<PAGE> 1
As filed with the Securities and Exchange Commission on April ___, 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 issuer as specified in its charter)
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
-----------------
NETSPEED, INC.
1996 STOCK OPTION PLAN
(Full title of the plan)
-----------------
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
---------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Netspeed, Inc.
1996 Stock Option Plan
Common Stock 513,401 $19.38 $9,949,711.38 $2,935.16
==============================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Netspeed, Inc. 1996 Stock
Option Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of
the Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
Cisco Systems, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended July 26, 1997 filed with the Commission on October 22, 1997,
pursuant to Section 13 of the Securities Exchange Act of 1934 (the
"1934 Act").
(b) The Registrant's Quarterly Reports on Forms 10-Q for the fiscal
quarters ended October 25, 1997 and January 24, 1998, filed with
the Commission on December 9, 1997, and March 9, 1998,
respectively.
(c) The Registrant's current reports on Forms 8-K filed with the
Commission on August 22, 1997, September 9, 1997, February 11,
1998, and April 29, 1998.
(d) The Registrant's Registration Statement No. 0-18225 on Form 8-A
filed with the Commission on January 11, 1990, together with
Amendment No. 1 on Form 8-A filed with the Commission on February
15, 1990, in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
II-2.
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended and
Restated Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4.0 Instruments Defining Rights of Shareholders. Reference is made to Registrant's Registration
Statement No. 0-18225 on Form 8-A, including the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(d).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-5 of this Registration Statement.
99.1 Netspeed 1996 Stock Option Plan.
99.2 Form of Stock Option Agreement in connection with the Netspeed 1996 Stock Option Plan.
99.3 Form of acceleration waiver letter.
99.4 Form of 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 the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
into the Registration Statement; (2) that for the purpose of determining any
liability under the 1933 Act each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the Netspeed, Inc. 1996 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into the Registration Statement shall be deemed to be
a new Registration Statement relating
II-3.
<PAGE> 4
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-4.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Jose,
State of California, on this 28th day of April, 1998.
CISCO SYSTEMS, INC.
By /s/ JOHN T. CHAMBERS
-------------------------------------
John T. Chambers
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John T. Chambers and Larry R. Carter and each of them
acting individually, as such person's true and lawful attorneys-in-fact and
agents, each with full power of substitution, for such person, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitutes, may do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ JOHN T. CHAMBERS President, Chief Executive April 28, 1998
- ------------------------------ Officer and Director (Principal
John T. Chambers Executive Officer)
/s/ LARRY R. CARTER Senior Vice President, Finance and April 28, 1998
- ------------------------------ Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ JOHN P. MORGRIDGE Chairman of the Board April 28, 1998
- ------------------------------ and Director
John P. Morgridge
</TABLE>
II-5.
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ DONALD T. VALENTINE Director April 28, 1998
- ------------------------------
Donald T. Valentine
/s/ JAMES F. GIBBONS Director April 28, 1998
- ------------------------------
James F. Gibbons
/s/ ROBERT L. PUETTE Director April 28, 1998
- ------------------------------
Robert L. Puette
/s/ MASAYOSHI SON Director April 28, 1998
- ------------------------------
Masayoshi Son
/s/ STEVEN M. WEST Director April 28, 1998
- ------------------------------
Steven M. West
/s/ EDWARD KOZEL Director April 28, 1998
- ------------------------------
Edward Kozel
/s/ CAROL BARTZ Director April 28, 1998
- ------------------------------
Carol Bartz
/s/ MARY CIRILLO Director April 28, 1998
- ------------------------------
Mary Cirillo
/s/ JAMES C. MORGAN Director April 28, 1998
- ------------------------------
James C. Morgan
</TABLE>
II-6.
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4.0 Instruments Defining Rights of Shareholders. Reference is made to Registrant's Registration
Statement No. 0-18225 on Form 8-A, including the exhibits thereto, which are incorporated
herein by reference pursuant to Item 3(d).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-5 of this Registration Statement.
99.1 Netspeed, Inc. 1996 Stock Option Plan.
99.2 Form of Stock Option Agreement in connection with the Netspeed, Inc. 1996 Stock Option Plan.
99.3 Form of Acceleration Waiver Letter.
99.4 Form of Option Assumption Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 5
April 28, 1998
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 513,401 shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, of 513,401 shares of the common
stock ("Common Stock") of Cisco Systems, Inc. (the "Company") issuable under the
Netspeed, Inc. 1996 Stock Option Plan (the "Plan") as assumed by the Company. We
advise you that, in our opinion, when such shares have been issued and sold
pursuant to the applicable provisions of the Plan and in accordance with the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS - COOPERS & LYBRAND L.L.P.
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Cisco Systems, Inc. for the registration of 513,401 common shares
pursuant to the acquisition of Netspeed, Inc., of our reports dated August 4,
1997, on our audits of the consolidated financial statements and financial
statement schedule of Cisco Systems, Inc. as of July 26, 1997 and July 28, 1996,
and for the years ended July 26, 1997, July 28, 1996 and July 30, 1995 which
reports are included in the Company's 1997 Annual Report on Form 10-K, filed
with the Securities and Exchange Commission.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Jose, California
April 24, 1998
<PAGE> 1
EXHIBIT 99.1
NETSPEED, INC.
1996 STOCK OPTION PLAN
1. Purpose. The NetSpeed, Inc. 1996 Stock Option Plan (the "Plan")
is intended to advance the interests of NetSpeed, Inc., a Texas corporation (the
"Company"), and its shareholders, by encouraging and enabling selected officers,
directors and employees, upon whose judgment, initiative and effort the Company
is largely dependent for the successful conduct of its business, to acquire and
retain a proprietary interest in the Company by ownership of its stock. It is
intended that options which may qualify for treatment as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended, and
applicable regulations and rulings promulgated thereunder (collectively the
"Code"), as well as options which may not so qualify, may be granted under the
Plan.
