<PAGE> 1
As filed with the Securities and Exchange Commission on March 2, 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)
----------
LIGHTSPEED INTERNATIONAL, 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>
Common Stock to be issued 486,504 $3.83 $1,863,310 $550
pursuant to options to
purchase common stock
originally issued under the
LightSpeed International,
Inc. 1996 Stock Option Plan
</TABLE>
================================================================================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the LightSpeed International,
Inc. 1996 Stock Option Plan by reason of any stock dividend, stock split,
<PAGE> 2
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> 3
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 Report on Form 10-Q for the fiscal
quarter ended October 25, 1997, filed with the Commission on
December 9, 1997.
(c) The Registrant's Registration Statement No. 0-18225 on Form
8-A filed with the Commission on January 11, 1990, together
with Amendment No. 1 on Form 8-A filed with the Commission on
February 15, 1990, in which there is described the terms,
rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
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.
II-1.
<PAGE> 4
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
and the exhibits thereto, which are incorporated herein by
reference pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 LightSpeed International, Inc. 1996 Stock Option Plan.
99.2 Form of Individual Stock Option Agreement, Version 1.1,
including First Amendment to Individual Stock Option Agreement.
99.3 Form of Individual Stock Option Agreement, Version 2.1.,
including First Amendment to Invidivual Stock Option Agreement.
99.4 Form of Individual Stock Option Agreement, Version 2.1a,
including First Amendment to Invidual Stock Option Agreement.
99.5 Form of Individual Stock Option Agreement, Version 3.1.
99.6 Form of Individual Stock Option Agreement, Version 4.1.
99.7 Form of Stock Option Assumption Agreement for Individual Stock
Option Agreement, Versions 1.1, 2.1, and 2.1a.
99.8 Form of Stock Option Assumption Agreement for Individual Stock
Option Agreement, Versions 3.1 and 4.1.
99.9 Form of Memorandum from Registrant to holders of options granted
under Individual Stock Option Agreement, Versions 1.1, 2.1,
2.1a, 3.1 and 4.1.
99.10 Form of optionee waiver letter.
</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
II-2.
<PAGE> 5
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 Registrant's 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 to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3.
<PAGE> 6
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 27th day of February, 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 February 27, 1998
John T. Chambers Officer and Director
(Principal Executive Officer)
/s/ Larry R. Carter
- ------------------------ Vice President, Finance and February 27, 1998
Larry R. Carter Administration, Chief Financial
Officer and Secretary
(Principal Financial and
Accounting Officer)
/s/ John P. Morgridge
- ------------------------ Chairman of the Board February 27, 1998
John P. Morgridge and Director
</TABLE>
II-4.
<PAGE> 7
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Donald T. Valentine
- -------------------------- Director February 27, 1998
Donald T. Valentine
/s/ James F. Gibbons
- -------------------------- Director February 27, 1998
James F. Gibbons
/s/ Robert L. Puette
- -------------------------- Director February 27, 1998
Robert L. Puette
/s/ Masayoshi Son
- -------------------------- Director February 27, 1998
Masayoshi Son
/s/ Steven M. West
- -------------------------- Director February 27, 1998
Steven M. West
- -------------------------- Director February 27, 1998
Edward Kozel
/s/ Carol Bartz
- -------------------------- Director February 27, 1998
Carol Bartz
</TABLE>
II-5.
<PAGE> 8
EXHIBIT INDEX
Exhibit Number Exhibit
4.0 Instruments Defining Rights of Shareholders. Reference is made
to Registrant's Registration Statement No. 0-18225 on Form 8-A
and the exhibits thereto, which are incorporated herein by
reference pursuant to Item 3(c).
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 LightSpeed International, Inc. 1996 Stock Option Plan.
99.2 Form of Individual Stock Option Agreement, Version 1.1, including
First Amendment to Individual Stock Option Agreement.
99.3 Form of Individual Stock Option Agreement, Version 2.1., including
First Amendment to Invidivual Stock Option Agreement.
99.4 Form of Individual Stock Option Agreement, version 2.1a, including
First Amendment to Invidual Stock Option Agreement.
99.5 Form of Individual Stock Option Agreement, version 3.1.
99.6 Form of Individual Stock Option Agreement, version 4.1.
99.7 Form of Stock Option Assumption Agreement for Individual Stock
Option Agreement, Versions 1.1, 2.1, and 2.1a.
99.8 Form of Stock Option Assumption Agreement for Individual Stock
Option Agreement, Versions 3.1 and 4.1.
99.9 Form of Memorandum from Registrant to holders of options granted
under Individual Stock Option Agreement, Versions 1.1, 2.1, 2.1a,
3.1 and 4.1.
99.10 Form of optionee waiver letter.
<PAGE> 1
EXHIBIT 5.0
February 27, 1998
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Cisco Systems, Inc. Registration Statement for
Offering of 486,504 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 486,504 shares of the common
stock ("Common Stock") of Cisco Systems, Inc. (the "Company") issuable under the
LightSpeed International, 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
We consent to the incorporation by reference in the Registration Statement
on Form S-8 of Cisco Systems, Inc. for the registration of 486,504 common shares
pursuant to the acquisition of Light Speed International, Inc. 1996 Stock Option
Plan, of our reports dated August 4, 1997, on our audits of the consolidated
financial statements and financial statements 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.
We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
San Jose, California
March 2, 1998
<PAGE> 1
EXHIBIT 99.1
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
(1) ESTABLISHMENT OF THE PLAN
LightSpeed International, Inc., a Virginia corporation (hereinafter
referred to as the "Company"), herein sets forth the terms of its 1996 Stock
Option Plan (hereinafter referred to as the "Plan").
(2) DEFINITIONS
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the U.S. Internal Revenue Code of 1986 and the
Regulations thereunder, as now or hereafter amended.
(c) "COMMON STOCK" or "SHARES" means shares of the no par value
common stock of the Company.
(d) "COMPANY" means LightSpeed International, Inc., a Virginia
corporation, and any of its parent corporations or wholly-owned
or majority-owned subsidiary corporations.
(e) "FAIR MARKET VALUE," when used in reference to Shares of Common
Stock shall mean such value as is determined by the Board in
good faith using any reasonable valuation method.
(f) "PARTICIPANT" means an officer, employee, consultant or advisor
of the Company who has been granted an option under the Plan.
(g) "PLAN SHARES" means any Shares of Common Stock issued to a
Participant in connection with an option granted under the Plan.
(3) PURPOSES OF THE PLAN
The purposes of the Plan are to provide the Participants with additional
incentive and motivation to contribute to the Company's future growth and
continued success, by providing them with the opportunity to obtain a stock
ownership interest in the Company, and to enable the Company to attract and
retain the services of qualified officers, employees, consultants and
advisors. The Plan is also intended to reinforce the commonality of interest
between the
<PAGE> 2
Company's shareholders and the Participants in the Plan.
(4) ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of the
Company.
(b) Subject to any specific limitations contained in the Plan, the Board
shall have the sole and complete authority: (i) to select the officers,
employees, consultants and advisors who shall participate in the Plan; (ii) to
grant options in such forms and amounts as it shall determine; (iii) to impose
such limitations, restrictions or conditions upon options as it shall deem
appropriate; (iv) to modify, amend, cancel or suspend options, with the consent
of any Participant affected thereby; (v) to interpret the Plan and to adopt,
amend and rescind administrative guidelines and other rules and regulations
relating to the Plan; and (vi) to make all other determinations and to take all
other actions necessary or advisable for the proper administration of the Plan.
The Board's interpretation and construction of any provision of the Plan, or of
any option granted under it, and any actions taken by the Board under the Plan,
shall be final and conclusive upon the Company, the Participants and all other
parties.
