Control but subject to Section 6.6, all Stock Appreciation Rights shall become
immediately and fully exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of a Stock Appreciation Right, a Grantee will be
entitled to receive a payment in cash or stock, in either case, with a value
equal to the excess, if any, of (A) the greater of (x) the Fair Market Value, on
the date preceding the date of exercise, of the underlying Shares subject to the
Stock Appreciation Right or portion thereof exercised and (y) the Adjusted Fair
Market Value, on the date preceding the date of exercise, of the Shares over (B)
the aggregate Fair Market Value, on the date the Stock Appreciation Right was
granted, of the Shares subject to the Stock Appreciation Right or portion
thereof exercised; provided, however, that in the case of a Stock Appreciation
Right granted within six (6) months of the Change in Control to any Grantee who
may be subject to liability under Section 16(b) of the Exchange Act, such
grantee shall be entitled to exercise his Stock Appreciation right during the
sixty (60) day period commencing upon the expiration of six (6) Months from the
date of grant of any such Stock Appreciation Right. In the event a Grantee's
employment with the Company is terminated by the Company following a Change in
Control each Stock Appreciation Right held by the Grantee that was exercisable
as of the date of termination of the Grantee's employment shall remain
exercisable for a period ending not before the earlier of the first anniversary
of the termination of the Grantee's employment or the expiration of the stated
term of the Stock Appreciation Right.
7. Restricted Stock.
7.1 Grant. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that Inappropriate legend be placed on Share certificates. Awards of
Restricted Stock shall be subject to the terms and provisions set forth below in
this Section 7.
7.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee as
soon as reasonably practicable after the Award is granted provided that the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents that the Committee may require as a condition to the
issuance of such Shares. If a Grantee fails to execute the Agreement evidencing
a Restricted Stock Agreement, the appropriate blank stock powers, and, in the
discretion of the Committee, an escrow agreements, and any other documents that
the Committee require within the time
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period prescribed by the Committee at the time the Award is granted, the Award
shall be null and. void. At the discretion of the Committee, Shares issued in
connection with a Restricted Stock Award; shall be deposited with the stock
powers with an escrow agent (which may be the Company) designated by Committee.
Unless the Committee determines otherwise and as set forth in the Agreement,
upon delivery of the Shares to the escrow agent, the Grantee shall have all of
the rights of a stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.
7.3 Non-transferability. Until all restrictions upon the Shares
of Restricted Stock awarded to a Grantee have lapsed in the manner set forth in
Section 7.4, such Shares shall not be sold, transferred or otherwise disposed
of, pledged or otherwise hypothecated, or delivered to the Grantee.
7.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted
Stock awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the Award
shall set forth such restrictions.
(b) Effect of Change in Control. Unless the Committee
shall determine otherwise at the time of the grant of an Award of Restricted
Stock, the restrictions upon Shares of Restricted Stock shall lapse upon a
Change in Control. The Agreement evidencing the Award shall set forth such
provisions.
7.5 Modification or Substitution. Subject to the term of the
Plan, the Committee may modify outstanding Awards of Restricted Stock or accept
the surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
7.6 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Shares of
Restricted Stock) or held in cash. If deferred dividends are to be held in cash,
there may be credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, determines. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.
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7.7 Delivery of Shares. Upon the lapse of the restrictions of
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
8. Performance Awards.
8.1 Performance Objective. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
pre-tax profits, (iii) net earnings, (iv) return on equity or assets, (v)
revenues or (vi) any combination of the foregoing. Performance Objectives may be
in respect of the performance of the Company and its Subsidiaries (which may be
on a consolidated basis), a Subsidiary or a Division. Performance Objectives may
be absolute or relative and may be expressed in terms of a progression within a
specified range. The Performance Objectives with respect to a Performance Cycle
shall be established in writing by the Committee by the earlier of (i) the date
on which a quarter of the Performance Cycle has elapsed or (ii) the date which
is ninety (90) days after the commencement of the Performance Cycle.
(b) Determination of Performance. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
Performance Award made to a Grantee who is subject to Section 162(m) of the
Code, the Committee shall certify in writing that the applicable Performance
Objectives have been satisfied.
8.2 Performance Units. The Committee, in its discretion, may
grant Awards of Performance to Eligible Individuals, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
8.2(b) of (i) in the case of Share denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of Performance Objective
attainment; provided, however, that the Committee may at the time a Performance
Unit is granted specify a maximum amount payable in respect of a vested
Performance Unit. Each Agreement shall specify the number of Performance Units
to which it relates, the Performance Objectives which must be satisfied in order
for the Performance Units to vest and the Performance Cycle within, which
Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 8.1(b)
and 8.4, a Grantee shall become vested with respect to the Performance Unites to
the extent that the Performance Objectives set forth in the Agreement are
satisfied for the Performance Cycle.
(b) Payment of Awards. Payment to Grantees in respect of
vested Performance Units shall be made within sixty (60) days after the last day
of the Performance Cycle to which such Award relates unless the Agreement
evidencing the Award provides for the deferral of payment, in which event the
terms and conditions of the deferral shall be set forth in the Agreement.
Subject to Section 8.4, such payments may made entirely in
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Shares valued at their Fair Market Value as of the last day of the applicable
Performance Cycle or such other date specified by the Committee, entirely in
cash, or in such combination of Shares and cash as the Committee in its
discretion shall determine at any time prior to such payment; provided, however,
that if the Committee in its discretion determines to make such payment entirely
or partially in Shares of Restricted Stock, the Committee must determine the
extent to which such payment will be in Shares of Restricted Stock and the terms
of such Restricted Stock at the time the Award is granted.
8.3 (a) Performance Shares. The Committee, in its discretion,
may grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:
(b) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued until the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee,. an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Performance Shares. If a Grantee shall fail to execute the
Agreement evidencing an Award of Performance Shares, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with an Award of Performance Shares shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(c) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 8.3(c) or 8.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.
(d) Lapse of Restrictions. Subject to Sections 8.1(b)
and 8.4, restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on such
terms, conditions and satisfaction of Performance Objectives as the Committee
may, in its discretion, determine at the time an Award is granted.
(e) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion, determine
that the payment
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to the Grantee of dividends, or a specified portion thereof, declared or paid on
actual Shares represented by such Award which have been issued by the Company to
the Grantee shall be (i) deferred until the lapsing of the restrictions imposed
upon such Performance Shares and (ii) held by the Company for the account of the
Grantee until such time. In the event that dividends are to be deferred, the
Committee shall determine whether such dividends are to be reinvested in shares
of Stock (which shall be held as additional Performance Shares) or held in cash.
If deferred dividends are to be held in cash, there may be credited at the end
of each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine. Payment of deferred dividends in respect of Performance Shares
(whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Performance Shares in respect of which the deferred dividends
were paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.
(f) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the Committee shall cause
a stock certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.
8.4 Effect of Change in Control. In the event of a Change in
Control:
(a) With respect to the Performance Units, the Grantee
shall (i) become vested in a percentage of Performance Units as determined, by
the Committee at the time of the Award of such Performance Units and as set
forth in the Agreement and (ii) be entitled to receive in respect of all
Performance Units which become vested as a result of a Change in Control a cash
payment within ten (10) days after such Change in Control in an amount as
determined by the Committee at the time of the Award of such Performance Unit
and as set forth in the Agreement.
(b) With respect to the Performance Shares, restrictions
shall lapse immediately on all or a portion of the Performance Shares as
determined by the Committee at the time of the Award of such Performance Shares
and as set forth in the Agreement. (C) The Agreements evidencing Performance
Shares , and Performance Units shall provide for the treatment of such Awards
(or portions thereof) which do not become vested as the result of a Change in
Control, including, but not limited to, provisions for the adjustment of
applicable Performance Objectives.
8.5 Modification or Substitution. Subject to the terms of the
Plan, the Committee may modify outstanding Performance Awards or accept the
surrender of outstanding Performance Awards and grant new Performance Awards in
substitution for them. Notwithstanding the foregoing, no modification of a
Performance Award shall adversely alter any rights or obligations under the
Agreement without the Grantee's consent.
9. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award
shall set forth the terms and conditions applicable to such Option or Award upon
a termination or
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<PAGE> 17
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary, or a Division (including a termination of change by
reason of the sale of a Subsidiary or a Division), as the Committee, in its
discretion, determines at the time the Option or Award is granted or thereafter.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the (i) maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (ii) maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted to any Eligible Individual during the term of
the Plan, (iii) the number and class of Shares or other stock or securities
subject to outstanding Options or Awards granted under the Plan, and the
purchase price therefor, if applicable, and (iv) the Performance Objectives, if
any.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a
Grantee of an Award is entitled to, or an Optionee is entitled to exercise an
Option with respect to, new, additional, or different shares of stock or
securities, such new, additional, or different shares shall thereupon be subject
to all of the conditions, restriction and performance criteria applicable to the
Shares subject to the Award or Option, as the case may be, prior to such Change
in Capitalization.
11. Effect of Certain Transactions.
11.1 Subject to Sections 5.9, 6.8, 7.4(b), 8.4 and 11.2 and as
otherwise provided in an Agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a merger or consolidation of the Company (a
"Transaction"), the Plan and the Options and Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction each Optionee and Grantee shall be entitled to receive
in respect of each Share subject to any outstanding Options or Awards, as the
case may be, upon exercise of any Option or payment or transfer in respect of
any Award, the same number and kind of stock, securities, cash, property, or
other consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share; provided, however, that such stock,
securities, cash, property, or other consideration shall remain subject to all
of the conditions, restrictions, and performance criteria applicable to the
Options and Awards prior to such Transaction.