2. Definitions.
(a) "Change of Control" means the occurrence of any of the
following events, as a result of one transaction or a series of transactions:
(i) any "person" (as that term is used in Sections 13(d)
and 14(d) of the Exchange Act (as defined below), but excluding the
Company, its affiliates and any qualified or non-qualified plan
maintained by the Company or its affiliates) becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under such Act),
directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company's then
outstanding securities;
(ii) individuals who constitute a majority of the Board
of Directors of the Company immediately prior to a contested
election for positions on the Board cease to constitute a majority
as a result of such contested election;
(iii) the Company is combined (by merger, share
exchange, consolidation, or otherwise) with another corporation and
as a result of such combination, less than 50% of the outstanding
securities of the surviving or resulting corporation are owned in
the aggregate by the former shareholders of the Company;
(iv) the Company sells, leases, or otherwise transfers
all or substantially all of its properties or assets to another
person or entity; or
(v) a dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the
Company.
<PAGE> 2
(b) "Committee" means a Committee of the Board of Directors of
the Company to whom the Board's authority has been delegated in accordance with
Section 3 of this Plan.
(c) "Common Stock" means the Company's Common Stock, $.01 par
value per share.
(d) "Date of Grant" means the date on which an Option is
granted under the Plan, which will be the date the Committee authorizes the
Option unless the Committee specifies a later date.
(e) "Date of Exercise" means the date on which an Option is
validly exercised pursuant to the Plan.
(f) "Disability" means any medically determinable physical or
mental impairment that, in the opinion of the Committee, based upon medical
reports and other evidence satisfactory to the Committee, can reasonably be
expected to prevent an Optionee from performing substantially all of the
Optionee's customary duties of employment for a continuous period of not less
than 12 months so as to be disabled within the meaning of Section 22(a)(3) of
the Code.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) "Fair Market Value" of the Company's Common Stock means
the closing sale price (or the average of the quoted closing bid and asked
prices if there is no closing sale price reported) on the last market trading
day prior to the date of determination as reported by the principal national
stock exchange on which the Common Stock is then listed. If there is no reported
price information for the Common Stock, the Fair Market Value will be determined
by the Committee, in its sole discretion. In making such determination, the
Committee may, but shall not be obligated to, commission and rely upon an
independent appraisal of the Common Stock.
(i) "Incentive Stock Option" means an option that qualifies as
an incentive stock option under all of the requirements of the Code.
(j) "Incentive Stock Option Agreement" means the agreement
between the Company and the Optionee, in such form as may from time to time be
adopted by the Committee, under which the Optionee may purchase Common Stock
pursuant to the terms of an Incentive Stock Option granted under the Plan.
(k) "Non-Qualified Stock Option" means an option to purchase
Common Stock granted pursuant to the provisions of the Plan that does not
qualify as an Incentive Stock Option.
2.
<PAGE> 3
(l) "Non-Qualified Stock Option Agreement" means the agreement
between the Company and the Optionee, in such form as may from time to time be
adopted by the Committee, under which the Optionee may purchase Common Stock
pursuant to the terms of a Non-Qualified Stock Option granted under the Plan.
(m) "Option" means an option granted under the Plan.
(n) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(o) "Retirement" shall mean the termination of an Optionee's
employment in accordance with the requirements of a written retirement plan,
policy or rule of the Company which has been duly adopted by the Board of
Directors of the Company.
(p) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, as (and to the extent) such rule, or any successor thereto, may
from time to time be in effect and including all interpretations thereunder.
(q) "Subsidiary" or "Subsidiaries" means a subsidiary
corporation or corporations of the Company as defined in Section 424(f) of the
Code.
(r) "Successor" means the legal representative of the estate
of a deceased Optionee or the person or persons who acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of an
Optionee.
3. Administration and Interpretation of Plan. The Plan shall be
administered by a Committee designated by the Board of Directors which shall
consist entirely of "disinterested persons" in accordance with the provisions of
Rule 16b-3. A "disinterested person" shall mean a person who has not at any time
within one year prior to the service as a member of the Committee (or during
such service) been granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company or any Subsidiary.
Notwithstanding the foregoing, a member of the Committee shall not fail to be a
"disinterested person" merely because he or she participates in a plan meeting
the requirements of Rule 16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange
Act. The Committee shall have full and final authority in its discretion,
subject to the provisions of the Plan: (i) to determine the individuals to whom,
and the time or times at which, Options shall be granted and the number of
shares of Common Stock covered by each Option; (ii) to construe and interpret
the Plan; and (iii) to make all other determinations and take all other actions
deemed necessary or advisable for the proper administration of the Plan. All
such actions and determinations by the Committee shall be final and conclusively
binding for all purposes and upon all persons.
3.
<PAGE> 4
4. Common Stock Subject to Options. The aggregate number of shares
of the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed one million (1,000,000) shares of Common
Stock, subject to adjustment as set forth in Section 8 of this Plan. The shares
of Common Stock to be issued upon the exercise of Options may be authorized but
unissued shares, shares issued and reacquired by the Company or shares bought on
the open market for the purposes of the Plan. In the event any Option shall, for
any reason, terminate or expire or be canceled or surrendered without having
been exercised in full, the shares subject to such Option, but not purchased
thereunder, shall again be available for Options to be granted under the Plan.
5. Participant. Incentive Stock Options may be granted under the
Plan to any person who is an officer or other key employee (including officers
and employees who are also directors) of the Company or any of its Subsidiaries.