(c) With respect to actions taken affecting the Plan, a majority of the
Board shall constitute a quorum, and the acts of a majority of the members
present at any meeting of the Board at which a quorum is present, or acts
approved in writing by a majority of the Board, shall be considered as valid
actions by the Board. The Board, in its sole discretion, may delegate its
authority hereunder to a committee of directors, in which case all references to
the "Board" shall be deemed to be to said committee. The Board may designate one
or more officers or employees of the Company to execute documents on its behalf
or to perform such other non-discretionary, ministerial duties as the Board may
determine.
(5) TYPES OF OPTIONS
The following kinds or types of options may be granted under the Plan:
(a) "Incentive Stock Options;" and (b) "Non-Qualified Stock Options," as defined
in Paragraph 8(a).
(6) ELIGIBILITY TO PARTICIPATE
Only persons who are officers, employees, consultants or advisors of the
Company shall be eligible to participate in and to receive options under the
Plan. For purposes of this Plan, the term "consultant" or "advisor" shall mean a
consultant or advisor who has or will render bona fide services to the Company
other than in connection with the offer or sale of securities in a capital
raising transaction.
<PAGE> 3
(7) SHARES SUBJECT TO THE PLAN
(a) The Shares to be issued and delivered by the Company upon the
exercise of options granted under the Plan shall be Shares of the no par value
Common Stock, which may be either authorized but unissued shares or treasury
shares as determined by the Board.
(b) The maximum number of Shares of Common Stock which may be issued
under the Plan shall be Two Million Six Hundred Thousand (2,600,000) Shares. In
the event of a change in the number or nature of the Shares of outstanding
Common Stock by reason of a stock dividend, stock split, reverse stock split,
recapitalization, reorganization, merger, exchange of shares, or other similar
capital adjustments: (i) equitable proportionate adjustments may be made by the
Board in the number or kind of Shares reserved for issuance pursuant to options
granted under the Plan; and (ii) with respect to any outstanding options granted
under the Plan, equitable proportionate adjustments shall be made by the Board
to the number, class, exercise price, or other price of Shares subject to such
outstanding options as the Board shall deem to be appropriate in order to
maintain the purpose of the original grant. The determination of the Board as to
any such adjustments shall be final, binding and conclusive.
(c) If any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full, the Shares subject to such
option shall again be available for issuance in connection with the grant of
options under the Plan.
(8) STOCK OPTIONS
All stock options granted under the Plan shall be subject to the
following terms and conditions:
(a) The Board may, from time to time in its discretion, subject to the
provisions of the Plan, grant to any eligible Participant options to purchase
Shares of Common Stock in such amounts as it shall determine, which options may
be "Incentive Stock Options" (as defined in Section 422 of the Code and
hereinafter referred to as "ISOs") or "Non-Qualified Stock Options" (all other
options granted hereunder); provided, that ISOs may only be granted to a person
who is a bona fide "employee" of the Company at the time of the grant, as that
term is defined in the Code. All options granted pursuant to the Plan shall be
evidenced by a written Stock Option Agreement between the Company and the
Participant. The Stock Option Agreement shall be in such form and shall contain
such terms and conditions as the Board shall determine. The Stock Option
Agreement shall indicate whether the option is an ISO or a Non-Qualified Stock
Option.
(b) The purchase price per share payable by a Participant upon the
exercise of each option granted under the Plan shall be determined by the Board
at the time of the grant of the
3
<PAGE> 4
option; provided, that: (i) the exercise or purchase price per share of each
Non-Qualified Stock Option shall not be less than eighty-five percent (85%) of
the Fair Market Value of the Shares on the date of the grant, and (ii) the
exercise or purchase price per share of each ISO shall not be less than One
Hundred percent (100%) of the Fair Market Value of the Shares on the date of the
grant, except as hereinafter provided. The exercise or purchase price per share
of each ISO granted to a Participant who, at the time of the grant, owns more
than Ten percent (10%) of the total combined voting power of all classes of
stock of the Company, shall not be less than One Hundred Ten percent (110%) of
the Fair Market Value of the Shares on the date of the grant. An option shall be
considered granted on the effective date of the Stock Option Agreement, or on
such later date as the Board shall specify in the Stock Option Agreement.
(c) The term during which each option granted under the Plan may be
exercised shall be determined by the Board at the time of the grant of the
option; provided, that in no event shall an ISO granted under the Plan be
exercisable in whole or in part more than ten (10) years from the date it is
granted. In addition, in the case of the grant of an ISO to a Participant who,
at the time of the grant, owns more than Ten percent (10%) of the total combined
voting power of all classes of stock of the Company, in no event shall such ISO
be exercisable in whole or in part more than five (5) years from the date it is
granted. Each Stock Option Agreement shall set forth a termination date on which
the option shall expire in all events.
The date(s) on which each option granted under the Plan shall become
exercisable shall be determined by the Board at the time of the grant of the
option. Options granted under the Plan may be exercisable immediately, or after
some specified period of time, or according to some specified schedule of
exercise, as determined by the Board. The Board may, in its sole discretion,
accelerate the date(s) on which an option may be exercised.
(d) More than one (1) option may be granted to any individual
Participant under the Plan, and the terms and conditions of options granted to
the same Participant or to other Participants may differ. Other than the overall
limit on the number of Shares reserved for issuance under the Plan, there is no
specific limitation on the number of Shares for which options may be granted to
any individual Participant, except as hereinafter provided. No option which is
intended to be an ISO shall be granted to a Participant during any calendar year
if the aggregate fair market value (determined at the time the option is
granted) of Shares with respect to which ISOs are exercisable for the first time
by such Participant during that calendar year under this or any other stock
option plan of the Company exceeds One Hundred Thousand Dollars ($100,000.00).
The maximum number of Shares of Common Stock which may be issued under the Plan
to a Participant is limited to the maximum number of Shares of Common Stock
which may be issued under the Plan as set forth in Paragraph (7)(b) hereof.
(e) An option granted under the Plan shall be exercised by the
Participant, or by
4
<PAGE> 5
such other person as may be entitled to exercise the option, by sending or
delivering a written notice to the Board, or to such officer or other person as
the Board shall designate. The written notice shall state the number of Shares
with respect to which the option is being exercised, and shall be accompanied by
the payment of the full exercise or purchase price for such Shares. The exercise
or purchase price for the Shares may be paid in cash, or in the discretion of
the Board with shares of Common Stock or any other property, or in any
combination thereof. In addition, the Board, in its discretion, may allow for
the cashless exercise or conversion of an option, in which the Participant sells
or the Company retains option shares equal in Fair Market Value to the exercise
price. Any Shares of Common Stock that are delivered in total or partial payment
of the exercise or purchase price shall be valued at the Shares' Fair Market
Value on the date of the exercise of the option, or on such other date as the
Board may determine. A stock certificate(s) for the Shares purchased by the
exercise of an option shall be issued in the regular course of the Company's
business, subsequent to the exercise of the option and the payment of the
purchase price. No Participant entitled to exercise an option granted under the
Plan shall have any of the rights or privileges of a shareholder of the Company
with respect to any Shares issuable upon exercise of such option, until
certificates representing such Shares shall have been issued and delivered and
the Participant's name entered as a shareholder of record on the books of the
Company.
(f) Options granted under the Plan shall not be assigned, transferred,
pledged or otherwise encumbered in any way, except in the event of the death of
a Participant, by the Participant's Will or by the applicable laws of descent
and distribution, or except pursuant to a qualified domestic relations order. In
the event of the death of a Participant, the Participant's estate, personal
representative, or the person or persons who acquire (by bequest or inheritance)
the rights to exercise any options granted under the Plan, may exercise any
available options or parts thereof, prior to the expiration of the exercise
period described in Paragraph (8)(g) of the Plan. Each option granted under the
Plan shall be exercisable during the Participant's lifetime only by the
Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative.