11.2 Subject to Sections 5.9, 6.8, 7.4(b) and 8.4 or as
otherwise provided in an Agreement, in the event that, prior to an Initial
Public Offering, Intercom Inc. and its affiliates sell all of the Shares of the
Company that they own to a third party including by
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<PAGE> 18
means of a transaction described in clause (b) of Section 11.1 (a "Third-Party
Transaction"), the Company may require that each Optionee surrender any
outstanding Option to the Company, in exchange for which the Optionee shall
receive in respect of each Share subject to any Option so surrendered a cash
payment equal to the fair market value of the consideration that each holder of
a Share was entitled to receive in the Third Party Transaction, less the sum of
(i) the purchase price per Share under the Option, and (ii) a proportionate
share (determined as if the Optionee was holder of the number of Shares covered
by the Option) of fees, expenses and liabilities to be paid by the Company in
connection with such Third Party Transaction.
12. Interpretation.
Following the required registration of any equity security of
the Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
(b) To the extent required under Section 162(m) of the
Code and the regulations thereunder for compensation to be treated as qualified
performance based compensation, the maximum number of shares of Stock with
respect to which any Option, Stock Appreciation Right or Performance Award may
be granted during any one year period to any employee may not exceed 100,000.
The Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options or Awards if the ability to
exercise such discretion or the exercise of such discretion itself would cause
the compensation attributable to such Options or Awards to fail to qualify as
performance based compensation.
13. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction , the Committee shall take such actions, if
any, which are specifically recommended by an independent accounting firm
retained by the Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including but not limited to
(i) deferring the vesting, exercise, payment, settlement, or lapsing of
restrictions with respect to any, Option or Award, (ii) providing that the
payment or settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (iii) providing for the extension of the term
of any Option or Award. to the extent necessary to accommodate the foregoing,
but not beyond the maximum term permitted for any Option or Award.
14. Termination and Amendment of the Plan.
The Plan shall terminate on the day preceding the tenth
anniversary of the date of its adoption by the Board and no Option or Award may
be granted thereafter. The Board may sooner terminate the Plan and the Board may
at any time and from time to time amend. suspend the Plan; provided, however,
that:
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<PAGE> 19
(a) No such amendment, modification, suspension, or
termination shall impair with the impair or adversely alter any Options or
Awards Heretofore granted under the Plan, except with the consent of the
Optionee or Grantee or deprive any Optionee or Grantee of any Shares that he or
she may have acquired through or as a result of the Plan; and
(b) To the extent necessary under Section 16(b) of the
Exchange Act and the rules and regulations promulgated thereunder or other
applicable law, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations.
15. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed
as amending, modifying, or rescinding any previously approved incentive
arrangement or as creating any limitation as on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
16. Limitation of Liability.
As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(i) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period
of time.
17. Regulations and Other Approvals: Governing Law.
17.1 Except as to matters of federal law, this Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Texas without giving effect to
conflicts of law principles thereof.
17.2 The obligation of the Company to sell deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules, and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
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<PAGE> 20
17.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government authority
or to obtain for Eligible Individuals granted Incentive Stock Options the tax
benefits under the applicable provisions of the Code and regulations promulgated
thereunder.
17.4 Each Option and Award is subject to the requirement that,
if at any time the Committee determines, in its discretion, that the listing,
registration, or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the.
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, as a whole or in part, unless listing,
registration, qualification, consent, or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
17.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall be
appropriately amended to reflect their status as restricted securities as
aforesaid.
18. Miscellaneous.
18.1 Multiple Agreements. The terms of each Option-or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Individual during the term of the Plan, either in addition
to, or in substitution for, one or more Options or Awards previously granted to
that Eligible Individual.
18.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes
taxable income in connection with the receipt of Shares or cash hereunder (a
"Taxable Event"), the Optionee or Grantee shall pay to the Company an amount
equal to the federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the Taxable
Event (the "Withholding Taxes") prior to the issuance, or release from escrow,
of such Shares or the payment of such cash. The Company shall have the right to
deduct from any payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election
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<PAGE> 21
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Committee to have withheld a portion of the Shares then issuable to him or her
having an aggregate Fair Market Value, on the date preceding the date of such
issuance, equal to the Withholding Taxes, provided that in respect of an
Optionee or Grantee who may be subject to liability under Section 16(b) of the
Exchange Act either: (a) in the case of a Taxable Event involving an Option or
an Award (i) the Tax Election is made at least six (6) months prior to the date
of the Taxable Event and (ii) the Tax Election is irrevocable with respect to
all Taxable Events of a similar nature occurring prior to the expiration of six
(6) months following a revocation of the Tax Election; or (b) in the case of the
exercise of an Option (i) the Optionee makes the Tax Election at least six
months after the date the Option was granted, (ii) the Option is exercised
during the ten day period beginning on the third business day and ending on the
twelfth business day following the release for publication of the Company's
quarterly or annual statement of sales and earnings (a "Window Period"), and
(iii) the Tax Election is made during the Window Period in which the related
Option is exercised or prior to such Window Period and subsequent to the
immediately preceding Window Period; or (c) in the case of a Taxable Event
relating to the payment of an Award (i) the Grantee makes the Tax Election at
least six months after the date the Award was granted and (ii) the Tax Election
is made (1) in the case of a Taxable Event occur-ring within a Window Period,
during the Window Period in which the Taxable Event occurs, or (z) in the case
of a Taxable Event not occurring within a window period, during the Window
Period immediately preceding the Taxable Event relating to the Award.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (a) modify the provisions of this Section 18.2 (other than as regards
director Options) or impose such other restrictions or limitations on Tax
Elections as may be necessary to ensure that the Tax Elections will be exempt
transactions under Section 16(b) of the Exchange Act, and (b) permit Tax
Elections to be made at such other times and subject to such other conditions as
the Committee determines will constitute exempt transactions under Section 16(b)
of the Exchange Act.
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day after
the date of transfer of such Share or Shares to the Optionee pursuant to such
exercise, the Optionee shall, within ten days of such disposition, notify the
Company. thereof, by delivery of written notice to the Company at its principal
executive office.
19. Effective Date. The effective date of the Plan shall be as
determined by the Board, subject only to the approval by the affirmative vote of
the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duty held in
accordance with the applicable laws of the State of Delaware within 12 months of
the adoption of the Plan by the Board.
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<PAGE> 1
EXHIBIT 99.2
INCENTIVE STOCK OPTION AWARD PURSUANT TO THE
SELSIUS SYSTEMS INC. 1997 STOCK INCENTIVE PLAN
THIS AWARD is made as of the Grant Date by SELSIUS SYSTEMS INC.
(the "Company") to ____________________ (the "Optionee").
Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to Optionee an incentive stock option (the "Option"), as described below, to
purchase the Option Shares.
A. Grant Date: _______________, 1997.
B. Type of Option: The Option granted hereunder is intended to be
an "incentive stock option" as defined under Section 422(b) of
the Internal Revenue Code of 1986, as amended (the "Code") to
the fullest extent permitted in accordance with Code Section
422(d). In the event that in any calendar year the fair market
value of the stock (determined as of the date of grant) for
which this Option first becomes exercisable exceeds $100,000 in
such calendar year, then the Option shall be treated as a
nonqualified option to the extent that the fair market value of
such stock exceeds $100,000.
C. Option Shares: All or any part of ________ shares of the
Company's common stock, $.01 par value per share ("Stock"),
subject to adjustment as provided in the attached Terms and
Conditions.
D. Exercise Price: $15.00 per share of Stock subject to adjustment
as provided in the attached Terms and Conditions.
E. Option Period: The Option may be exercised only during the
Option Period which commences on the Grant Date and ends on the
earlier of (a) the tenth (10th) anniversary of the Grant Date;
(b) the later of the date (i) 30 days following the date the
Optionee ceases to provide services to the Company or any
Subsidiary or any affiliate for any reason other than retirement
at age 65, death or Disability or (ii) twelve months following
the date the Optionee ceases to provide services to the Company
or any Subsidiary or any affiliate due to death or Disability,
provided that the Option may be exercised as to no more than the
Vested Option Shares, determined pursuant to the Vesting
Schedule. Note that other limitations to exercising the Option,
as described in the attached Terms and Conditions, may apply.
F. Vesting Schedule: The Option Shares shall become vested in
accordance with the attached Vesting Schedule. All or a portion
of the Option Shares may become vested on an earlier date as
provided in the attached Terms and Conditions.
<PAGE> 2
G. Condition to Award: As a condition to the granting Optionee this
Option, shall forfeit all rights and interests to any options or
awards granted to Optionee under the InteCom Inc. 1995 Stock
Incentive Plan.
IN WITNESS WHEREOF, the Company and the Optionee have executed
this Award as of the Grant Date set forth above.
OPTIONEE SELSIUS SYSTEMS INC.
By:
- ----------------------------------- --------------------------------------
Title:
--------------------------------------
2
<PAGE> 1
EXHIBIT 99.3
NONQUALIFIED STOCK OPTION AWARD
PURSUANT TO SELSIUS SYSTEM INC.
1997 STOCK INCENTIVE PLAN
THIS AWARD is made as of the Grant Date by SELSIUS SYSTEMS INC.
(the "Company") to ___________ (the "Optionee").
Upon and subject to the Terms and Conditions attached hereto and
incorporated herein by reference, the Company hereby awards as of the Grant Date
to Optionee an option (the "Option"), as described below, to purchase the Option
Shares.
A. Grant Date: ________
B. Type of Option: Nonqualifed Stock Option issued under the
Selsius Systems Inc. 1997 Stock Incentive Plan.
C. Option Shares: All or any part of ____ shares of the Company's
voting common stock, $.01 per share (the "Stock"), subject to
adjustment as provided in the attached Terms and Conditions.
D. Exercise Price: $15.00 per share, subject to adjustment as
provided in the attached Terms and Conditions.