Non-Qualified Options may be granted under the Plan to any person who is an
officer, key employee, director or consultant of the Company; provided, however,
that no member of any Committee administering this Plan shall be eligible to be
granted an option hereunder except under circumstances that may be permitted
under Rule 16b-3 without adversely affecting any requirement of such rule that
this Plan be administered by disinterested persons.
6. Terms and Conditions of Options. Any Option granted under the
Plan shall be evidenced by either an Incentive Stock Option Agreement or a
Non-Qualified Stock Option Agreement executed by the Company and the Optionee.
Such agreement shall be subject to the following limitations and conditions:
(a) Option Price. The option price per share with respect to
each Option shall be determined by the Committee but in no instance shall the
option price for an Option which is intended to qualify as an Incentive Stock
Option be less than 100% of the Fair Market Value of a share of the Common Stock
on the Date of Grant.
(b) Payment of Option Price. Full payment for shares purchased
upon exercising an Option shall be made in cash or by check, or by delivery of
previously owned shares of Common Stock, or partly in cash or by check and
partly in such Common Stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the Fair Market Value
of such shares on the Date of Exercise of the Option. Any shares of Common Stock
to be used as payment must, if originally acquired from the Company pursuant to
the exercise of an Incentive Stock Option, have been held for at least two years
after the Date of Grant and one year after the Date of Exercise.
(c) Term of Option. The expiration date of each Incentive
Stock Option and each Non-Qualified Option shall not be more than ten (10) years
from the Date of Grant.
4.
<PAGE> 5
(d) Vesting of Shareholder Rights. Neither an Optionee nor his
Successor shall have any of the rights of a shareholder of the Company until the
certificate or certificates evidencing the shares purchased pursuant to the
exercise of an Option are properly delivered to such Optionee or his Successor.
(e) Exercise of an Option. Each Option shall be exercisable at
any time, and from time to time, and in no particular order if the Optionee
holds more than one Option, throughout a period commencing on or after the Date
of Grant, as specified by the Committee and reflected in the Incentive Stock
Option Agreement or Non-Qualified Stock Option Agreement, as the case may be,
and ending upon the earliest of the expiration, cancellation, surrender or
termination of the Option; provided, however, that no Option shall be
exercisable in whole or in part prior to the date of shareholder approval of the
Plan. Furthermore, the exercise of each Option shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration or qualification of any share otherwise deliverable upon
such exercise upon any securities exchange or under any state or federal law, or
that the report to, or consent or approval of any regulatory body, is necessary
or desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
(f) Company Loans. The Company may make stock purchase loans
in connection with Option exercises upon the following terms and conditions:
(i) Upon the exercise by an Optionee of his Option, or
any part thereof, and the Optionee's request for a loan pursuant hereto, the
Company, upon approval by the Committee, may loan said Optionee, for the sole
purpose of purchasing Common Stock from the Company pursuant to the exercise of
such Option, an amount up to the exercise price of the Option; provided,
however, that the Optionee shall execute concurrently a promissory note in form
satisfactory to the Committee for such amount payable to the order of the
Company;
(ii) The Company shall have no obligation to make any
loan to any Optionee at any time;
(iii) The promissory note referenced above shall provide
for interest to be payable upon the outstanding principal balance thereof at
such rate and times as the Committee may determine. Interest shall be payable at
least annually and shall be charged at the minimum rate necessary to avoid the
treatment as interest under any applicable provision of the Code, of any amounts
other than amounts stated to be interest under such note. Such note shall also
provide that the Committee may require the Optionee to secure the payment
thereof at any time with collateral deemed adequate by the Committee in its sole
discretion. Such note shall mature, and all outstanding principal and interest
shall become immediately due and payable in installments or in
5.
<PAGE> 6
lump sum at such time or times as the Committee shall provide. The note will
provide for prepayment of principal and accrued interest in whole or in part
from time to time without premium or penalty and may be extended or modified,
from time to time, at the Committee's discretion. The note shall provide for
acceleration of maturity by the Company upon the happening of any events
determined appropriate by the Committee, including, without limitation, any of
the following events:
(1) failure of the Optionee to pay or perform any
term or provision thereof;
(2) termination of the Optionee's employment with
the Company or a Subsidiary for any reason, whether voluntary or
involuntary, except Retirement, Disability or death;
(3) if the Optionee shall execute an assignment
for the benefit of creditors, or admit in writing his inability to
pay his debts generally as they become due, or voluntarily seek the
benefit of, or have a petition filed against him seeking the benefit
of, a judgment, order or decree filed against him pursuant to any
bankruptcy, insolvency, reorganization, or similar debtor relief law
affecting the rights of creditors generally;
(4) failure of the Optionee to have discharged
within a period of thirty (30) days after the commencement thereof
any attachment, sequestration or similar proceeding against any of
the assets of the Optionee;
(5) failure of the Optionee to pay any money
judgment against him at least thirty (30) days prior to the date on
which any of his assets may be lawfully sold to satisfy such
judgment;
(6) failure or refusal of the Optionee to comply
with any of the terms and conditions of his stock option agreement
or any other oral or written agreement with the Company;
(7) failure or refusal of the Optionee to provide
adequate security for payment of the promissory note immediately
upon request for collateral by the Committee; or
(8) the divorce of the Optionee, unless
arrangement satisfactory to the Committee are agreed to prior to the
entry of the divorce decree.
(g) Nontransferability of Option. No Option shall be
transferable or assignable by an Optionee, voluntarily or by operation of law,
other than by will or the laws of descent and distribution. Each Option shall be
exercisable, during the Optionee's lifetime, only by
6.
<PAGE> 7
him. No Option or the shares covered thereby shall be pledged or hypothecated in
any way and no Option or the shares covered thereby shall be subject to
execution, attachment or similar process.