(g) (i) Except as hereinafter provided, options granted under the Plan
shall expire in all events upon the date determined by the Board at the time of
the grant of the option and specified in the Stock Option Agreement, which date
with respect to ISOs shall not exceed the periods described in Paragraph (8)(c)
of the Plan.
(ii) Unless otherwise specified in the Stock Option Agreement
between the Company and the Participant, if a Participant's employment or
consulting relationship with the Company (hereinafter referred to as "Company
Relationship") is terminated for any reason, other than the Participant's
permanent disability or death, prior to the date described in Paragraph 8(g)(i)
above, then any options granted under the Plan shall terminate immediately upon
the date of the termination of the Participant's employment. The Board may, in
its sole discretion, grant options under the Plan which survive, either in whole
or in part, the
5
<PAGE> 6
termination of a Participant's employment with the Company, upon such terms and
conditions as the Board may determine. In addition, the Board may, in its sole
discretion, at the time of the termination of a Participant's employment with
the Company, extend the exercise period of any option that would otherwise have
terminated. In no event, however, shall any option granted under the Plan
survive beyond the date described in Paragraph 8(g)(i) above. For purposes of
this Plan, a Participant's Company Relationship shall be terminated "for cause"
only if terminated because of (A) the Participant's material breach of an
employment agreement, consulting agreement, agreement not to compete,
confidentiality agreement or other agreement with the Company, (B) the
Participant's theft of Company property, (C) the Participant's conviction of a
felony or of a misdemeanor which materially impairs the Participant's ability to
perform his duties with the Company, (D) the willful and continued failure by
the Participant to substantially perform his duties with the Company, (E) a
material misrepresentation in or omission from a Participant's job application
or job interview, (F) unlawful possession or use of drugs, or (G) willful and
continued conduct by the Participant which is demonstrably and materially
injurious to the Company, monetarily or otherwise. Notwithstanding anything
herein contained to the contrary, if a Participant's Stock Option Agreement
contains a separate definition of "for cause," then such definition shall
control instead of the definition contained in the foregoing sentence.
(iii) Unless otherwise specified in the Stock Option Agreement
between the Company and the Participant, if a Participant's Company Relationship
is terminated by reason of the Participant's permanent disability or death, any
outstanding vested options may be exercised, to the extent such options were
vested and exercisable on the date of the Participant's permanent disability or
death, for a period of 12 months following the date of permanent disability or
death. If not exercised within such 12 month period, such options shall
terminate. Any options which were not vested or exercisable on the date of the
Participant's death or permanent disability shall terminate immediately on that
date. The Board may, in its sole discretion, grant options under the Plan which
survive, either in whole or in part, the permanent disability or death of a
Participant for a period of up to 36 months, upon such terms and conditions as
the Board may determine. In addition, the Board may, in its sole discretion, at
the time of a Participant's permanent disability or death, extend the exercise
period of any option that would otherwise have terminated. In no event, however,
shall any option granted under the Plan survive beyond the date described in
Paragraph (8)(g)(i) above.
(9) RESTRICTIONS ON TRANSFER OF SHARES
(a) Notwithstanding anything to the contrary contained in the Plan, the
Company shall not be obligated to issue Plan Shares to a Participant pursuant to
any option granted under the Plan, unless at the time of such issuance, the
Participant agrees not to sell, assign, give, encumber, pledge or otherwise
transfer legal or beneficial ownership of all or any of the Plan Shares to any
person, corporation or other entity, during life (whether voluntarily or by
6
<PAGE> 7
involuntary legal action), or at death (whether by testamentary disposition,
intestate succession or contractual survivorship), except as provided in this
Paragraph (9). The Participant's acceptance of any Plan Shares shall be deemed
to constitute the Participant's agreement to comply with the terms and
conditions of this Paragraph (9). Any attempt to transfer any interest in Plan
Shares in violation of the restrictions contained in this Paragraph (9), or in
violation of the transfer restrictions and procedures contained elsewhere in
this Agreement, shall be ineffective and void, and the Company shall refuse to
register the Shares in the name of the transferee.
(b) If a Participant should receive a bona fide offer for the purchase
of any Plan Shares or should otherwise desire to voluntarily sell or transfer
any Plan Shares, the Participant shall first give written notice to the Company
of his or her receipt of the bona fide offer or of his or her desire to sell or
transfer the Plan Shares. The written notice shall describe the offer or
proposed sale, including the name and address of the proposed transferee, the
number of Plan Shares to be transferred, the price per Share, the terms of
payment and all other material terms of the proposed transaction. The Company
shall have the first right, but not the obligation, to purchase the
Participant's Plan Shares for the price per Share being offered by the bona fide
offeror as described in the Participant's written notice to the Company.
The Company shall exercise its option by sending a written notice to the
Participant within 30 days of the date of the Participant's notice to the
Company. If the Company exercises its option within such 30-day period, a
closing shall be held at the Company's principal place of business within 30
days thereafter on a mutually agreed-upon date and time. The Company may pay the
purchase price for the Plan Shares, as determined above, to the Participant (i)
in full in cash at the Closing, or (ii) at the election of the Company, in equal
monthly, quarterly or annual installments over a period not to exceed three
years from the date of Closing. If the Company elects to pay the purchase price
in installments, the Company shall deliver a promissory note (the "Note") to the
Participant at the Closing reflecting the payment terms and bearing interest on
the unpaid balance thereof at the "Prime Rate," plus two percent (2.0%) per
annum. Interest shall be payable on the same dates as the installments of
principal. The "Prime Rate" shall mean the prime rate announced by the First
Union Bank of Virginia on the Closing date. The Note shall be unsecured. The
Note may be prepaid by the Company in whole or in part at any time without
penalty.
If the Company fails to exercise its option to purchase the Plan Shares,
the Plan Shares or any number of them may be sold at any time within 90 days
from the date of the Participant's original notice to the Company, but only for
the price and on the terms specified in the original notice. No sale of the
Participant's Plan Shares shall be made after the end of the 120-day period, nor
shall any change in the price or terms of sale or transfer be permitted, without
a new notice of intention to transfer in compliance with the requirements of
this Paragraph (9).
7
<PAGE> 8
(c) All stock certificates now or hereafter issued by the Company to any
Participant under the Plan shall be subject to the transfer restrictions and
limitations of this Paragraph (9) and shall contain a restrictive legend to that
effect.
(d) The restrictions and provisions contained in this Paragraph (9)
shall terminate and be of no further force or effect with respect to Plan shares
on the earlier of: (i) the date the Company successfully completes an initial
public offering of its Common Stock pursuant to the Securities Act of 1933, as
amended, or (ii) the effective date of the Company's registration of its Common
Stock as a Class under the Securities Exchange Act of 1934, as amended.
8
<PAGE> 9
(10) EFFECT OF PLAN ON EMPLOYMENT STATUS
The fact that the Participant has been granted an option under the Plan
shall not affect the right of the Company to terminate the Participant's Company
Relationship at any time, subject to the provisions of any written employment
agreement or other agreement between the Company and such Participant.
(11) AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN
The Board of Directors may terminate, amend or modify the Plan in its
discretion, at any time; provided, however, that no amendment, modification or
termination of the Plan shall affect any outstanding options theretofore granted
under the Plan in any manner, without the consent of the Participant or his or
her successor-in-interest. In addition, any amendment or modification that would
increase the number of Shares reserved for issuance under the Plan or change the
requirements as to eligibility for participation in the Plan, must also be
approved by the Company's shareholders.