E. Option Period: The Option may be exercised only during the
Option Period which commences on the Grant Date and ends on the
earlier of (a) the tenth (10th) anniversary of the Grant Date;
(b) the later of the date (i) 30 days following the date the
Optionee ceases to provide services to the Company or any
Subsidiary or any affiliate for any reason other than retirement
at age 65, death or Disability or (ii) twelve months following
the date the Optionee ceases to provide service to the Company
or any Subsidiary or any affiliate due to death or Disability,
provided that the Option may be exercised as to no more than the
Vested Option Shares, determined pursuant to the Vesting
Schedule. Note that other limitations to exercising the Option,
as described in the attached Terms and Conditions, may apply.
F. Vesting Schedule: The Option Shares shall become vested in
accordance with the attached Vesting Schedule. All or a portion
of the Option Shares may become vested on an earlier date as
provided in the attached Terms and Conditions.
G. Condition to Award: As a condition to the granting of Optionee
this Option, Optionee shall forfeit all rights and interest to
any options or awards granted to Optionee under the InteCom Inc.
1995 Stock Incentive Plan.
IN WITNESS WHEREOF, the Company and the Optionee have executed
this Award as of the Grant Date set forth above.
OPTIONEE SELSIUS SYSTEMS INC.
By:
- ----------------------------------- --------------------------------------
Title:
------------------------------------
<PAGE> 1
EXHIBIT 99.4
TERMS AND CONDITIONS TO THE
INCENTIVE STOCK OPTION AWARD
PURSUANT TO SELSIUS SYSTEMS INC.
1997 STOCK INCENTIVE PLAN
1. Exercise of Option. Subject to the provisions provided herein or in
the Award made pursuant to the Plan:
(a) the Option may be exercised with respect to all or any
portion of the Vested Option Shares at any time during the Option Period
by the delivery to the Company, at its principal place of business, of a
written notice of exercise in substantially the form attached hereto as
Exhibit 1, which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten (10) days prior to the date
upon which Optionee desires to exercise all or any portion of the
Option; and
(b) payment to the Company of the Exercise Price multiplied by
the number of Vested Option Shares being purchased (the "Purchase
Price") as provided in Section 2.
Upon acceptance of such notice and receipt of payment in full of the Purchase
Price, the Company shall cause to be issued a certificate representing the
Option Shares purchased.
2. Purchase Price. Payment of the Purchase Price for all Option Shares
purchased pursuant to the exercise of an Option shall be made in cash or
certified check or, alternatively, as follows:
(a) by delivery to the Company of a number of shares of Stock
which have been owned by the Optionee for at least six (6) months prior
to the date of the Option's exercise having a fair market value, as
determined under the Plan, on the date of exercise either equal to the
Purchase Price or in combination with cash or a certified check to equal
the Purchase Price;
(b) by receipt of the Purchase Price in cash from a broker,
dealer or other "creditor" as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System following delivery by
the Optionee to the Committee of instructions in a form acceptable to
the Committee regarding delivery to such broker, dealer or other
creditor of that number of Option Shares with respect to which the
Option is exercised; or
(c) by a combination of the foregoing.
3. Vested Option Shares. The Option Shares shall become vested in the
manner provided in the Vesting Schedule attached hereto.
4. Rights as Shareholder. Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Option shall have no rights as a shareholder with respect to
such Option Shares. The Company shall make no
<PAGE> 2
adjustment for any dividends or distributions or other rights on or with respect
to such Option Shares. The Company shall make no adjustment for any dividends or
distributions or other rights on or with respect to Option Shares for which the
record date is prior to the issuance of that stock certificate, except as the
Plan or the attached Award otherwise provides.
5. Restriction on Transfer of Option and of Option Shares. The Option
evidenced hereby is nontransferable other than by will or the laws of descent
and distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his legatee or the executor of his
estate. In addition, any Option Shares acquired by the Optionee through the
exercise of all or a portion of this Option will be subject to the terms of a
shareholders agreement between the Optionee and the Company, which agreement
will be in the form and substance reasonably satisfactory to the Company and
will provide for customary provisions relating to the ownership of the shares of
Stock acquired including a right of the Company to purchase any Option Shares
prior to the Optionee's disposing of such shares to a party other than the
Company.
6. Restrictive Covenants. As a condition to preserving the benefits
provided by this Award, the Optionee agrees to refrain from violating any
covenants contained in any current or future written agreement, including any
modifications thereof, between the Optionee and the Corporation, prohibiting or
restricting competition, solicitation of customers, or solicitation or hiring of
employees or independent contractors, or concerning the ownership, use,
possession or disclosure of inventions, patent applications, copyrights,
confidential information, trade secrets or other proprietary information
(defined collectively as "Covenants"). In the even that the Committee determines
in good faith that the Optionee has violated the provisions of Covenants, then
the Optionee (or his heir or legatee) shall forfeit any further right to
exercise any unexercised portion of the Option hereunder.
7. Changes in Capitalization.
(a) Except as provided in Subsection (b) below, if the number of
shares of Stock shall be increased or decreased by reason of a
subdivision or combination of shares of Stock, the payment of an
ordinary stock dividend in shares of Stock or any other increase or
decrease in the number of shares of Stock outstanding effected without
receipt of consideration by the Company, an appropriate adjustment shall
be made by the Committee, in a manner determined in its sole discretion,
in the number and kind of Option Shares and in the Exercise Price.
(b) In the event of a merger, consolidation, reorganization,
extraordinary dividend or other change in the corporate structure of the
Company, including a Change in Control, or tender offer for shares of
Stock, shall provide for an appropriate adjustment to the Option or
provide for the substitution of a new option which adjustment or
substitution shall be consistent with the event requiring the adjustment
or substitution; provided, however, in the event will not be the
surviving entity as a result of the event and the surviving entity does
not agree to the adjustment or substitution, the Committee may elect to
terminate the Option Period as of the date of the Change in Control in
consideration of the payment to the Optionee of the sum of the
difference between the then Fair Market Value of the Common Stock and
the Exercise Price for each Option
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<PAGE> 3
Share as to which the Option has not been exercised as of the date of
the Change in Control.
(c) The existence of the Plan and the Option granted pursuant to
this Agreement shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any
merger or consolidation of the Company, any issue of debt or equity
securities having preferences or priorities as to the Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its business or assets, or any other
corporate act or proceeding. Any adjustment pursuant to this Section may
provide, in the Committee's discretion, for the elimination without
payment therefor of any fractional shares that might otherwise become
subject to any Option.
8. Special Limitation on Exercise. No purported exercise of the Option
shall be effective without the approval of the Committee, which may be withheld
to the extent that the exercise, either individually or in the aggregate
together with the exercise of other previously exercised stock options and/or
offers and sales pursuant to any prior or contemplated offering of securities,
would, in the sole and absolute judgment of the Committee, require the filing of
a registration statement with the United States Securities and Exchange
Commission or with the securities commission of any state. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities law with respect to shares of Stock purchasable or otherwise
deliverable under the Option, the Optionee (a) shall deliver to the Company,
prior to the exercise of the Option or as a condition to the delivery of Stock
pursuant to the exercise of an Option exercise, such information,
representations and warranties as the Company may reasonably request in order
for the Company to be able to satisfy itself that the Option Shares are being
acquired in accordance with the terms of an applicable exemption from the
securities registration requirements of applicable federal and state securities
laws and (b) shall agree that the shares of Stock so acquired will not be
disposed of except pursuant to an effective registration statement, unless the
Company shall have received an option of counsel that such disposition is exempt
from such requirement under the Securities Act of 1933 and any applicable state
securities law.
9. Legend on Stock Certificates. Certificates evidencing the Option
Shares, to the extent appropriate at the time, shall have noted conspicuously on
the certificates a legend intended to give all persons full notice of the
existence of the conditions, restrictions, rights and obligations set forth
herein and in the Plan.
10. Governing Laws. This Award and the Terms and Conditions shall be
construed, administered and enforced according to the laws of the State of
Texas.
11. Successors. This Award and the Terms and Conditions shall be binding
upon and inure to the benefit of the heirs, legal representatives, successors
and permitted assigns of the Optionee and the Company.
12. Notice. Except as otherwise specified herein, all notices and other
communications under this Award shall be in writing and shall be deemed to have
been given if
3
<PAGE> 4
personally delivered or if sent by registered or certified United States mail,
return receipt requested, postage prepaid, addressed to the proposed recipient
at the last known address of the recipient. Any party may designate any other
address to which notices shall be sent by giving notice of the address to the
other parties in the same manner as provided herein.
13. Severability. In the event that any one or more of the provisions or
portion thereof contained in the Award and these Terms and Conditions shall for
any reason be held to be invalid, illegal or unenforceable in any respect, the
same shall not invalidate or otherwise affect any other provisions of the Award
and these Terms and Conditions, and the Award and these Terms and Conditions
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
14. Entire Agreement. Subject to the terms and conditions of the Plan,
the Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.
15. Violation. Any transfer, pledge, sale, assignment, or hypothecation
of the Option or any portion thereof shall be a violation of the terms of the
Award or these Terms and Conditions and shall be void and without effect.
16. Headings and Capitalized Terms. Section headings used herein are for
convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined, in
either the Award or the Terms and Conditions shall be given the meaning ascribed
to them in the Plan.
17. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of the
Award and these Terms and Conditions, the party or parties who are thereby
aggrieved shall have the right to specific performance and injunction in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.
18. No Right to Continued Service. Neither the establishment of the Plan
nor the award of Option Shares hereunder shall be construed as giving the
Optionee the right to continue employment with the Company or any Subsidiary.
4
<PAGE> 5
EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
SELSIUS SYSTEM INC.
Name
-------------------------------------
Address
----------------------------------
Date
-------------------------------------
Selsius Systems Inc.