(h) Termination of Employment. Upon termination of an
Optionee's employment with the Company or with any of its Subsidiaries for any
reason other than death or Disability, any and all outstanding Options of such
Optionee shall expire, and shall not be exercisable with respect to any vested
portion as to which such Options have not been exercised on a date thirty days
after such date of termination. Any and all Outstanding Options shall be null
and void, and shall not be exercisable with respect to any unvested portion of
such Options immediately upon the termination of the Optionee's employment with
the Company for any reason, including death or Disability. The right of the
Optionee to receive any benefits from the Company or any of its Subsidiaries
after termination of employment with the Company or any of its Subsidiaries by
reason of employment contract, severance arrangement or otherwise shall not
affect the determination that an Optionee's employment has been terminated with
the Company or any of its Subsidiaries for purposes of the Plan. Neither the
adoption of this Plan nor the grant of an Option to an eligible person shall
alter in any way the Company's or the relevant Subsidiary's rights to terminate
such person's employment or directorship at any time with or without cause nor
does it confer upon such person any rights or privileges to continued
employment, or any other rights and privileges, except as specifically provided
in the Plan.
(i) Disability or Death of Optionee. If an Optionee dies or
suffers a Disability while in the employ of the Company, but prior to
termination of his right to exercise an Option in accordance with the provisions
of his stock option agreement, without having totally exercised the Option, the
Option may be exercised, to the extent of the shares with respect to which the
Option could have been exercised by the Optionee on the date of the Optionee's
death or Disability, by (i) the Optionee's estate or by the person who acquired
the right to exercise the Option by bequest or inheritance or by reason of the
death of the Optionee in the event of the Optionee's death, or (ii) the Optionee
or his personal representative in the event of the Optionee's Disability,
provided the Option is exercised prior to the date of its expiration or not more
than one year from the date of the Optionee's death or Disability, whichever
first occurs. The date of Disability of an Optionee shall be determined by the
Company.
(j) Ten Percent Shareholders. Notwithstanding anything herein
to the contrary, an Option which is intended to qualify as an Incentive Stock
Option shall be granted hereunder to any Optionee who, immediately before such
Option is granted, beneficially owns, directly or indirectly, more than 10% of
the total combined voting power of all classes of stock of the Company only if
both of the following conditions are met:
(i) The option price per share shall be no less than
110% of the Fair Market Value of a share of Common Stock on the Date of Grant,
and
7.
<PAGE> 8
(ii) The expiration date of the Option shall be not more
than five (5) years from the Date of Grant.
(k) Other Terms. Each Incentive Stock Option Agreement or
NonQualified Stock Option Agreement, as the case may be, may contain such other
provisions (not inconsistent herewith) as the Committee in its discretion may
determine, including, without limitation:
(i) any provision which shall condition the exercise of
all or part of an Option upon such matters as the Committee may deem appropriate
(if any) such as the passage of time, or the attainment of certain performance
goals, appropriate to reflect the contribution of the Optionee to the
performance of the Company;
(ii) any provision which would give the Committee the
discretionary authority to accelerate the exercisability of an Option in spite
of any provision contained in an Option pursuant to clause (i) above, under such
circumstances as the Committee may deem appropriate; and
(iii) the manner in which an Option is to be exercised.
7. Allotment of Shares. The grant of an Option shall not be deemed
either to entitle the Optionee to, or disqualify the Optionee from,
participation in any other grant of options under this Plan or any other stock
option plan of the Company. The number of shares allotted to each Optionee shall
be determined by the Committee, in its discretion; provided that the aggregate
Fair Market Value (determined as of the time the option is granted) of the
Common Stock with respect to which Options which are intended to qualify as
Incentive Stock Options are exercisable for the first time by such Optionee
during any calendar year (under all such plans of the Optionee's employer
corporation and its parent and subsidiary corporations) shall not exceed
$100,000.
8. Adjustments. In the event that the number of outstanding shares
of Common Stock is changed by reason of a stock dividend, stock split,
recapitalization or combination of shares, the number of shares of Common Stock
subject to the Plan and to Options granted pursuant to the Plan shall be
proportionately adjusted.
9. Change of Control. In the event of a Change in Control of the
Company, all outstanding stock options shall immediately vest and become
immediately exercisable effective the date immediately prior to a Change of
Control for a period of three months after such Change of Control.
10. Designation of Incentive Stock Options. The Committee shall
cause each Option granted hereunder to be clearly designated in the agreement
evidencing such Option, at the time of grant, as to whether or not it is
intended to qualify as an Incentive Stock Option.
8.
<PAGE> 9
11. Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or an Optionee
may change, at any time and from time to time, by written notice to the other,
the address which it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee shall
specify as its and his address for receiving notices the address set forth in
the option agreement pertaining to the shares to which such notice relate.
12. Amendment or Discontinuance. The Plan and any Option outstanding
hereunder may be amended or discontinued by the Committee without the approval
of the shareholders of the Company, except that the Committee may not, except as
expressly provided in the Plan, increase the aggregate number of shares which
may be issued under Options granted pursuant to the Plan, materially amend the
eligibility requirements of the Plan or materially increase the benefits which
may accrue to participants under the Plan, without such approval (if any) as may
be required pursuant to the provisions of Rule 16b-3, or applicable law
(including the Code) or the requirements of any national stock exchange upon
which the Company's Common Stock is traded.
13. Effect of the Plan. Neither the adoption of this Plan nor any
action of the Committee shall be deemed to give any officer or employee any
right to be granted an option to purchase Common Stock of the Company or any of
its Subsidiaries, or any other rights except as may be evidenced by a stock
option agreement, or any amendment thereto, duly authorized by the Committee and
executed on behalf of the Company and then only to the extent and on the terms
and conditions expressly set forth therein.