(12) WITHHOLDING
Upon the transfer of Common Stock as a result of the exercise of a stock
option, the Company shall have the right to retain or sell without notice,
sufficient Shares to cover the amount of any tax required by any governmental
authority to be withheld or otherwise deducted and paid with respect to such
payment, remitting any balance to the Participant; provided, however, that the
Participant shall have the option to provide the Company with the funds,
including previously acquired Shares of the Company's Common Stock (if
acceptable to the Board in its discretion), to enable it to pay any such tax.
(13) SECURITIES LAWS
Notwithstanding anything to the contrary contained in the Plan, the
Company shall not be obligated to issue Shares of its Common Stock to a
Participant pursuant to any option granted under the Plan, unless at the time of
such issuance the Shares are registered, exempt, or the subject matter of an
exempt transaction under both federal and applicable state securities laws. If
requested to do so by the Board, as a condition to the exercise of an option or
the receipt of Shares, each Participant shall execute a certificate indicating
that he or she is purchasing the Common Stock for investment and not with any
present intention to sell or distribute the same and making other reasonable
representations and warranties.
(14) TERM OF THE PLAN
The Plan shall become effective on the date of its adoption by the
Company's
9
<PAGE> 10
shareholders. The Plan shall terminate ten years after its effective date, or on
such earlier date as may be determined by the Board of Directors. No option
shall be granted under the Plan following the Plan's termination. The
termination of the Plan shall not affect the rights of Participants under
outstanding options previously granted under the Plan, and all of such unexpired
options shall continue in full force and effect after termination of the Plan,
except as they may lapse or be terminated under the terms and conditions of each
individual option grant.
THE PLAN HAS BEEN AMENDED AS FOLLOWS:
1. PARAGRAPH (7)(b) OF THE PLAN WAS AMENDED BY THE COMPANY'S SHAREHOLDERS
EFFECTIVE APRIL 14, 1997 TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE UNDER THE PLAN FROM 1,000,000 TO 2,000,000.
2. THE BOARD OF DIRECTORS AMENDED THE PLAN EFFECTIVE AUGUST 27, 1997 BY
ADDING TWO SENTENCES CONCERNING "FOR CAUSE" TERMINATION TO THE END OF
PARAGRAPH (8)(g)(ii).
3. PARAGRAPH (7)(b) OF THE PLAN WAS AMENDED BY THE COMPANY'S SHAREHOLDERS
EFFECTIVE NOVEMBER 11, 1997 TO INCREASE THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE UNDER THE PLAN FROM 2,000,000 TO 2,600,000.
10
<PAGE> 1
EXHIBIT 99.2
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
VERSION 1.1
------------------------------------
This Agreement is made this 24th day of October, 1996, between
LightSpeed International, Inc. (the "Company"), a Virginia corporation, and
__________, an employee of the Company (the "Optionee").
WHEREAS, the Company has adopted and maintains the LightSpeed
International, Inc. 1996 Stock Option Plan (the "Plan") for the benefit of its
officers, employees, consultants and advisors; and
WHEREAS, the Plan provides that the Company's Board of Directors (the
"Board"), may grant options to purchase shares of the Company's common stock to
its officers, employees, consultants and advisors; and
WHEREAS, the Board has determined that the Optionee should be given the
opportunity to acquire a stock ownership interest in the Company pursuant to the
Plan, in order to provide the Optionee with additional incentive and motivation
to contribute to the Company's future growth and continued success, and to
encourage the Optionee to continue to provide services to the Company.
<PAGE> 2
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
Pursuant to the provisions of the Plan, the Company hereby grants to the
Optionee the right and option (the "Option") to purchase from the Company, on
the terms and conditions hereinafter provided, up to a maximum number of _______
shares of the Company's no par value common stock (the "Option Shares"). This
Option shall be an "Incentive Stock Option" as defined in the Plan and in
Section 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Price.
The exercise or purchase price to be paid by the Optionee for the Option
Shares shall be $.10 per share. The Board has determined that the fair market
value of the Company's common stock on the date of the grant of this option is
$.10 per share.
3. Schedule of Exercise.
(a) Except as provided in Paragraphs 3(b) and (c) below, the Optionee
shall have the right to exercise the Option granted under this Agreement as
follows: (i) 25% of the Option Shares shall be eligible for exercise after
____________; and (ii) an additional 2.0833% of the Option Shares shall be
eligible for exercise at the end of each month, for a period of 36 months,
beginning ____________.
<PAGE> 3
(b) Notwithstanding any provisions to the contrary contained in this
Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the sale of the Company or substantially all of its assets to a
single purchaser or to a group of associated purchasers; (ii) the sale,
exchange, or other disposition, in one transaction, of two-thirds of the
outstanding corporate shares of the Company; (iii) a bona fide decision by the
Company's Board and shareholders to terminate its business, dissolve and
liquidate its assets; (iv) the merger or consolidation of the Company in a
transaction in which the shareholders of the Company receive or hold less than
50% of the outstanding voting shares of the new or surviving corporation, or (v)
the successful completion of an initial public offering of the Company's common
stock pursuant to the Securities Act of 1933, as amended.
(c) Notwithstanding any provisions to the contrary contained in this
Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the termination of the Optionee's employment with the Company due to
the Optionee's death, or (ii) the termination of the Optionee's employment with
the Company due to his permanent disability (physical or mental).
4. Method of Exercise.
<PAGE> 4
Subject to the schedule provided in Paragraph (3) of this Agreement, the
Option granted under this Agreement may be exercised by the Optionee in whole or
in part, and from time to time, by written notice signed by the Optionee (or by
such other person as may be entitled to exercise the option) and delivered to
the Company's president or secretary at the Company's principal executive
offices. The written notice shall state the number of shares with respect to
which the Option is being exercised, and shall be accompanied by the payment of
the total exercise or purchase price for that number of shares. The exercise or
purchase price for the Option Shares shall be paid in cash (including certified
check or bank cashier's check), or in the discretion of the Company's Board of
Directors with shares of the Company's common stock or any other property, or in
any combination thereof. Any shares of the Company's common stock that may be
delivered in payment of the exercise or purchase price shall be valued at their
fair market value, as determined by the Board pursuant to the provisions of the
Plan, as of the date of delivery of the shares to the Company. Upon payment of
the full exercise or purchase price, the Option Shares shall be fully paid and
nonassessable, outstanding shares of the Company's common stock. No partial
exercise of the option may be made for less than 1,000 shares, and the Company
shall not be required to issue any fractional shares.
<PAGE> 5
5. Termination of Option.
(a) Subject to the provisions of Subparagraph (5)(b) hereof, the Option
and all rights granted under this Agreement, to the extent that those rights
have not been exercised, shall terminate on the earliest of: (i) the date the
Optionee's employment with the Company is terminated "for cause" as defined in
Paragraph (8)(g) of the Plan; (ii) the date which is 90 days from the date that
the Optionee is discharged or terminates his employment with the Company for any
reason, other than "for cause" as defined above or by reason of the Optionee's
death or permanent disability; or (iii) the date which is 10 years from the date
of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while serving
as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
Option granted under this Agreement, for a period of 12 months following the
Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided services to the Company as an employee.