- ----------------------------------
- ----------------------------------
Attention:
------------------------
Re: Exercise of Incentive Stock Option
Gentlemen:
Subject to acceptance hereof by Selsius systems Inc. (the "Company")
pursuant to the provisions of the Selsius Systems Inc. 1997 Stock Incentive Plan
(the "Plan"), I hereby give notice of my election to exercise options granted to
me to purchase ________________ shares of common stock of the Company ("Stock")
under the Incentive Stock Option Award (the "Award") dated as of
____________________________. The purchase shall take place as of __________,
199___ (the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase price
as follows:
[ ] by delivery of cash or a certified check for $___________ for
the full purchase price payable to the order of Selsius Systems
Inc.
[ ] by delivery of cash or a certified check for $___________
representing a portion of the purchase price with the balance to
consist of shares of Stock that I have owned for at least six
months and that are represented by a stock certificate I will
surrender to the Company with my endorsement. If the number of
shares of Stock represented by such stock certificate exceed the
number to be applied against the purchase price, I understand
that a new stock certificate will be issued to me reflecting the
excess number of shares.
5
<PAGE> 6
[ ] by delivery of a stock certificate representing shares of Stock
that I have owned for at least six months which I will surrender
to the Company with my endorsement as payment of a purchase
price. If the number of shares of Stock represented by such
certificate exceed the umber to be applied against the purchase
price, I understand that a new certificate will be issued to me
reflecting the excess number of shares.
[ ] by delivery of the purchase price by ________________________, a
broker, dealer or other "creditor" as defined by Regulation T
issued by the Board of Governors of the Federal Reserve System.
I hereby authorize the Company to issue a stock certificate for
the number of shares indicated above in the name of said broker,
dealer or other creditor or its nominee pursuant to instructions
received by the Company and to deliver said stock certificate
directly to that broker, dealer or other creditor (or to such
other party specified in the instructions received by the
Company from the broker, dealer or other creditor) upon receipt
of the purchase price.
As soon as the stock certificate is registered in my name, please
deliver it to me at the above address.
If the Stock being acquired is not registered for issuance to and resale
by the Optionee pursuant to an effective registration statement on Form S-8 (or
successor form) filed under the Securities Act of 1933, as amended (the "1933
Act"), I hereby represent, warrant, covenant, and agree with the Company as
follows:
The shares of the Stock being acquired by me will be acquired
for my own account without the participation of any other person, with
the intent of holding the Stock for investment and without the intent of
participating, directly or indirectly, in a distribution of the Stock
and not with a view to, or for resale in connection with, any
distribution of the Stock, nor am I aware of the existence of any
distribution of the Stock;
I am not acquiring the Stock based upon any representation, oral
or written, by any person with respect to the future value of, or income
from, the Stock but rather upon an independent examination and judgment
as to the prospects of the Company;
The Stock was not offered to me by means of publicly
disseminated advertisements or sale literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the
Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Stock will be issued and sold to
me without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the 1933 Act,
6
<PAGE> 7
provided by Sections 3(b) and/or 4(2) thereof and the rules and
regulations promulgated thereunder;
The Stock cannot be offered for sale, sold or transferred by me
other than pursuant to: (A) and effective registration under the 1933
Act or in a transaction otherwise in compliance with the 1933 Act; and
(B) evidence satisfactory to the Company of compliance with the
applicable securities laws of other jurisdictions. The Company shall be
entitled to rely upon an opinion of counsel satisfactory to it with
respect to compliance with the above laws;
The Company will be under no obligation to register the Stock or
to comply with any exemption available for sale of the Stock without
registration of filing, and the information or conditions necessary to
permit routine sales of securities of the Company under Rule 144 under
the 1933 Act are not now available and no assurance has been given that
it or they will become available The Company is under no obligation to
act in any manner so as to make Rule 144 available with respect to the
Stock;
I have and have had complete access to and the opportunity to
review and make copies of all material documents related to the business
of the Company, including, but not limited to, contracts, financial
statements, tax returns, leases, deeds and other books and records. I
have examined such of these documents as I wished and am familiar with
the business and affairs of the Company. I realize that the purchase of
the Stock is a speculative investment and that any possible profit
therefrom is uncertain;
I have had the opportunity to ask question of and receive answer
from the Company and any person acting on its behalf and to obtain all
material information reasonably available with respect to the Company
and its affairs. I have received all information and data with respect
to the Company which I have requested and which I have deemed relevant
in connection with the evaluation of the merits and risks of my
investment in the Company;
I have such knowledge and experience in financial and business
matters that I am capable of evaluating the merits and risks of the
purchase of the Common Stock hereunder and I am able to bear the
economic risk of such purchase; and
The agreements, representations, warranties and covenants made
by me herein extend to and apply to all of the Stock of the Company
issued to me pursuant to this Award. Acceptance by me of the certificate
representing such Stock shall constitute a confirmation by me that all
such agreements, representations, warranties and covenants made herein
shall be true and correct at that time.
I understand that the certificates representing the shares being
purchased by me in accordance with this notice shall bear a legend referring to
the foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates being
acquired by me in accordance with this notice. I further understand that
capitalized terms
7
<PAGE> 8
used in this Notice of Exercise without definition shall have the meanings given
to them in the Plan.
Very truly yours,
-----------------------------------------
AGREED TO AND ACCEPTED:
SELSIUS SYSTEMS INC.
By:
-------------------------------
Title:
----------------------------
Number of Shares
Exercised:
------------------------
Number of Shares
Remaining:
------------------------
Date:
------------------------------------
8
<PAGE> 1
EXHIBIT 99.5
TERMS AND CONDITIONS
TO THE
NONQUALIFIED STOCK OPTION AWARD
PURSUANT TO SELSIUS SYSTEMS INC.
1997 STOCK INCENTIVE PLAN
1. Exercise of Option. Subject to the provisions provided herein or in
the Award made pursuant to the Selsius Systems Inc. 1997 Stock Incentive Plan:
(a) the Option may be exercised with respect to all or any
portion of the Vested Option Shares at any time during the Option Period
by the delivery to the Company, at its principal place of business, of a
written notice of exercise in substantially the form attached hereto as
Exhibit 1, which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten (10) days prior to the date
upon which Optionee desires to exercise all or any portion of the
Option; and
(b) payment to the Company of the Exercise Price multiplied by
the number of Vested Option Shares being purchased (the "Purchase
Price") as provided in Section.
Upon acceptance of such notice and receipt of payment in Mt of the Purchase
Price, the Company shall cause to be issued a certificate representing the
purchased.
2. Purchase Price. Payment of the Purchase Price for all Option Shares
purchased pursuant to the exercise of an Option shall be made
(a) in cash or certified check;
(b) by delivery to the Company of a number of shares of Stock
which have been owned by the Optionee for at least six (6) months prior
to the date Of the Option's exercise having, a fair market value, as
determined under the Plan, on the date of exercise e r equal to the
Purchase Price or in combination with cash or a certified check to:
equal the Purchase Price;
(c) if and when the Stock becomes traded, whether on a national
securities exchange or otherwise, by receipt of the Purchase Price in
cash from a broker, dealer or other "creditor" as defined by Regulation
T issued by the Board of Governors of the Federal Reserve System
following delivery by the Optionee to the Committee of instructions in a
form acceptable to the Committee regarding delivery to such broker,
dealer or other creditor of that number of with respect to which the
Option is exercised; or
(d) or any combination of the foregoing.
3. Vested Option Shares. The Option Shares shall become vested in the
manner provided in the Vesting Schedule attached hereto.
Page 1 of 4
<PAGE> 2
4. Rights as Shareholder. Until the stock certificates reflecting the
Option Shares accruing, to the Optionee upon exercise of the Option are issued
to the Optionee, the Optionee shall have no rights as a shareholder with respect
to such Option Shares. The Company shall make no adjustment for any dividends or
distributions or other rights on or with respect to Option Shares for which the
record date is prior to the issuance of, that stock certificate, except as the
Plan or the attached Award otherwise provides.
5. Restriction on Transfer of Option and of Option Shares. The Option
evidenced hereby is nontransferable other than by will or the laws of descent
and distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his legate or the executor of his
estate. In addition, any Option Shares acquired by the Optionee through the
exercise of all or a portion of this Option will be subject to the terms of a
shareholders agreement between the Optionee and the Company, which agreement
will be in the form and substance reasonably satisfactory to the Company and
will provide for customary provisions relating to the ownership of the shares of
Stock acquired including a right of the Company to purchase any Option Shares
prior to the Optionee's disposing of such shares to a party other than the
Company.
6. Restrictive Covenants. As a condition to preserving the benefits
provided by this Award, the Optionee agrees to refrain from violating any
covenants contained in any current or future written agreement, including any
modifications thereof, between the Optionee and the Corporation, prohibiting, or
restricting competition, solicitation of customers, or solicitation or hiring of
employees or independent contractors, or concerning the ownership, use,
possession or. disclosure of inventions, patent applications, copyrights,
confidential information, trade secrets or other proprietary information
(defined collectively as "Covenants"). In the event that the Committee
determines in good faith that the Optionee has violated the provisions of
Covenants, then the Optionee (or his heir or legatee) shall forfeit any further
right to exercise any unexercised portion of the Option hereunder.
7. Changes in Capitalization.
(a) Except as provided in Subsection (b) below, if the number of
shares of Stock shall be increased or decreased by reason of a
subdivision or combination of shares of Stock, the payment of an
ordinary stock dividend in shares of Stock or any other increase or
decrease, in the number of shares of Stock outstanding effected without
receipt of consideration by the Company, an appropriate adjustment shall
be made by the Committee, in a manner determined in its sole discretion,
in the number and kind of Option Shares and in the Exercise Price.