14. Grant of Incentive Stock Options. No Incentive Stock Options
shall be granted pursuant to this Plan after the expiration of ten (10) years
from the date of the earlier of: (i) the date the Plan is adopted, or (ii) the
date the Plan is approved by the shareholders of the Company.
15. Shares Not Transferable. As a condition to the transfer of the
shares of Common Stock issued under this Plan, the Company may require an
opinion of counsel, satisfactory to the Company, to the effect that such
transfer will not be in violation of the Securities Act of 1933, as amended, or
any other applicable securities laws or that such transfer has been registered
under federal and all applicable state securities laws. Further, the Company
shall be authorized to refrain from delivering or transferring shares of Common
Stock issued under this Plan until the Committee has determined that the
Optionee has tendered to the Company any federal, state or local tax owed by the
Optionee as a result of exercising the Option or disposing of any Common Stock,
when the
9.
<PAGE> 10
Company has a legal liability to satisfy such tax. The Company shall not be
liable to any party for damages due to a delay in the delivery or issuance of
any stock certificate for any reason whatsoever.
16. Reservation of Shares. During the term of the Plan, the Company
will at all times reserve and keep available, and will seek or obtain from any
regulatory body having jurisdiction any requisite authority in order to issue
and sell such number of shares of Common Stock as shall be sufficient to satisfy
the requirements of the Plan. The inability of the Company to obtain the
authority from any regulatory body having jurisdiction which is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any shares
of Common Stock hereunder shall relieve the Company of any liability in respect
of the nonissuance or sale of such Common Stock as to which such requisite
authority shall not have been obtained.
17. Approval of Plan. The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the outstanding capital stock
of the Company entitled to vote and will be submitted for approval to the
shareholders of the Company. Any amendments to the Plan which require
shareholder approval shall be by the affirmative vote of the holders of a
majority of the outstanding capital stock of the Company entitled to vote. No
options granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company as specified above.
18. Conformity with the Code. The Incentive Stock Options authorized
pursuant to the Plan are intended to satisfy all requirements for the Incentive
Stock Options under the Code and, notwithstanding any provision of the Plan or
any Incentive Stock Option Agreement, the Plan and all Incentive Stock Options
granted pursuant hereto shall be so construed and all contrary provisions shall
be so limited in scope and effect and to the extent they cannot be so limited,
they shall be void.
19. Liability of the Company. Neither the Company, its directors,
officers or employees, nor any Subsidiary which is in existence or hereafter
comes into existence, shall be liable to any Optionee or other person if it is
determined for any reason by the Internal Revenue Service or any court having
jurisdiction that any incentive stock option granted hereunder does not qualify
for tax treatment as an incentive stock option under Section 422 of the Code.
20. GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
21. Severability of Provisions. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
10.
<PAGE> 1
EXHIBIT 99.2
NETSPEED, INC.
STOCK OPTION AGREEMENT
[Form of Non-Qualified Stock Option]
THIS AGREEMENT (this "Agreement"), effective as of _____________,
1997, is made and entered into by and between NetSpeed, Inc., a Texas Company
(the "Company"), and ____________ (the "Optionee").
WITNESSETH:
WHEREAS, the Company has implemented the NetSpeed, Inc. 1996 Stock
Option Plan (the "Plan"), which was adopted by the Company's Board of Directors
(the "Board") and approved by the Company's shareholders, and which provides for
the grant of stock options to certain selected officers, directors and key
employees of the Company or its subsidiaries with respect to shares of Common
Stock, $.01 par value, of the Company (the "Common Stock");
WHEREAS, the committee appointed by the Board to administer the Plan
(the "Committee") has selected the Optionee to participate in the Plan and has
awarded the non-qualified stock option described in this Agreement (the
"Option") to the Optionee;
WHEREAS, the stock options provided for under the Plan are intended
to comply with the requirements of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended; and
WHEREAS, the parties hereto desire to evidence in writing the terms
and conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the Optionee
to continue as an employee of the Company or its subsidiaries and to promote the
success of the business of the Company and its subsidiaries, the parties hereby
agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, upon
the terms and subject to the conditions, limitations and restrictions set forth
in the Plan and in this Agreement, the Option to acquire ________ shares of
Common Stock, at an exercise price per share of $_____, effective as of the date
of this Agreement (the "Date of Grant"). The Optionee hereby accepts the Option
from the Company.
2. Vesting. Except as otherwise provided for by the Plan, the shares
of Common Stock subject to the Option shall vest ratably in __________ equal
annual increments commencing on the first anniversary of the Date of Grant.
<PAGE> 2
3. Exercise. In order to exercise the Option with respect to any
vested portion, the Optionee shall provide written notice to the Company at its
principal executive office. At the time of exercise, the Optionee shall pay to
the Company the exercise price per share set forth in Section 1 times the number
of vested shares as to which the Option is being exercised. The Optionee shall
make such payment in cash, check or at the Company's option, by the delivery of
shares of Common Stock having a Fair Market Value (as defined in the Plan) on
the date immediately preceding the exercise date equal to the aggregate exercise
price. If the Option is exercised in full, the Optionee shall surrender this
Agreement to the Company for cancellation. If the Option is exercised in part,
the Optionee shall surrender this Agreement to the Company so that the Company
may make appropriate notation hereon or cancel this Agreement and issue a new
agreement representing the unexercised portion of the Option.
4. Who May Exercise. The Option shall be exercisable only by the
Optionee except in the case of death or Disability (as defined in the Plan). To
the extent exercisable after the Optionee's death or Disability, the Option
shall be exercised only by the Optionee's representatives, executors, successors
or beneficiaries.