6. Transferability.
The Option and all rights granted under this Agreement shall not be
transferred, assigned, pledged or
<PAGE> 6
otherwise encumbered in any manner (whether by operation of law or otherwise)
except, in the event of the Optionee's death, by will or by the applicable laws
of descent or distribution. Upon any attempt to transfer, assign, pledge,
encumber or otherwise dispose of this Option contrary to the provisions of this
Agreement, or upon the levy of any attachment or similar process upon this
Option, the Option shall immediately become null and void. The Option and all
rights granted under this Agreement shall be exercisable during the Optionee's
lifetime only by the Optionee, or if permissible under applicable law, by the
Optionee's guardian or legal representative.
7. Adjustment to Option Shares.
(a) In the event that at any time prior to the termination date of this
Option and prior to the exercise thereof, the Company issues common stock by way
of stock dividend or other distribution, or subdivides or combines its
outstanding shares of common stock, the number of shares subject to this Option
and the exercise price shall be adjusted to be consistent with such change or
changes. In the event that at any time prior to the termination date of this
Option and prior to the exercise thereof, there is any reclassification, capital
reorganization or other change of outstanding shares of the Company's common
stock, or in case of any consolidation or merger of the Company with or into
another corporation, or in case of any sale or conveyance to
<PAGE> 7
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Company shall cause effective provision to be
made so that the Optionee shall have the right thereafter, by exercising this
Option, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. The determination of
the Board as to any adjustments or provisions to be made under this paragraph
shall be final, binding and conclusive.
(b) Except as provided above, the grant of the Option herein shall not
affect in any manner the right or power of the Company or its shareholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or to issue bonds, debentures, preferred or
prior preference stock ahead of or affecting the common stock of the Company or
the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of the Company's assets or business.
8. Effect of Agreement on Status of Optionee.
(a) The fact that the Board has granted an Option to the Optionee
pursuant to the Plan, shall not confer on
<PAGE> 8
the Optionee any right to employment with the Company or to a position as an
officer or director of the Company, nor shall it limit the right of the Company
to terminate or remove the Optionee from any position held by him at any time;
provided, however, nothing contained in this Paragraph (8)(a) shall be deemed to
affect any rights or obligations of the Company or the Optionee contained in any
separate employment agreement or similar agreement.
(b) The Optionee shall not be or have any of the rights or privileges of
a shareholder of the Company with respect to the Option Shares, unless and until
the Option has been exercised, the exercise or purchase price fully paid,
certificates representing such shares endorsed, transferred and delivered to the
Optionee, and the Optionee's name entered as a shareholder of record on the
books of the Company.
9. Securities Laws.
Notwithstanding anything to the contrary contained in this Agreement,
this Option shall not be exercisable by the Optionee except for shares of the
Company's common stock which at the time of such exercise are registered,
exempt, or the subject matter of an exempt transaction, under both federal and
applicable state securities laws. By accepting and executing this Option
Agreement, the Optionee acknowledges and represents to the Company that any and
all shares of the Company's common stock purchased under this
<PAGE> 9
Agreement will be acquired by the Optionee as an investment, and not with a view
towards subsequent distribution.
10. Taxes.
The Optionee agrees to pay all federal, state and local taxes, including
withholding taxes, if any, resulting from the exercise of this Option and the
subsequent sale of the Option Shares.
11. Conditions.
This Option is governed by the terms of this Agreement and the Plan, the
provisions of which are incorporated herein and made a part hereof.
12. Restrictions on Transfer.
The Optionee agrees that the Option Shares shall be subject to the
restrictions on transfer, repurchase option and other conditions of Paragraph
(9) of the Plan. In addition, if the restrictions and other conditions contained
in Paragraph (9) of the Plan should terminate as provided therein, then
following exercise of the Option, the Optionee agrees to notify the Company
promptly of any subsequent sale of the Option Shares if the sale occurs within
two years after the date of this Agreement or within one year after exercise.
13. Acknowledgment.
The Optionee's signature on this Agreement also constitutes his or her
acknowledgment that he or she has
<PAGE> 10
received a copy of the Plan and the Company's Summary Plan Description of the
Plan dated September 26, 1996.
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of
any successors or assigns of the Company, and shall be binding upon and inure to
the benefit of the Optionee's executors, administrators, heirs and personal
representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LIGHTSPEED INTERNATIONAL, INC.
By:_______________________________
Lev Volftsun
Its: President & CEO
________________________________________
_________________________,(Optionee)
<PAGE> 11
FIRST AMENDMENT TO INDIVIDUAL STOCK OPTION AGREEMENT
This First Amendment to Individual Stock Option Agreement (the
"Amendment") is made and entered into effective as of the ____ day of
_______________, 1997, by and between LightSpeed International, Inc. (the
"Company") and _______________________ (the "Optionee").
WHEREAS, the Company and the Optionee entered into an Individual Stock
Option Agreement dated __________________, 19___ (the "Agreement"); and
WHEREAS, the Company and the Optionee now desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to amend the Agreement
as follows:
1. Section 3(a) of the Agreement is hereby amended to provide that, upon
a "change in control" as defined below, the Optionee's vesting schedule, as set
forth in Section 3(a) of the Agreement, will be accelerated by a period of one
(1) year. To illustrate the effect of this provision, assume the Optionee
received his or her Stock Options on January 1, 1997. If a change in control
occurs on January 1, 1998, the Optionee would be 50% instead of 25% vested as of
that date. The remaining 50% of the Optionee's Stock Options would vest monthly
at the rate of 2.0833%, for a period of 24 months beginning in 1998.
2. Sections 3(b) and (c) of the Agreement shall be deleted in their
entireties and replaced with the following:
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted
under this Agreement shall vest 100% immediately upon the occurrence of
any of the following events: (i) the termination of the Optionee's
employment with the Company due to the Optionee's death or permanent
disability (physical or mental); (ii) the termination by the Company of
the Optionee's employment with the Company for any reason other than
"for cause" as defined in Paragraph 3(c) below; (iii) a bona fide
decision by the Company's Board and shareholders to terminate its
business, dissolve and liquidate its assets; (iv) the termination by the
Optionee of the Optionee's employment with the Company following: (A) a
permanent relocation by the Company of the Optionee's place or location
of employment to an area outside the greater Washington D.C.
metropolitan area; (B) a material change by the Company in the
Optionee's functions, duties or responsibilities; or (C) a material
change in the Optionee's compensation or terms of employment by the
Company to the detriment of the Optionee.
(c) Notwithstanding any provisions to the contrary contained in
this Agreement, an Optionee's employment with the Company shall be
deemed terminated "for cause" only if terminated because of: (i) the
Optionee's material
<PAGE> 12
breach of an employment agreement, agreement not to compete,
confidentiality agreement or other agreement with the Company; (ii) the
Optionee's theft of Company property; (iii) the Optionee's conviction of
a felony or of a misdemeanor which materially impairs the Optionee's
ability to perform his or her duties with the Company; or (iv) willful
and continued misconduct by the Optionee which is demonstrably and
materially injurious to the Company, monetarily or otherwise.
3. This Amendment shall only become effective in the event of a "change
in control," which shall mean: (i) the sale of the Company or substantially all
of its assets to a single purchaser or to a group of associated purchasers; (ii)
the sale, exchange, or other disposition, in one transaction, of two-thirds of
the outstanding corporate shares of the Company; or (iii) the merger or
consolidation of the Company in a transaction in which the shareholders of the
Company receive or hold less than 50% of the outstanding voting shares of the
new or surviving corporation.
4. Except as amended hereby, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day
and year first above written.
By:
--------------------------------------
Its:
--------------------------------------
______________________________________
____________________________(Optionee)
2.
<PAGE> 13
EXHIBIT B
Sentences to be added at the end of Paragraph (8)(g)(ii) of the Company's 1996
Stock Option Plan.