(b) In the event of a merger, consolidation, reorganization,
extraordinary dividend or other change in the corporate structure of the
Company, including a Change in Control, or tender offer for shares of
Stock, shall provide for an appropriate adjustment to the option or
provide for the substitution of a new option which adjustment or
substitution shall be consistent with the event requiring the adjustment
or substitution; provided, however, in the event the Company will not be
the surviving entity as a result of the event and the surviving entity
does not agree to the adjustment or substitution, the Committee may
elect to terminate the Option Period as of the date of the Change in
Page 2 of 4
<PAGE> 3
Control in consideration of the payment to the Optionee of the sum of
the difference between the then Fair Market Value of the Common Stock
and the Exercise Price for each Option Share as to which the Option has
not been exercised as of the date of the Change in Control.
(c) The existence of the Plan and the Option granted pursuant to
this Agreement shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any
merger or consolidation of the Company, any issue of debt or equity
securities having preferences or priorities as to the Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its business or assets, or any other
corporate act or proceeding. Any adjustment pursuant to this Section may
provide, in the Committee's discretion, for the elimination without
payment therefor of any fractional shares that might otherwise become
subject to any Option.
8. Special Limitation on Exercise. No purported exercise of the Option
shall be effective without the approval of the Committee, which may be withheld
to the extent that the exercise, either individually or in the aggregate
together with the exercise of other previously exercised stock options and/or
offers and sales pursuant to any prior or contemplated offering of securities,
would, in the sole and absolute judgment of the Committee, require the filing of
a registration statement with the United States, Securities and Exchange
Commission or with the securities commission of any state. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities law with respect to shares of Stock purchasable or otherwise
deliverable under the Option. the Optionee (a) shall deliver to the Company,
prior to the exercise of the Option or as a condition to the delivery of Stock
pursuant to the exercise of an Option exercise., such information,
representations and warranties as the Company may reasonably request in order
for the Company to be able to satisfy itself that the Option Shares are being
acquired in accordance with the terms of an avolicable exemption from the
securities registration requirements of applicable federal and state securities
laws and (b) shall acre that the shares of Stock so acquired will not be
disposed of except pursuant to an effective registration statement, unless the
Company shall have received an opinion of counsel that such disposition is
exempt from such requirement under the Securities Act of 1933 and any applicable
state securities law.
9. Legend on Stock Certificates. Certificates evidencing the Option
Share, to the extent appropriate at the time, shall have noted conspicuously on
the certificates a legend intended to give all persons full notice of the
existence of the conditions, restrictions, rights and obligations set forth
herein and in the Plan.
10. Governing Laws. This Award and the Terms and Conditions shall be
construed, administered and enforced according to the laws of the State of
Texas.
11. Successors. This Award and the Terms and Conditions shall be binding
upon and inure to the benefit of the heirs, legal representatives, successors
and permitted assigns of the optionee and the Company.
Page 3 of 4
<PAGE> 4
12. Notice. Except as otherwise specified herein, all notices and other
communications under this Award shall be in writing and shall be deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving, notice of
the address to the other parties in the same manner as provided herein.
13. Severability. In the event that any one or more of the provisions or
portion thereof contained in the Award and these Terms and Conditions shall for
any reason be held to be invalid, illegal or unenforceable in any respect, the
same shall not invalidate or otherwise affect any other provisions of the Award
and these Terms and Conditions, and the Award and these Terms and Conditions
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
14. Entire Agreement. Subject to the terms and conditions of the Plan,
the Award and the Terms and Conditions express the entire understanding of the
parties with respect to the Option.
15. Violation. Any transfer, pledge, sale, assignment, or hypothecation
of the Option or any portion thereof shall be a violation of the terms of the
Award or these Terms and Conditions and shall be void and without effect.
16. Headings and Capitalized Terms. Section headings used herein are for
convenience of reference only and shall not be considered in construing the
Award or these Terms and Conditions. Capitalized terms used, but not defined, in
either the Award or the Terms and Conditions shall be given the meaning ascribed
to them in the Plan.
17. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms conditions and provisions of the
Award and these Terms and Conditions, the party or parties who are thereby
aggrieved shall have the right to specific performance and injunction in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.,
18. No Right to Continued Service. Neither the establishment of the Plan
nor the award hereunder shall be construed as giving the Optionee the right to
continued service with the Company or any Subsidiary or any affiliate.
Page 4 of 4
<PAGE> 5
EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
SELSIUS SYSTEMS INC.
Name
-------------------------------------
Address
----------------------------------
-----------------------------------------
Date
-------------------------------------
Selsius Systems Inc.
Re: Exercise of Nonqualified Stock Option
Gentlemen:
Subject to acceptance hereof by Selsius Systems Inc. (the "Company")
pursuant to the provisions of the Selsius Systems Inc. 1997 Stock Incentive Plan
(the "Plan") I hereby give notice of my election to exercise options granted to
me to purchase ________________shares of common stock of the Company under the
Nonqualified Stock Option Award (the "Award") dated as of __________. The
purchase shall take place as of ___________ 199_ (the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase price
as follows:
[ ] by, delivery of cash or a certified check for $________ for the full
purchase price payable to the order of Selsius Systems Inc.
[ ] by delivery of cash or a certified check for $________ representing a
portion of the purchase price with the balance to consist of shares of
Common Stock that I have owned for at least six months and that are
represented by a stock certificate I will surrender to the Company with
my endorsement. If the number of shares of Common Stock represented by
such stock certificate exceed the number to be applied against the
purchase price, I understand that a new stock certificate will be issued
to me reflecting the excess number of shares.
[ ] by delivery of a stock certificate representing shares of Common Stock
that I have owned for at least six months which I will surrender to the
Company with my endorsement as payment of the purchase price. If the
number of shares Of Common Stock represented by such certificate exceed
the number to be applied against the purchase price, I understand that a
new certificate will be issued to me reflecting the excess number of
shares.
EXHIBIT 1 to Non-qualified Stock Option Award -- Page 1
<PAGE> 6
[ ] by delivery of the purchase price by ______ a broker, dealer or other
"creditor" as defined by Regulation T issued by the Board of Governors
of the Federal Reserve System. I hereby authorize the Company to issue a
stock certificate for the number of shares indicated above in the name
of said broker, dealer or other creditor or its nominee pursuant to
instructions received by the Company and to deliver said stock
certificate directly to that broker, dealer or other creditor (or to
such other party specified in the instructions received by the Company
from the broker, dealer or other creditor) upon receipt of the purchase
price.
The required federal, state and local income tax withholding
obligations, if any, on the exercise of the Award shall also be paid on or
before the Exercise Date in the manner provided in the Withholding Election
previously tendered or to be tendered to the Company no later than the Exercise
Date.
As soon as the stock certificate is registered in my name, please
deliver it to me at the above address.
If the Common Stock being acquired is not registered for issuance to and
resale by the Optionee pursuant to an effective registration statement on Form
S-8 (or successor form) filed under the Securities Act of 1933, as amended (the
"1933 Act"), I hereby represent, warrant, covenant, and agree with the Company
as follows:
The shares of the Common Stock being, acquired by me will be
acquired for my own account without the participation of any other
person, with the intent of holding the Common Stock for investment and
without the intent of participating, directly or indirectly, in a
distribution of the Common Stock and not with a view to, or for resale
in connection with, any distribution of the Common Stock, nor am I aware
of the existence of any distribution of the Common Stock;
I am not acquiring the Common Stock based upon any
representation, oral or written, by any person with respect to the
future value of, or income from, the Common Stock but rather upon an
independent examination and judgment as to the prospects of the Company;
The Common Stock, was not offered to ;by -means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the Common
Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold to
me without registration under any state law relating to the registration of
securities for sale, and will be issued and sold in reliance on the exemptions
from registration under the 1933 Act, provided by Sections 3(b) and/or 4(2)
thereof and the rules and regulations promulgated thereunder;
EXHIBIT 1 to Non-qualified Stock Option Award -- Page 2
<PAGE> 7
The Common Stock cannot be offered for sale, sold or transferred by me
other than pursuant to: (A) an effective registration under the 1933 Act or in a
transaction otherwise in compliance with the 1933 Act; and (B) evidence
satisfactory to the Company of compliance with the applicable securities laws of
other jurisdictions. The Company shall be entitled to rely upon an opinion of
counsel satisfactory to it with respect to compliance with the above laws;
The Company will be under no obligation to register the Common Stock or
to comply with any exemption available for sale of the Common Stock without
registration or filing, and the information or conditions necessary to permit
routine sales of securities of the Company under Rule 144 under the 1933 Act are
not now available and no assurance has been given that it or they will become
available. The Company is under no obligation to act in any manner so as to make
Rule 144 available with respect to the Common Stock;
I have and have had complete access to and the opportunity to review and
make copies of all material documents related to the business of the Company,
including, beat not limited to, contracts, financial statements, tax returns,
leases, deeds and other books and records. I have examined such of these
documents as I wished and am familiar with the business and affairs of the
Company. I realize that the purchase of the Common Stock is a speculative
investment and that any possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive answers from
die. Company and any. person acting on its behalf and to obtain all material
information reasonably available with respect to the Company and its affairs. I
have received all information and data with respect to the Company which I have
requested and which I have deemed relevant in connection with the evaluation of
the merits and risks of my investment in the Company;
I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of the purchase of the
Common Stock hereunder and I am able to bear the economic risk of such purchase;
and
The agreements, representations, warranties and covenants made by me
herein extend to and apply to all of the Common Stock of the Company issued to
me pursuant to this Award. Acceptance by me of the certificate representing such
Common Stock shall constitute a confirmation b me that all such agreements,
representations, warranties and covenants made herein shall be true and correct
at that time.
I understand that the certificates representing the shares being
purchased by me in accordance with this notice shall bear a legend referring to
the foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates being
acquired by me in accordance with this notice.