5. Expiration of Option. The Option shall expire, and shall not be
exercisable with respect to any vested portion as to which the Option has not
been exercised, on the first to occur of: (a) the _________ anniversary of the
Date of Grant; (b) thirty days after the date of termination of the Optionee's
employment with the Company for any reason other than death or Disability; or
(c) one year after any termination of the Optionee's employment with the Company
if such termination is due to the death or Disability of the Optionee. The
Option shall expire, and shall not be exercisable, with respect to any unvested
portion, immediately upon the termination of the Optionee's employment with the
Company for any reason, including death or Disability. The right of the Optionee
to receive any benefits from the Company after termination of employment with
the Company by reason of employment contract, severance arrangement or otherwise
shall not affect the determination that the Optionee's employment has been
terminated with the Company for purposes of this Agreement.
6. Tax Withholding. Any provision of this Agreement to the contrary
notwithstanding, the Company may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the shares of Common Stock
subject hereto.
7. Transfer of Option. The Optionee shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") any
unvested portion of the Option or the rights and privileges pertaining thereto.
In addition, the Optionee shall not, directly or indirectly, Transfer any vested
portion of the Option other than by will or the laws of descent and
distribution. Any permitted transferee to whom the Optionee shall Transfer the
Option shall agree to be bound by this Agreement. Neither the Option nor the
underlying shares of Common Stock is liable for or
2.
<PAGE> 3
subject to, in whole or in part, the debts, contracts, liabilities or torts of
the Optionee, nor shall they be subject to garnishment, attachment, execution,
levy or other legal or equitable process.
8. Certain Legal Restrictions. The Company shall not be obligated to
sell or issue any shares of Common Stock upon the exercise of the Option or
otherwise unless the issuance and delivery of such shares shall comply with all
relevant provisions of law and other legal requirements including, without
limitation, any applicable federal or state securities laws and the requirements
of any stock exchange upon which shares of the Common Stock may then be listed.
As a condition to the exercise of the Option or the sale by the Company of any
additional shares of Common Stock to the Optionee, the Company may require the
Optionee to make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration requirements of
applicable federal or state securities laws. The Company shall not be liable for
refusing to sell or issue any shares if the Company cannot obtain authority from
the appropriate regulatory bodies deemed by the Company to be necessary to
lawfully sell or issue such shares. In addition, the Company shall have no
obligation to the Optionee, express or implied, to list, register or otherwise
qualify any of the Optionee's shares of Common Stock. The shares of Common Stock
issued upon the exercise of the Option may not be transferred except in
accordance with applicable federal or state securities laws. At the Company's
option, the certificate evidencing shares of Common Stock issued to the Optionee
may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN
COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
Any Common Stock issued pursuant to the exercise of Options granted
pursuant to this Agreement to a person who would be deemed an officer or
director of the Company under Rule 16b-3 shall not be transferred until at least
six months have elapsed from the date of grant of such Option to the date of
disposition of the Common Stock underlying such Option.
9. Plan Incorporated. The Optionee accepts the Option subject to all
the provisions of the Plan, which are incorporated into this Agreement,
including the provisions that authorize the Committee to administer and
interpret the Plan and which provide that the Committee's decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
3.
<PAGE> 4
10. Miscellaneous.
(a) The Option is intended to be a non-qualified stock option
under applicable tax laws, and it is not to be characterized or treated as an
incentive stock option under such laws.
(b) The granting of the Option shall impose no obligation upon
the Optionee to exercise the Option or any part thereof. Nothing contained in
this Agreement shall affect the right of the Company to terminate the Optionee
at any time, with or without cause, or shall be deemed to create any rights to
employment on the part of the Optionee.
(c) The rights and obligations arising under this Agreement
are not intended to and do not affect the employment relationship that otherwise
exists between the Company and the Optionee, whether such employment
relationship is at will or defined by an employment contract. Moreover, this
Agreement is not intended to and does not amend any existing employment contract
between the Company and the Optionee.
(d) Neither the Optionee nor any person claiming under or
through the Optionee shall be or shall have any of the rights or privileges of a
shareholder of the Company in respect of any of the shares issuable upon the
exercise of the Option herein unless and until certificates representing such
shares shall have been issued and delivered to the Optionee or such Optionee's
agent.
(e) Any notice to be given to the Company under the terms of
this Agreement or any delivery of the Option to the Company shall be addressed
to the Company at its principal executive offices, and any notice to be given to
the Optionee shall be addressed to the Optionee at the address set forth beneath
his or her signature hereto, or at such other address for a party as such party
may hereafter designate in writing to the other. Any such notice shall be deemed
to have been duly given if mailed, postage prepaid, addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the
transferability by the Optionee of the Option and any shares of Common Stock,
this Agreement shall be binding upon and inure to the benefit of the
representatives, executors, successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
(h) If any provision of this Agreement is declared or found to
be illegal, unenforceable or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent
4.
<PAGE> 5
and agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(i) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions of
this Agreement.
(j) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary or
appropriate to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
(m) This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
(n) At any time and from time to time the Committee may
execute an instrument providing for modification, extension, or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall (i) impair the Option in any respect without the consent of the holder of
the Option or (ii) conflict with the provisions of Rule 16b-3. Except as
provided in the preceding sentence, no supplement modification or amendment of
this Agreement or waiver of any provision of this Agreement shall be binding
unless executed in writing by all parties to this Agreement. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision of this Agreement (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
(o) In addition to all other rights or remedies available at
law or in equity, the Company shall be entitled to injunctive and other
equitable relief to prevent or enjoin any violation of the provisions of this
Agreement.
(p) The Optionee's spouse joins this Agreement for the purpose
of agreeing to and accepting the terms of this Agreement and to bind any
community property interest
5.