For purposes of this Plan, a Participant's Company Relationship shall be
terminated "for cause" only if terminated because of (A) the Participant's
material breach of an employment agreement, consulting agreement, agreement not
to compete, confidentiality agreement or other agreement with the Company, (B)
the Participant's theft of Company property, (C) the Participant's conviction of
a felony or of a misdemeanor which materially impairs the Participant's ability
to perform his duties with the Company, (D) the willful and continued failure by
the Participant to substantially perform his duties with the Company, (E) a
material misrepresentation in or omission from a Participant's job application
or job interview, (F) unlawful possession or use of drugs, or (G) willful and
continued conduct by the Participant which is demonstrably and materially
injurious to the Company, monetarily or otherwise. Notwithstanding anything
herein contained to the contrary, if a Participant's Stock Option Agreement
contains a separate definition of "for cause," then such definition shall
control instead of the definition contained in the foregoing sentence.
<PAGE> 1
EXHIBIT 99.3
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
VERSION 2.1
This Agreement is made this 18th day of March, 1997, between LightSpeed
International, Inc. (the "Company"), a Virginia corporation, and NAME~ , an
[officer/employee/consultant/adviser]
of the Company (the "Optionee").
WHEREAS, the Company has adopted and maintains the LightSpeed
International, Inc. 1996 Stock Option Plan (the "Plan") for the benefit of its
officers, employees, consultants and advisors; and
WHEREAS, the Plan provides that the Company's Board of Directors (the
"Board"), may grant options to purchase shares of the Company's common stock to
its officers, employees, consultants and advisors; and
WHEREAS, the Board has determined that the Optionee should be given the
opportunity to acquire a stock ownership interest in the Company pursuant to the
Plan, in order to provide the Optionee with additional incentive and motivation
to contribute to the Company's future growth and continued success, and to
encourage the Optionee to continue to provide services to the Company.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
<PAGE> 2
Pursuant to the provisions of the Plan, the Company hereby grants to the
Optionee the right and option (the "Option") to purchase from the Company, on
the terms and conditions hereinafter provided, up to a maximum number of
OPTIONS_397_~ shares of the Company's no par value common stock (the "Option
Shares"). This Option shall be an "Incentive Stock Option" as defined in the
Plan and in ss. 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Price.
The exercise or purchase price to be paid by the Optionee for the Option
Shares shall be $.10 per share. The Board has determined that the fair market
value of the Company's common stock on the date of the grant of this option is
$.10 per share.
3. Schedule of Exercise.
(a) Except as provided in Paragraphs 3(b) and (c) below, the Optionee
shall have the right to exercise the Option granted under this Agreement as
follows: (i) 25% of the Option Shares shall be eligible for exercise after
VESTING_DATE~ and (ii) an additional 2.0833% of the Option Shares shall be
eligible for exercise at the end of each month, for a period of 36 months,
beginning MONTHLY~.
(b) Notwithstanding any provisions to the contrary contained in this
Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the sale of
<PAGE> 3
the Company or substantially all of its assets to a single purchaser or to a
group of associated purchasers; (ii) the sale, exchange, or other disposition,
in one transaction, of two-thirds of the outstanding corporate shares of the
Company; (iii) a bona fide decision by the Company's Board and shareholders to
terminate its business, dissolve and liquidate its assets; or (iv) the merger or
consolidation of the Company in a transaction in which the shareholders of the
Company receive or hold less than 50% of the outstanding voting shares of the
new or surviving corporation.
(c) Notwithstanding any provisions to the contrary contained in this
Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the termination of the Optionee's employment with the Company due to
the Optionee's death, or (ii) the termination of the Optionee's employment with
the Company due to his permanent disability (physical or mental).
(d) In the event of the successful completion of an initial public
offering of the Company's common stock pursuant to
the Securities Act of 1933, as amended, the Optionee's right to exercise the
Option granted under this Agreement shall not vest immediately. Instead, the
Optionee's right to exercise the Option granted under this Agreement shall vest
at the times and in the amounts as otherwise provided in this Agreement.
4. Method of Exercise.
<PAGE> 4
Subject to the schedule provided in Paragraph (3) of this Agreement, the
Option granted under this Agreement may be exercised by the Optionee in whole or
in part, and from time to time, by written notice signed by the Optionee (or by
such other person as may be entitled to exercise the option) and delivered to
the Company's president or secretary at the Company's principal executive
offices. The written notice shall state the number of shares with respect to
which the Option is being exercised, and shall be accompanied by the payment of
the total exercise or purchase price for that number of shares. The exercise or
purchase price for the Option Shares shall be paid in cash (including certified
check or bank cashier's check), or in the discretion of the Company's Board of
Directors with shares of the Company's common stock or any other property, or in
any combination thereof. Any shares of the Company's common stock that may be
delivered in payment of the exercise or purchase price shall be valued at their
fair market value, as determined by the Board pursuant to the provisions of the
Plan, as of the date of delivery of the shares to the Company. Upon payment of
the full exercise or purchase price, the Option Shares shall be fully paid and
nonassessable, outstanding shares of the Company's common stock. No partial
exercise of the option may be made for less than 1,000 shares, and the Company
shall not be required to issue any fractional shares.
5. Termination of Option.
(a) Subject to the provisions of Subparagraph (5)(b)
<PAGE> 5
hereof, the Option and all rights granted under this Agreement, to the extent
that those rights have not been exercised, shall terminate on the earliest of:
(i) the date the Optionee's employment with the Company is terminated "for
cause" as defined in Paragraph (8)(g) of the Plan; (ii) the date which is 90
days from the date that the Optionee is discharged or terminates his employment
with the Company for any reason, other than "for cause" as defined above or by
reason of the Optionee's death or permanent disability; or (iii) the date which
is 10 years from the date of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while
serving as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
Option granted under this Agreement, for a period of 12 months following the
Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided services to the Company as an employee.
6. Transferability.
The Option and all rights granted under this Agreement shall not
be transferred, assigned, pledged or otherwise encumbered in any manner (whether
by operation of law or otherwise) except, in the event of the Optionee's death,
by will or by the applicable laws of descent or distribution. Upon any attempt
to transfer, assign, pledge, encumber or otherwise
<PAGE> 6
dispose of this Option contrary to the provisions of this Agreement, or upon the
levy of any attachment or similar process upon this Option, the Option shall
immediately become null and void. The Option and all rights granted under this
Agreement shall be exercisable during the Optionee's lifetime only by the
Optionee, or if permissible under applicable law, by the Optionee's guardian or
legal representative.
7. Adjustment to Option Shares.
(a) In the event that at any time prior to the termination date
of this Option and prior to the exercise thereof, the Company issues common
stock by way of stock dividend or other distribution, or subdivides or combines
its outstanding shares of common stock, the number of shares subject to this
Option and the exercise price shall be adjusted to be consistent with such
change or changes. In the event that at any time prior to the termination date
of this Option and prior to the exercise thereof, there is any reclassification,
capital reorganization or other change of outstanding shares of the Company's
common stock, or in case of any consolidation or merger of the Company with or
into another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that the
Optionee shall have the right thereafter, by exercising this Option, to purchase
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital
<PAGE> 7
reorganization or other change, consolidation, merger, sale or conveyance. The
determination of the Board as to any adjustments or provisions to be made under
this paragraph shall be final, binding and conclusive.
(b) Except as provided above, the grant of the Option herein
shall not affect in any manner the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or to issue bonds,
debentures, preferred or prior preference stock ahead of or affecting the common
stock of the Company or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the Company's assets
or business.