Very truly yours,
EXHIBIT 1 to Non-qualified Stock Option Award -- Page 3
<PAGE> 8
------------------------------------
AGREED TO AND ACCEPTED:
SELSIUS SYSTEMS INC.
By:
-------------------------------
Title:
----------------------------
Number of Shares
Exercised:
------------------------
Number of Shares
Remaining: Date:
------------------------ ------------------------------------
EXHIBIT 1 to Non-qualified Stock Option Award -- Page 4
<PAGE> 1
EXHIBIT 99.6
SCHEDULE 1 [NAME OF OPTIONEE]
TO SELSIUS SYSTEMS INC.
INCENTIVE STOCK OPTION AWARD
Vesting Schedule
"Vested Option Shares" means only that percentage of the Option Shares
as to which the Option becomes exercisable following completion of the months of
service indicated in the schedule first set forth below.
<TABLE>
<CAPTION>
Percentage of Shares Months of Service
Which are Vested Option Shares after Grant Date
- ------------------------------ ----------------
<S> <C>
0% 0 up to 12
33% 12
plus an additional 2.78% each additional
month thereafter
</TABLE>
Notwithstanding the foregoing Vesting Schedule, the option shall become fully
vested and exercisable during the Option Period if and when the Optionee retires
on or after age 65 or if a Change of Control occurs after the 12th month
following the Grant Date. If a Change of Control occurs prior to the 12th month
following the Grant Date, the Option shall be vested in that percentage equal to
the quotient of the Optionee's months of service following the Grant Date
divided by 12.
____________
1. Construction. (a) For purposes of the Vesting Schedule, Optionee
shall be granted as month of service for each consecutive month period following
the Grant Date and during which Optionee continues, at all times, as an employee
of the Company or a Subsidiary.
(b) The right of Optionee to vest in Stock shall cease upon the
termination of his or her service as an employee with the Company and any
Subsidiaries. Thereafter, no further shares shall become Vested Shares. The
Option shall be exercisable only as to Vested Shares during the Option Period
specified in the Award.
<PAGE> 1
EXHIBIT 99.7
SCHEDULE I [NAME OF OPTIONEE]
TO SELSIUS SYSTEMS INC.
NONQUALIFIED STOCK OPTION AWARD
Vesting Schedule
"Vested Option Shares" means only that percentage of the number of
shares of Stock subject to the Option as to which the Option becomes exercisable
following completion of the month of service for the Company indicated in the
schedule below.
<TABLE>
<CAPTION>
Percentage of Shares Months of Service
Which are Vested Option Shares after Grant Date
- ------------------------------ ----------------
<S> <C>
0% 0 up to 12
33% 12
plus an additional 2.78% each additional
month thereafter
</TABLE>
Notwithstanding the foregoing Vesting Schedule, the Option shall become fully
vested and exercisable during the Option Period if and when the Optionee retires
on or after age 65 or if a Change of Control occurs after the 12th month
following the Grant Date. If a Change of Control occurs prior to the 12th month
following the Grant Date, the Option shall be vested in that percentage equal to
the quotient of the Optionee's months of service following the Grant Date
divided by 24.
- --------------
1. Construction. (a) For purposes of the Vesting Schedule, Optionee
shall be granted a month of service for each consecutive month following the
Grant Date and during which Optionee continues, at all times, to provide service
to the Company or a Subsidiary.
(b) The right of Optionee to vest in Stock shall cease upon the
termination of his or her service to the Company or Subsidiary, whether by
reason of death, Disability or otherwise and, thereafter, no further shares
shall become Vested Option Shares; and the Option shall be exercisable during
the Option Period specified in the Award.
<PAGE> 1
EXHIBIT 99.8
DISCLOSURE STATEMENT
TO
EMPLOYEES, INCLUDING HOLDERS OF OPTIONS
GRANTED UNDER
THE
SELSIUS SYSTEMS INC. 1997 STOCK INCENTIVE PLAN
THE TRANSACTION
GENERAL
On October 13, 1998, Selsius Systems Inc. (the "Company"), InteCom Inc.
("InteCom"), and Jacques Payer, George O'Brien, George Platt, Jean-Francois
Boulin, John Christoph, and Gary Schatzel (collectively, the "Optionholders")
entered into a Stock Purchase Agreement pursuant to which (a) InteCom agreed to
sell to Cisco Systems, Inc. ("Cisco") all of the Company's Common Stock, par
value $.Ol per share ("Common Stock") and Preferred Stock, par value $.01 per
share ("Preferred Stock") that it holds of record on the date of sale (the
"Closing Date") and (b) the Optionholders agreed to convert all options held by
them on the Closing Date into Common Stock and to sell such Stock to Cisco.
Messrs. Payer, Platt, and O'Brien hold options granted under the Selsius Systems
Inc. Director Stock Option Plan (the "Director Plan"). Messrs. Boulin,
Christoph, and Schatzel hold options granted under the Selsius Systems Inc. 1997
Stock Incentive Plan (the "Employee Plan"). In this Disclosure Statement, the
options granted to Messrs. Payer, Platt, and O'Brien are referred to as the
"Director Options"; the options granted to Messrs. Boulin, Christoph, and
Schatzel are referred to as the "NonEmployee Options"; and all other options
granted under the Employee Plan are referred to as the "Employee Options." The
Common Stock and Preferred Stock are collectively referred to as the "Stock" and
the sale of the by the holders thereof to Cisco pursuant to the Stock Purchase
Agreement is herein called the "Transaction."
DIRECTOR OPTIONS AND NON-EMPLOYEE OPTIONS
All of the Director Options and the Non-Employee Options will vest as of
the Closing Date and the holders thereof will convert such Options into Common
Stock and sell such Common Stock to Cisco in the Transaction for the price set
forth below in "Employee Options" - "Employees who elect not to continue
employment with the Company after the Closing.
EMPLOYEE OPTIONS
Continuing Employees. Each Company employee (an "Employee") who elects
to continue his or her employment with the Company after the Closing (each a
"Continuing Employee") must execute the waiver agreement in the form attached
hereto as Exhibit A (the "Waiver"). Cisco will assume each vested and unvested
Employee Option that Continuing Employees hold on the Closing Date. Each of the
Employee Options that Cisco assumes will continue to have, and to be subject to,
the terms and conditions set forth in, the Employee Plan and the award pursuant
to which the Company granted the
1
<PAGE> 2
Employee Options to its employees (the "Award"), except that (1) the Transaction
will not accelerate the exercisability or vesting of any Employee Options for
which the Company receives a Waiver; (2) Cisco will exchange each Employee
Option for a Cisco option (a "New Option") exercisable for that number of whole
shares of Cisco Common Stock equal to the product of the number of shares of
Common Stock that were issuable upon exercise of such Employee Option
immediately prior to the Closing Date multiplied by the Exchange Ratio (as
defined below) and rounded down to the nearest whole number of shares of Cisco
Common Stock; and (3) the per share exercise price for the shares of Cisco
Common Stock issuable upon exercise of each New Option will be equal to a
quotient determined by dividing the exercise price per share of Common Stock at
which such option was exercisable immediately prior to the Closing Date by the
Exchange Ratio, rounded up to the nearest whole cent. The Exchange Ratio will be
the quotient derived by dividing the Option Component by the aggregate number of
Employee Options outstanding on the Closing Date. The Option Component is the
number derived by (1) multiplying $140,000,000 by a fraction, the numerator of
which is the number of shares of Common Stock underlying the Employee Options
outstanding on the Closing Date and the denominator of which is the number of
shares of Common Stock underlying the Employee Options on the Closing Date plus
the number of shares of Common Stock and Preferred Stock outstanding on the
Closing Date and (2) dividing the amount determined pursuant to subparagraph (1)
by the average of the closing prices for a share of Cisco Common Stock as quoted
on the NASDAQ National Market for the ten trading days immediately preceding and
ending on the trading day that is three calendar days prior to the Closing Date.
Within 20 business days after the Closing Date, Cisco will issue to each
Continuing Employee a document in appropriate form evidencing Cisco's assumption
of such Employee's Employee Options.
Cisco has advised the Company that if Cisco or the Company terminates a
Continuing Employee's employment "Without Cause" at any time following the
Closing, all of such Employee's New Options that had not previously vested will
automatically vest in full and all of such Employee's New Options will be
immediately exercisable (a "Special Acceleration"). The Special Acceleration
will apply only to the New Options that Cisco assumes in the Transaction and not
to any options that Cisco grants to Continuing Employees in the future. A
termination for "Cause" means a termination for any of the following reasons:
(a) the Continuing Employee's failure to perform satisfactorily the duties of
his or her position after receipt of a written warning; (b) the Continuing
Employee's misconduct; (c) the Continuing Employee's conviction of a crime; (d)
the Continuing Employee's commission of an act of fraud against, or the
misappropriate of property belong to, Cisco or the Company; (e) the Continuing
Employee's material breach of his employment agreement with the Company or Cisco
or of any confidentiality or proprietary information agreement between the
Continuing Employee and Cisco or the Company. A termination "Without Cause"
means a termination for any other reason. A Continuing Employee will not be
entitled to a Special Acceleration if he or she resigns from his or her
employment for any reason or if Cisco or the Company terminates such Employee's
employment "For Cause."
Non-Continuing Employees. All of the Employee Options held by Employees
who elect not to continue employment with the Company after the Closing (the
"Non-Continuing Employees") will vest as of the Closing Date. Each
Non-Continuing Employee will be required to exercise, on or prior to the Closing
Date, his or her Employee Options in accordance with the Award pursuant to which
the Company granted such Options to him or her (including the payment of the
exercise price) and sell the Common Stock that such Employee receives in such
exercise to Cisco on the Closing Date. Each Non-Continuing Employee will be
required to signify his/her consent to sell by executing and delivering to Cisco
an Election Not to Participate and Agreement to Sell in the form attached hereto
as Exhibit B. The price for each share of Common Stock that the Cisco will pay
to Non-Continuing Employees will be equal to (a) $140,000,000 divided by (b) the
sum of the number of shares of Stock outstanding on the Closing Date plus the
number of shares of Common Stock underlying the Employee Options outstanding on
the Closing and held by Continuing Employees.