<PAGE> 6
he or she has or may have in the Option, any vested portion or any unvested
portion of the Option, any shares of Common Stock acquired upon exercise of the
Option and any other shares of Common Stock held by the Optionee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
COMPANY:
NetSpeed, Inc.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
OPTIONEE:
-----------------------------------------
Name:
----------------------------------
Address:
----------------------------------
-----------------------------------------
-----------------------------------------
OPTIONEE'S SPOUSE:
-----------------------------------------
Name:
----------------------------------
6.
<PAGE> 1
EXHIBIT 99.3
FORM OF
OPTION WAIVER
EXHIBIT E
[NETSPEED LETTERHEAD]
[ ]
c/o NetSpeed, Inc.
- ------------------
- ------------------
Dear [ ]:
As you know, Cisco Systems, Inc. ("Cisco") is in the process of
acquiring NetSpeed, Inc. (the "Company"). Under the terms of the acquisition
(the "Acquisition"), Cisco has agreed to assume the outstanding options held by
certain employees of the Company. However, in order to facilitate the completion
of this Acquisition, the vesting acceleration provisions currently in effect for
those options need to be revised prior the Acquisition so that those options do
not accelerate in full upon the Acquisition.
You currently hold the following stock option(s) (collectively the
"Options") to acquire shares of the Company's common stock under the Company's
1996 Stock Option Plan (the "Option Plan"):
<TABLE>
<CAPTION>
Number of
Outstanding
Grant Date Exercise Price Option Shares
---------- -------------- -------------
<S> <C> <C>
[ ] [ ] [ ]
</TABLE>
In order to facilitate the completion of the Acquisition, the
vesting acceleration provisions of your existing Options must be amended so that
those Options will NOT vest in full at the time of the Acquisition and will NOT
become exercisable for all of the shares of the Company's common stock subject
to those Options at that time. Instead, you will be given credit for only twelve
(12) months of vesting service upon the Acquisition, i.e., you will be treated
for vesting purposes as if you have worked for the Company for an additional
twelve (12) months.
<PAGE> 2
Your additional twelve (12) months of vesting service will be based
on a revised vesting schedule. Each of your Options currently vests and becomes
exercisable in four (4) equal successive annual installments measured from the
option grant date. In connection with the Acquisition and the assumption of your
Options, the vesting schedule for your Options will be revised to match the
standard Cisco vesting schedule. Accordingly, following the Acquisition your
Option vesting schedule will be as follows: 25% of the Option shares vest upon
your completion of one (1) year of service measured from your initial option
grant date, and the balance of the Option shares vest in thirty-six (36) equal
successive monthly installments over your next thirty-six (36) months of
service. The twelve (12) months of vesting service credit you will be given upon
the assumption of your Options is calculated based on this revised vesting
schedule. For example, if you had completed 1 month of employment following your
option grant date prior to the Acquisition, you would not be vested in any of
your Option shares prior to the Acquisition. Immediately following the
Acquisition, you would be vested in 27.083% of the Option shares (25% for the
annual installment plus 2.083% for one (1) additional month of vesting). The
balance of the assumed Option would become exercisable in 35 equal successive
monthly installments as long as you remain employed with Cisco (or any Cisco
subsidiary) following the Acquisition.
The amendment to each of your Options to limit the acceleration to
twelve (12) months of vesting service will be effected by an amendment to
Section 9 of the Option Plan, which has been incorporated into the stock option
agreement (the "Option Agreement") for each of your Options. Accordingly, in
order to facilitate the completion of the Acquisition, you must agree to the
following amendment of Section 9 of the Option Plan and to the incorporation of
that amended provision into each of your Option Agreements so that your Options
will not vest in full on an accelerated basis at the time of the Acquisition.
AMENDED SECTION 9 TO BE EFFECTIVE IMMEDIATELY
FOR EACH OF YOUR OPTIONS
"9. Change in Control. In the event of a Change in Control of the
Company (including the merger of the Company with and into Cisco Systems,
Inc. (the "Acquisition")), all outstanding Options shall not vest in full.
However, upon the effective date of a merger (including the Acquisition)
all Optionees shall be given credit for twelve (12) months of vesting
service based on a revised vesting schedule. The revised vesting schedule
applicable to the outstanding Options and upon which the vesting
acceleration shall be based is as follows: 25% of the shares subject to an
Option shall vest upon the Optionee's completion of one (1) year of
service measured from the Date of Grant, and balance of the shares subject
to the Option shall vest in thirty-six (36) equal successive monthly
installments upon the Optionee's completion of each additional month of
service over the thirty-six (36) month period measured from the first
<PAGE> 3
anniversary of the Date of Grant."
In addition, you agree that you will not exercise any of your
Options during the period between the date of this letter agreement and the
effective date of the Acquisition (or such earlier date on which it is announced
that the Acquisition will not be consummated). The Acquisition is expected to
become effective in approximately 30 to 45 days following the date of this
letter, but the actual effective date cannot be determined at this time.
Since each of your Options is a non-statutory option under the
federal tax laws, you will recognize ordinary income at the time that option is
exercised in an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (ii) the exercise price paid for
those shares. Such income will be subject to all applicable withholding taxes at
that time.
To indicate your agreement with (i) the foregoing amendment to your
Options and to confirm that accelerated vesting you will receive under your
Options at the time the Acquisition closes will be limited to twelve (12) months
of vesting service credit (based on the revised vesting schedule) and (ii) the
suspended exercise period for your Options, please sign and date the
Acknowledgement section below and return it to me. If you do not sign and return
the Acknowledgement form, the Acquisition may not close, and you will not become
entitled to any accelerated vesting or other change in your vesting schedule.
For your records, you should attach a copy of this letter to each of your Option
Agreement(s) in order to evidence the revision to the acceleration provisions of
your Option(s) effected by this letter agreement.