8. Effect of Agreement on Status of Optionee.
(a) The fact that the Board has granted an Option to
the Optionee pursuant to the Plan, shall not confer on the Optionee any right to
employment with the Company or to a position as an officer or director of the
Company, nor shall it limit the right of the Company to terminate or remove the
Optionee from any position held by him at any time; provided, however, nothing
contained in this Paragraph (8)(a) shall be deemed to affect any rights or
obligations of the Company or the Optionee contained in any separate employment
agreement or similar agreement.
(b) The Optionee shall not be or have any of the
<PAGE> 8
rights or privileges of a shareholder of the Company with respect to the Option
Shares, unless and until the Option has been exercised, the exercise or purchase
price fully paid, certificates representing such shares endorsed, transferred
and delivered to the Optionee, and the Optionee's name entered as a shareholder
of record on the books of the Company.
9. Securities Laws.
Notwithstanding anything to the contrary contained in this
Agreement, this Option shall not be exercisable by the Optionee except for
shares of the Company's common stock which at the time of such exercise are
registered, exempt, or the subject matter of an exempt transaction, under both
federal and applicable state securities laws. By accepting and executing this
Option Agreement, the Optionee acknowledges and represents to the Company that
any and all shares of the Company's common stock purchased under this Agreement
will be acquired by the Optionee as an investment, and not with a view towards
subsequent distribution.
10. Taxes.
The Optionee agrees to pay all federal, state and local taxes,
including withholding taxes, if any, resulting from the exercise of this Option
and the subsequent sale of the Option Shares.
11. Conditions.
This Option is governed by the terms of this Agreement and the
Plan, the provisions of which are incorporated herein and
<PAGE> 9
made a part hereof.
12. Restrictions on Transfer.
The Optionee agrees that the Option Shares shall be subject to
the restrictions on transfer, repurchase option and other conditions of
Paragraph (9) of the Plan. In addition, if the restrictions and other conditions
contained in Paragraph (9) of the Plan should terminate as provided therein,
then following exercise of the Option, the Optionee agrees to notify the Company
promptly of any subsequent sale of the Option Shares if the sale occurs within
two years after the date of this Agreement or within one year after exercise.
13. Acknowledgment.
The Optionee's signature on this Agreement also constitutes his
or her acknowledgment that he or she has received a copy of the Plan and the
Company's Summary Plan Description of the Plan dated September 26, 1996.
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company, and shall be binding upon
and inure to the benefit of the Optionee's executors, administrators, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LIGHTSPEED INTERNATIONAL, INC.
<PAGE> 10
By:_______________________________
Its: President & CEO
------------------------------
----------------------------------
NAME~(Optionee)
<PAGE> 11
FIRST AMENDMENT TO INDIVIDUAL STOCK OPTION AGREEMENT
This First Amendment to Individual Stock Option Agreement (the
"Amendment") is made and entered into effective as of the ____ day of
_______________, 1997, by and between LightSpeed International, Inc. (the
"Company") and _______________________ (the "Optionee").
WHEREAS, the Company and the Optionee entered into an Individual Stock
Option Agreement dated __________________, 19___ (the "Agreement"); and
WHEREAS, the Company and the Optionee now desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to amend the Agreement
as follows:
1. Section 3(a) of the Agreement is hereby amended to provide that, upon
a "change in control" as defined below, the Optionee's vesting schedule, as set
forth in Section 3(a) of the Agreement, will be accelerated by a period of one
(1) year. To illustrate the effect of this provision, assume the Optionee
received his or her Stock Options on January 1, 1997. If a change in control
occurs on January 1, 1998, the Optionee would be 50% instead of 25% vested as of
that date. The remaining 50% of the Optionee's Stock Options would vest monthly
at the rate of 2.0833%, for a period of 24 months beginning in 1998.
2. Sections 3(b) and (c) of the Agreement shall be deleted in their
entireties and replaced with the following:
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted
under this Agreement shall vest 100% immediately upon the occurrence of
any of the following events: (i) the termination of the Optionee's
employment with the Company due to the Optionee's death or permanent
disability (physical or mental); (ii) the termination by the Company of
the Optionee's employment with the Company for any reason other than
"for cause" as defined in Paragraph 3(c) below; (iii) a bona fide
decision by the Company's Board and shareholders to terminate its
business, dissolve and liquidate its assets; (iv) the termination by the
Optionee of the Optionee's employment with the Company following: (A) a
permanent relocation by the Company of the Optionee's place or location
of employment to an area outside the greater Washington D.C.
metropolitan area; (B) a material change by the Company in the
Optionee's functions, duties or responsibilities; or (C) a material
change in the Optionee's compensation or terms of employment by the
Company to the detriment of the Optionee.
(c) Notwithstanding any provisions to the contrary contained in
this Agreement, an Optionee's employment with the Company shall be
deemed terminated "for cause" only if terminated because of: (i) the
Optionee's material
<PAGE> 12
breach of an employment agreement, agreement not to compete,
confidentiality agreement or other agreement with the Company; (ii) the
Optionee's theft of Company property; (iii) the Optionee's conviction of
a felony or of a misdemeanor which materially impairs the Optionee's
ability to perform his or her duties with the Company; or (iv) willful
and continued misconduct by the Optionee which is demonstrably and
materially injurious to the Company, monetarily or otherwise.
3. This Amendment shall only become effective in the event of a "change
in control," which shall mean: (i) the sale of the Company or substantially all
of its assets to a single purchaser or to a group of associated purchasers; (ii)
the sale, exchange, or other disposition, in one transaction, of two-thirds of
the outstanding corporate shares of the Company; or (iii) the merger or
consolidation of the Company in a transaction in which the shareholders of the
Company receive or hold less than 50% of the outstanding voting shares of the
new or surviving corporation.
4. Except as amended hereby, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day
and year first above written.
By:
---------------------------------------
Its:
---------------------------------------
__________________________________________
_________________________________(Optionee)
2.
<PAGE> 13
EXHIBIT B
Sentences to be added at the end of Paragraph (8)(g)(ii) of the Company's 1996
Stock Option Plan.
For purposes of this Plan, a Participant's Company Relationship shall be
terminated "for cause" only if terminated because of (A) the Participant's
material breach of an employment agreement, consulting agreement, agreement not
to compete, confidentiality agreement or other agreement with the Company, (B)
the Participant's theft of Company property, (C) the Participant's conviction of
a felony or of a misdemeanor which materially impairs the Participant's ability
to perform his duties with the Company, (D) the willful and continued failure by
the Participant to substantially perform his duties with the Company, (E) a
material misrepresentation in or omission from a Participant's job application
or job interview, (F) unlawful possession or use of drugs, or (G) willful and
continued conduct by the Participant which is demonstrably and materially
injurious to the Company, monetarily or otherwise. Notwithstanding anything
herein contained to the contrary, if a Participant's Stock Option Agreement
contains a separate definition of "for cause," then such definition shall
control instead of the definition contained in the foregoing sentence.
<PAGE> 1
EXHIBIT 99.4
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
VERSION 2.1A
This Agreement is made this 19th day of August, 1997, between LightSpeed
International, Inc. (the "Company"), a Virginia corporation, and EMPLOYEE_NAME~
, an [officer/employee/consultant/adviser] of the Company (the
"Optionee").
WHEREAS, the Company has adopted and maintains the LightSpeed
International, Inc. 1996 Stock Option Plan (the "Plan") for the benefit of its
officers, employees, consultants and advisors; and
WHEREAS, the Plan provides that the Company's Board of Directors (the
"Board"), may grant options to purchase shares of the Company's common stock to
its officers, employees, consultants and advisors; and
WHEREAS, the Board has determined that the Optionee should be given the
opportunity to acquire a stock ownership interest in the Company pursuant to the
Plan, in order to provide the Optionee with additional incentive and motivation
to contribute to the Company's future growth and continued success, and to
encourage the Optionee to continue to provide services to the Company.