2
<PAGE> 3
EMPLOYEE RIGHTS UNDER THE PLAN
The following information is being provided to assist the Employee in
making a decision as to whether to waive his/her rights under the Plan. The
Company will make a full copy of the Plan available to the Employees upon
request. Any Employee who desires to review the entire Plan should contact Sam
Swann at 972.855.8482.
The options granted to an Employee under the Plan vest according to the
vesting schedule attached to the Award. Each Award provides that, in addition to
the vesting schedule set forth in the Award (a) the options will become fully
vested and exercisable during the Option Period (as defined below) if and when
the Employee option holder retires on or after age 65 or if a Change in Control
(as defined below) occurs after the 12th month following the grant date of the
option; and (b) a percentage of the Employee holder's options will vest if a
Change in Control occurs before the 12th month following the grant date. This
percentage is to be computed by dividing the number of months elapsing between
the grant date and the Change in Control date by 12. An Employee may exercise
his Vested Options by complying with the Terms and Conditions attached to his
Award.
"Option Period" means the period that commences on the option grant date
and ends on the earlier of (a) the tenth anniversary of the grant date; and (b)
the later to occur of (i) 30 days following the date upon which the Employee
holder ceases to provide services to the Company or any subsidiary or any
affiliate for any reason other than retirement at age 65, death, or disability
and (ii) 12 months following the date upon the Employee holder ceases to provide
services to the Company or any subsidiary or affiliate due to death or
disability, provided that in all cases the option may be exercised as to no more
than the Vested Options determined pursuant to the vesting schedule. A "Change
in Control" will be deemed to occur, among other things, on the date upon which
the Company's stockholders approve an agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
person (other than a transfer to a subsidiary).
CONDITIONS PRECEDENT TO CLOSING
The conditions described in this Section are among those conditions that
must be satisfied on or prior to the Closing.
1. At least 90% of all current Company employees (each an "Employee")
performing technical functions and at least 80% of all holders of options
granted under the Employee Plan, other than the Non-Employee Options, must
execute the Waiver attached hereto. (Up to 20% of the Employees participating in
the Employee Plan (including 10% of the Employees performing technical
functions) may elect not to execute the Waiver and not become Cisco employees.)
2. Each Non-Continuing Employee must (a) execute the Election Not to
Participate and Agreement to Sell attached hereto as Exhibit B, (b) exercise all
of his or her Employee Options in accordance with his/her Award, and (c) sell
the Common Stock received upon exercise of his/her Employee Options to Cisco on
the Closing Date.
If these conditions are not satisfied, Cisco will not acquire Stock from
any holder thereof, the Closing will not occur; no Director Options,
Non-Employee Options, or Employee Options will accelerate; and the Director Plan
and the Employee Plan will remain in effect as if the parties had never entered
into the Stock Purchase Agreement. Likewise, the Plans will remain in effect as
if the parties had never entered into the Stock Purchase Agreement if the
Closing does not occur for any other reason,
3
<PAGE> 4
including the failure of Messrs. Tucker, Platt, Hahn, Sanders, and Alexander to
enter into employment agreements with Cisco.
OTHER REQUIREMENTS
As part of the Employee's obligations to the Company and to InteCom, on
or before the Closing Date (a) each Employee who was previously an InteCom
employee must execute and deliver to the Company the Departing Employee
Certificate section of the document entitled "InteCom Employee's Covenant To
Protect Proprietary Information" and (b) each Employee must execute and deliver
to the Company the Selsius Employee's Covenant to Protect IiiteCom Proprietary
Information in the form attached hereto.
TAX CONSEQUENCES
It is the intention of the parties that the Employee Options that Cisco assumes
will qualify, to the maximum extent permissible following the Closing Date, as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, to the extent such options qualified as incentive stock
options prior to the Closing Date. Each Employee participant should consult
his/her own tax counsel or accountant to determine the tax effect of the Waiver
upon the Employee.
PROCEDURE
A. If you agree to (1) become a Continuing Employee, (2) waive your
rights to accelerated vesting of your options upon a Change in Control, and (3)
exchange your Employee Options for New Options as described under "TRANSACTION,"
in lieu of all rights that you may have under the Plan and your Award, you must
complete, date, and execute the following documents and return them to Sam Swann
on or prior to October 31, 1998:
(1) the Waiver Agreement in the form attached hereto;
(2) a Departing Employee Certificate in the form attached here if
you were previously an InteCom employee; and
(3) the Selsius Employee's Covenant to Protect InteCom Proprietary
Information attached hereto.
B. If you elect to become a Non-Continuing Employee, you must complete,
date, and execute the following documents and return them to Sam Swann on or
prior to October 31, 1998:
(1) the Election Not to Participate and Agreement to Sell in the
form attached hereto;
(2) a Departing Employee Certificate in the form attached here if
you were previously an InteCom employee; and
(3) the Selsius Employee's Covenant to Protect InteCom Proprietary
Information attached hereto.
Dated October 13, 1998
4
<PAGE> 5
EXHIBIT A
WAIVER AGREEMENT
I, ____________________________ (the "Employee"), hereby represent and
warrant to Selsius Systems Inc. (the "Company") and its affiliates that:
1. I am a participant in the Selsius Systems Inc. 1997 Stock Incentive
Plan (the "Plan").
2. 1 have been given the opportunity to review the Plan and been
provided with a copy of the award and terms and conditions pursuant to which the
Company granted options to me under said Plan (the "Award").
3. The number of options that I now hold and each date upon which the
Company granted such options to me are set forth on Schedule A hereto. The
options identified on Schedule A and any that may be granted to me prior to the
Closing are herein referred to as the "Options."
4. The Company has informed me that Cisco Systems Inc. ("Cisco") desires
to acquire all of the Company's capital stock from the holders thereof.
5. 1 have received and have read the Selsius Systems Inc. Disclosure
Statement to Holders of Options Granted under the Plan, dated October 13, 1998
(the "Disclosure Statement") and have either discussed the same with my counsel
or determined not to do so.
6. In entering into this Waiver Agreement, I have relied solely upon the
Disclosure Statement and have not relied upon any oral statements made to me by
any Employee of the Company or affiliate of the Company or Cisco.
7. 1 have the capacity to enter into this Agreement and to perform my
obligations hereunder.
8. Words and terms used herein and not defined shall have the meanings
ascribed to them in the Disclosure Statement.
Agreements
In partial consideration of (a) my receipt from Cisco of an offer of
continued employment and (b) Cisco's promise to exchange my Options for New
Options as described in the Section entitled "THE TRANSACTION" in the Disclosure
Statement:
A. I agree to waive the vesting acceleration provisions of the Plan and the
Award on my outstanding Options. By this waiver I acknowledge my
understanding that my Options will not become fully vested or become
exercisable upon a Change in Control (as defined in Section 2.7(a) of
the Plan), whether under the Award or the Plan.
B. I agree that Cisco will assume each of the Options, whether vested or
unvested, that I hold on the Closing Date. Each of my Options that Cisco
assumes will continue to have, and to be subject to, the terms and
conditions set forth in, the Plan and the Award, except that (1) the
Waiver Agreement
1
<PAGE> 6
exercisability or vesting of my Options will not accelerate upon the
Closing of the Transaction; (2) Cisco will exchange each of my Options
for a Cisco option (a "New Option") exercisable for that number of whole
shares of Cisco Common Stock equal to the product of the number of
shares of Common Stock that were issuable upon exercise of my Option
immediately prior to the Closing Date multiplied by the Exchange Ratio
(as defined below) and rounded down to the nearest whole number of
shares of Cisco Common Stock, and (3) the per share exercise price for
the shares of Cisco Common Stock issuable upon exercise of each New
Option shall be equal to a quotient determined by dividing the exercise
price per share of Common Stock at which such option was exercisable
immediately prior to the Closing by the Exchange Ratio, rounded up to
the nearest whole cent. Within 20 business days after the Closing Date,
Cisco will issue to me a document in appropriate form evidencing Cisco's
assumption of my Options.
The Exchange Ratio will be the quotient derived by dividing the Option
Component by the aggregate number of Employee Options outstanding on the
Closing Date. The Option Component is the number derived by (1)
multiplying $140,000,000 by a fraction, the numerator of which is the
number of shares of Common Stock underlying the Employee Options
outstanding on the Closing Date and the denominator of which is the
number of shares of Common Stock underlying the Employee Options on the
Closing Date plus the number of shares of Stock outstanding on the
Closing Date and (2) dividing the amount determined pursuant to
subparagraph (1) by the average of the closing prices for a share of
Cisco Common Stock as quoted on the NASDAQ National Market for the ten
trading days immediately preceding and ending on the trading day that is
three calendar days prior to the Closing Date.
C. This Waiver Agreement will be irrevocable when executed by me and
delivered to the Company unless the Closing does not occur prior to
December 15, 1998 or such later date upon which the Company and Cisco
agree, in which case this Waiver Agreement will be of no force and
effect.
D. This Waiver Agreement is for the benefit of the Company, Cisco, InteCom,
Lagardere SCA, and their respective affiliates.
E. Capitalized words and terms used herein and not defined shall have the
meanings ascribed to them in the Disclosure Statement.