Very truly yours,
By:
-------------------------------------
Title:
-------------------------------------
<PAGE> 4
ACKNOWLEDGEMENT
In order to facilitate the closing of the Acquisition and in
recognition of the twelve (12) months of vesting service credit and revised
vesting schedule I will receive under each of my Options upon the closing of the
Acquisition, I hereby knowingly and freely agree to the foregoing amendment to
Section 9 of the Option Plan, as incorporated into the terms of the Option
Agreement for each of my Options. I further agree not to exercise any of my
Options during the period between the date of this letter agreement and the
effective date of the Acquisition (or such earlier date on which it is announced
that the Acquisition will not be consummated).
Signature:
--------------------------------------
[ ]
Date:
--------------------------------------
<PAGE> 1
EXHIBIT 99.4
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
NETSPEED, INC.
1996 STOCK OPTION PLAN
OPTIONEE: [ ]
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 10th day of
April, 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 NetSpeed, Inc., a
Texas corporation ("NetSpeed"), which were granted to Optionee under the
NetSpeed, Inc. 1996 Stock Option Plan (the "Plan") and are each evidenced by
the following agreements between NetSpeed and Optionee: (i) a Stock Option
Agreement (the "Option Agreement") and (ii) that certain letter agreement (the
"Letter Agreement") amending the Plan and the Option Agreement. The Option
Agreement, including the incorporated provisions of the Plan as amended by the
Letter Agreement, shall be referred to in this document as the "Amended Option
Agreement."
WHEREAS, NetSpeed has this day been acquired by Cisco through the
merger of NetSpeed with and into Cisco (the "Merger") pursuant to the Agreement
of Merger dated March 9, 1998, by and between Cisco and NetSpeed (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of NetSpeed under all outstanding options under the Plan
at the consummation of the Merger and to issue to the holder of each outstanding
option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is .5526 of a
share of Cisco common stock ("Cisco Stock") for each outstanding share of
NetSpeed common stock ("NetSpeed Stock").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Cisco in connection
with the Merger.
<PAGE> 2
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of NetSpeed Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "NetSpeed
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 NetSpeed under each of the NetSpeed Options. In connection with
such assumption, the number of shares of Cisco Stock purchasable under each
NetSpeed 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 NetSpeed 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 NetSpeed Option shall also be
as indicated for that option in attached Exhibit A.
2. The intent of the foregoing adjustments to each assumed NetSpeed
Option is to assure that the spread between the aggregate fair market value of
the shares of Cisco Stock purchasable under each such option and the aggregate
exercise price as adjusted pursuant to this Agreement will, immediately after
the consummation of the Merger, substantially equal the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the NetSpeed Stock subject to the NetSpeed 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 Merger, on a
per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the NetSpeed Option immediately prior
to the Merger.
3. The following provisions shall govern each NetSpeed 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" shall mean Cisco, (ii) to "Common Stock" shall mean shares
of Cisco Stock, (iii) to 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 NetSpeed Option and all other provisions which govern either
the exercise or the termination of the assumed NetSpeed 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.
<PAGE> 3
(c) Pursuant to the terms of the Amended Option
Agreement, the four (4) year annual installment vesting schedule in
effect for each assumed NetSpeed Option shall be revised to be a
four (4) year schedule with twenty-five percent (25%) of the shares
vesting upon the completion of one (1) year of employment and the
balance of the shares vesting in thirty-six (36) equal successive
monthly installments over the thirty-six (36) months of employment
thereafter, all measured from the original grant date of the
NetSpeed Option. In addition, Optionee was credited with twelve (12)
months of vesting service at the time of the Merger. Optionee's
additional twelve (12) months of vesting service shall be based on
this revised vesting schedule. Each NetSpeed Option, as so revised
and accelerated and as adjusted in accordance with the provisions of
paragraph 1 above, shall be assumed by Cisco as of the Effective
Time. Each such assumed NetSpeed Option shall thereafter continue to
become exercisable for any remaining unvested shares of Cisco stock
subject to that option in accordance with the revised vesting
schedule, after giving effect to the twelve (12) months of
accelerated vesting service, and the number of shares of Cisco Stock
subject to each such installment shall be adjusted to reflect the
Exchange Ratio.
(d) For purposes of applying any and all provisions of
the Amended Option Agreement and the Plan relating to Optionee's
status as an employee of NetSpeed, Optionee shall be deemed to
continue in such status as an employee for so long as Optionee
renders services as an employee to Cisco or any present or future
Cisco subsidiary. Accordingly, the provisions of the Amended Option
Agreement governing the termination of the assumed NetSpeed Options
upon Optionee's cessation of service as an employee of NetSpeed
shall hereafter be applied on the basis of Optionee's cessation of
employee status with Cisco and its subsidiaries, and each assumed
NetSpeed Option shall accordingly terminate, within the designated
time period in effect under the Amended Option Agreement for that
option, following such cessation of service as an employee of Cisco
and its subsidiaries.
(e) The adjusted exercise price payable for the Cisco
Stock subject to each assumed NetSpeed 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 NetSpeed Stock prior to the Merger shall be taken into account.
(f) In order to exercise each assumed NetSpeed 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
3.
<PAGE> 4
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 Merger shall continue in full
force and effect and shall not in any way be amended, revised or otherwise
affected by this Stock Option Assumption Agreement.
4.
<PAGE> 5
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___ day of _______________, 1998.
CISCO SYSTEMS, INC.
By:
--------------------------------------
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her NetSpeed Options hereby assumed by Cisco are as
set forth in the Amended Option Agreement, the Plan and such Stock Option
Assumption Agreement.
--------------------------------------
[ ], OPTIONEE
DATED: __________________, 1998
5.
<PAGE> 6
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of NetSpeed, Inc.
Common Stock (Pre-Merger)
and
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