Dated: October 13, 1998
Name:
------------------------------------
Waiver Agreement
2
<PAGE> 7
SCHEDULE A
Employee's Name:
-----------------------
<TABLE>
<CAPTION>
Date(s) on which the Company
granted Options to the Number of Options Granted on Exercise
Employee under the Plan Each Date Price
---------------------------- ---------------------------- --------
<S> <C> <C>
</TABLE>
Waiver Agreement
1
<PAGE> 8
EXHIBIT B
ELECTION NOT TO PARTICIPATE AND
AGREEMENT TO SELL
I, ____________________________ (the "Employee"), hereby represent and
warrant to Selsius Systems Inc. (the "Company") and its affiliates that:
1. I am a participant in the Selsius Systems Inc. 1997 Stock Incentive Plan
(the "Plan").
2. I have been given the opportunity to review the Plan and been provided
with a copy of the award and terms and conditions pursuant to which the Company
granted options to me under said Plan (the "Award").
3. The number of options that I now hold (the "Options") and each date upon
which the Company granted such Options to me are set forth on Schedule A hereto.
4. The Company has informed me that Cisco Systems Inc. ("Cisco") desires to
acquire all of the Company's capital stock from the holders thereof.
5. I have received and have read the Selsius Systems Inc. Disclosure
Statement to Holders of Options Granted under the Plan, dated October 13, 1998
(the "Disclosure Statement") and have either discussed the same with my counsel
or determined not to do so.
6. In entering into this Election Not to Participate and Agreement to Sell,
I have relied solely upon the Disclosure Statement and have not relied upon any
oral statements made to me by any Employee of the Company or affiliate of the
Company.
7. 1 have the capacity to enter into this Agreement and to perform my
obligations hereunder.
8. Words and terms used herein and not defined shall have the meanings
ascribed to them in the Disclosure Statement.
Agreements
In consideration of the acceleration of all of my outstanding Options:
A. I hereby exercise my Options in accordance with the Award and the Plan
immediately prior to the Closing Date.
B. I hereby agree to sell the shares of Common Stock issued upon exercise
of the Options to Cisco on the Closing Date. Cisco's obligations to
purchase the shares are subject to the conditions set forth in Article
VI of the Stock Purchase Agreement.
C. I agree to sell to Cisco, on the Closing Date, the shares of Common
Stock that I receive upon exercise of my Options for a price equal to
(a) $140,000,000 divided by (b) the sum of the number of shares of Stock
outstanding on the Closing Date plus the number of shares of
Election Not to Participate 1
<PAGE> 9
Common Stock underlying the Employee Options outstanding on the Closing
and held by Continuing Employees.
D. At the Closing, upon delivery of the certificates representing the
shares issued upon exercise of the Options, Cisco will acquire good and
marketable title to the shares, free and clear of any lien, pledge,
claim, charge, restriction or other encumbrance and with no title
defect, and will be entitled to all the rights of a holder of such
shares.
E. This Election Not to Participate and Agreement to Sell will be
irrevocable when executed by me and delivered to the Company unless the
Closing does not occur prior to December 15, 1998 or such later date
upon which the Company and Cisco agree. Thereafter this Election Not to
Participate and Agreement to Sell will be of no force and effect.
F. This Election Not to Participate and Agreement to Sell is for the
benefit of the Company, Cisco, InteCom, Lagardere SCA, and their
respective affiliates.
G. Capitalized words and terms used herein and not defined shall have the
meanings ascribed to them in the Disclosure Statement.
Dated: October , 1998
Name:
------------------------------
Election Not to Participate 2
<PAGE> 10
SCHEDULE A
Employee's Name:
-----------------------
<TABLE>
<CAPTION>
Date(s) on which the Company
granted Options to the Number of Options Granted on Exercise
Employee under the Plan Each Date Price
---------------------------- ---------------------------- --------
<S> <C> <C>
</TABLE>
Election Not to Participate
<PAGE> 1
EXHIBIT 99.9
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
SELSIUS SYSTEMS INC.
1997 STOCK INCENTIVE PLAN
OPTIONEE: [Optionee]
This STOCK OPTION ASSUMPTION AGREEMENT is effective as of the
20th day of November, 1998 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 Selsius
Systems Inc., a Delaware corporation ("Selsius"), which were granted to Optionee
under the 1997 Stock Incentive Plan (the "Plan"), which is evidenced by the
following agreements between Selsius and Optionee: (i) a Stock Option Award (the
"Option Award"), (ii) the Terms and Conditions to the Stock Option Award, and
(iii) the Disclosure Statement and Waiver Letter (collectively, the
"Waiver").dated October 13, 1998, amending the Option Award (and the Plan, as
incorporated into the Option Award). The Option Award, including the
incorporated provisions of the relevant Plan as amended by the Waiver, shall be
referred to in this document as the "Amended Option Agreement."
WHEREAS, Selsius has on November 20, 1998 been acquired by Cisco
through Cisco's purchase of one hundred percent (100%) of Selsius' capital stock
from InteCom Inc., a Delaware corporation, and certain individuals (the
"Transaction") pursuant to the Stock Purchase Agreement dated October 13, 1998,
by and among Cisco, InteCom Inc. and Selsius (the "Stock Purchase Agreement").
WHEREAS, the provisions of the Stock Purchase Agreement require
Cisco to assume all obligations of Selsius under all outstanding options under
the Plans at the consummation of the Transaction 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 Stock Purchase
Agreement, the exchange ratio (the "Exchange Ratio") in effect for the
Transaction is 2.37438777 of a share of Cisco common stock ("Cisco Stock") for
each outstanding share of Selsius common stock ("Selsius Stock").
WHEREAS, this Agreement is effective immediately upon the
consummation of the Transaction (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plans which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Transaction.
1.
<PAGE> 2
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Selsius Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "Selsius 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 Selsius under each of the Selsius Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each Selsius
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 Selsius Option hereby assumed shall be as specified
for that option in attached Exhibit A, and the adjusted exercise price payable
per share of Cisco Stock under the assumed Selsius Option shall also be as
indicated for that option in attached Exhibit A.
2. The intent of the foregoing adjustments to each assumed
Selsius 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 Transaction, approximate the spread
which existed, immediately prior to the Transaction, between the then aggregate
fair market value of the Selsius Stock subject to the Selsius Option and the
aggregate exercise price in effect at such time under the Amended Option
Agreement. Such adjustments are also designed to preserve, immediately after the
Transaction, on a per share basis, the same ratio of exercise price per option
share to fair market value per share which existed under the Selsius Option
immediately prior to the Transaction.
3. The following provisions shall govern each Selsius Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all references in
each Amended Option Agreement and in the Plan (as incorporated into such
Amended Option Agreement) (i) to the "Company" or "Selsius" shall mean
Cisco, (ii) "Shares" or "Option Shares" shall mean shares of Cisco
Stock, (iii) to the "Board of Directors" or the "Board" shall mean the
Board of Directors of Cisco and (iv) 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
Selsius Option and all other provisions which govern either the exercise
or the termination of the assumed Selsius Option shall remain the same
as set forth in the Amended Option Agreement applicable to that option,
and the provisions of the Amended Option Agreement shall accordingly
govern and control Optionee's rights under this Agreement to purchase
Cisco Stock.
(c) Pursuant to the terms of the Amended Option Agreement, the
assumed Selsius option shall NOT vest and become fully exercisable on an
accelerated basis upon the consummation of the Transaction. Each assumed
Selsius Option shall therefore remain exercisable in accordance with the
same installment exercise schedule in effect under the applicable
Amended Option Agreement immediately prior to the Effective Time, with
shares of Cisco stock subject to each installment adjusted to reflect
the Exchange Ratio. Each Selsius Option shall be assumed by Cisco as of
the Effective Time.
2.
<PAGE> 3
(d) Pursuant to the terms of the Amended Option Agreement,
following the Transaction, each assumed Selsius Option that had not
previously vested will automatically vest in full and become immediately
exercisable upon termination of the Optionee's employment with Cisco
Without Cause (as the term "Without Cause" is defined in the Amended
Option Agreement) within one (1) year of the Effective Date.
(e) For purposes of applying any and all provisions of the
Amended Option Agreement and the relevant Plan relating to Optionee's
right to continued service with Selsius, Optionee shall be deemed to
continue in such status for so long as Optionee renders services to
Cisco or any present or future Cisco subsidiary. Accordingly, the
provisions of the Amended Option Agreement governing the termination of
the assumed Selsius Options upon Optionee's cessation of service to
Selsius shall hereafter be applied on the basis of Optionee's cessation
of service to Cisco and its subsidiaries, and each assumed Selsius
Option shall accordingly terminate, within the designated time period in
effect under the Amended Option Agreement for that option, following
such cessation of service to Cisco and its subsidiaries. Accordingly,
the Optionee must exercise their assumed Selsius Option within thirty
(30) days following the termination of their employment with Cisco
without Cause (as defined in (d)).
(f) The adjusted exercise price payable for the Cisco Stock
subject to each assumed Selsius Option shall be payable in any of the
forms authorized under the Amended 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 Selsius Stock prior to the
Transaction shall be taken into account.
(g) In order to exercise each assumed Selsius 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.
255 West Tasman Drive, Building J
San Jose, CA 95134
Attention: Option Plan Administrator
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Amended Option
Agreement as in effect immediately prior to the Transaction shall continue in
full force and effect and shall not in any way be amended, revised or otherwise
affected by this Stock Option Assumption Agreement.
3.
<PAGE> 4
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 16 day of December, 1998.
CISCO SYSTEMS, INC.
By:
--------------------------------------
Larry R. Carter
Corporate Secretary
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 Selsius Options hereby assumed by Cisco are as set
forth in the Amended Option Agreement, the Plan and such Stock Option Assumption
Agreement.
-----------------------------------------
[Optionee], OPTIONEE
DATED: __________________, 1998
4.
<PAGE> 5
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of Selsius Systems Inc.
Common Stock (Pre-Transaction)
and
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Transaction)