1
<PAGE> 2
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
Pursuant to the provisions of the Plan, the Company hereby grants
to the Optionee the right and option (the "Option") to purchase from the
Company, on the terms and conditions hereinafter provided, up to a maximum
number of STOCK_OPTIONS~ shares of the Company's no par value common stock (the
"Option Shares"). This Option shall be an "Incentive Stock Option" as defined in
the Plan and in Section 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Price.
The exercise or purchase price to be paid by the Optionee for the
Option Shares shall be $1.00 per share. The Board has determined that the fair
market value of the Company's common stock on the date of the grant of this
option is $1.00 per share.
3. Schedule of Exercise.
(a) Except as provided in Paragraphs 3(b) and (c) below, the
Optionee shall have the right to exercise the Option granted under this
Agreement as follows: (i) 25% of the Option Shares shall be eligible for
exercise after VESTING_DATE~ and (ii) an additional 2.0833% of the Option Shares
shall be eligible for exercise at the end of each month, for a period of 36
months,
2
<PAGE> 3
beginning MONTHLY_VESTING~.
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the sale of the Company or substantially all of its assets to a
single purchaser or to a group of associated purchasers; (ii) the sale,
exchange, or other disposition, in one transaction, of two-thirds of the
outstanding corporate shares of the Company; (iii) a bona fide decision by the
Company's Board and shareholders to terminate its business, dissolve and
liquidate its assets; or (iv) the merger or consolidation of the Company in a
transaction in which the shareholders of the Company receive or hold less than
50% of the outstanding voting shares of the new or surviving corporation.
(c) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) the termination of the Optionee's employment with the Company due to
the Optionee's death, or (ii) the termination of the Optionee's employment with
the Company due to his permanent disability (physical or mental).
(d) In the event of the successful completion of an
3
<PAGE> 4
initial public offering of the Company's common stock pursuant to the Securities
Act of 1933, as amended, the Optionee's right to exercise the Option granted
under this Agreement shall not vest immediately. Instead, the Optionee's right
to exercise the Option granted under this Agreement shall vest at the times and
in the amounts as otherwise provided in this Agreement.
4. Method of Exercise.
Subject to the schedule provided in Paragraph (3) of this
Agreement, the Option granted under this Agreement may be exercised by the
Optionee in whole or in part, and from time to time, by written notice signed by
the Optionee (or by such other person as may be entitled to exercise the option)
and delivered to the Company's president or secretary at the Company's principal
executive offices. The written notice shall state the number of shares with
respect to which the Option is being exercised, and shall be accompanied by the
payment of the total exercise or purchase price for that number of shares. The
exercise or purchase price for the Option Shares shall be paid in cash
(including certified check or bank cashier's check), or in the discretion of the
Company's Board of Directors with shares of the Company's common stock or any
other property, or in any combination thereof. Any shares of the Company's
common stock that may be delivered in payment of the exercise or purchase price
shall be valued at their fair market value, as determined
4
<PAGE> 5
by the Board pursuant to the provisions of the Plan, as of the date of delivery
of the shares to the Company. Upon payment of the full exercise or purchase
price, the Option Shares shall be fully paid and nonassessable, outstanding
shares of the Company's common stock. No partial exercise of the option may be
made for less than 1,000 shares, and the Company shall not be required to issue
any fractional shares.
5. Termination of Option.
(a) Subject to the provisions of Subparagraph (5)(b) hereof, the
Option and all rights granted under this Agreement, to the extent that those
rights have not been exercised, shall terminate on the earliest of: (i) the date
the Optionee's employment with the Company is terminated "for cause" as defined
in Paragraph (8)(g) of the Plan; (ii) the date which is 90 days from the date
that the Optionee is discharged or terminates his employment with the Company
for any reason, other than "for cause" as defined above or by reason of the
Optionee's death or permanent disability; or (iii) the date which is 10 years
from the date of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while
serving as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
5
<PAGE> 6
Option granted under this Agreement, for a period of 12 months following the
Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided services to the Company as an employee.
6. Transferability.
The Option and all rights granted under this Agreement shall not
be transferred, assigned, pledged or otherwise encumbered in any manner (whether
by operation of law or otherwise) except, in the event of the Optionee's death,
by will or by the applicable laws of descent or distribution. Upon any attempt
to transfer, assign, pledge, encumber or otherwise dispose of this Option
contrary to the provisions of this Agreement, or upon the levy of any attachment
or similar process upon this Option, the Option shall immediately become null
and void. The Option and all rights granted under this Agreement shall be
exercisable during the Optionee's lifetime only by the Optionee, or if
permissible under applicable law, by the Optionee's guardian or legal
representative.
7. Adjustment to Option Shares.
(a) In the event that at any time prior to the
termination date of this Option and prior to the exercise thereof, the Company
issues common stock by way of stock dividend or other distribution, or
subdivides or combines its outstanding shares of common stock, the number of
shares subject to this
6
<PAGE> 7
Option and the exercise price shall be adjusted to be consistent with such
change or changes. In the event that at any time prior to the termination date
of this Option and prior to the exercise thereof, there is any reclassification,
capital reorganization or other change of outstanding shares of the Company's
common stock, or in case of any consolidation or merger of the Company with or
into another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that the
Optionee shall have the right thereafter, by exercising this Option, to purchase
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance. The determination of the Board as to
any adjustments or provisions to be made under this paragraph shall be final,
binding and conclusive.
(b) Except as provided above, the grant of the Option herein
shall not affect in any manner the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or to issue bonds,
debentures, preferred or prior preference stock ahead of or affecting the
7
<PAGE> 8
common stock of the Company or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business.
8. Effect of Agreement on Status of Optionee.
(a) The fact that the Board has granted an Option to
the Optionee pursuant to the Plan, shall not confer on the Optionee any right to
employment with the Company or to a position as an officer or director of the
Company, nor shall it limit the right of the Company to terminate or remove the
Optionee from any position held by him at any time; provided, however, nothing
contained in this Paragraph (8)(a) shall be deemed to affect any rights or
obligations of the Company or the Optionee contained in any separate employment
agreement or similar agreement.
(b) The Optionee shall not be or have any of the rights or
privileges of a shareholder of the Company with respect to the Option Shares,
unless and until the Option has been exercised, the exercise or purchase price
fully paid, certificates representing such shares endorsed, transferred and
delivered to the Optionee, and the Optionee's name entered as a shareholder of
record on the books of the Company.
9. Securities Laws.
Notwithstanding anything to the contrary contained in
this Agreement, this Option shall not be exercisable by the
8
<PAGE> 9
Optionee except for shares of the Company's common stock which at the time of
such exercise are registered, exempt, or the subject matter of an exempt
transaction, under both federal and applicable state securities laws. By
accepting and executing this Option Agreement, the Optionee acknowledges and
represents to the Company that any and all shares of the Company's common stock
purchased under this Agreement will be acquired by the Optionee as an
investment, and not with a view towards subsequent distribution.
10. Taxes.
The Optionee agrees to pay all federal, state and local taxes,
including withholding taxes, if any, resulting from the exercise of this Option
and the subsequent sale of the Option Shares.
11. Conditions.
This Option is governed by the terms of this Agreement and the
Plan, the provisions of which are incorporated herein and made a part hereof.
12. Restrictions on Transfer.
The Optionee agrees that the Option Shares shall be subject to
the restrictions on transfer, repurchase option and other conditions of
Paragraph (9) of the Plan. In addition, if the restrictions and other conditions
contained in Paragraph (9)
9
<PAGE> 10
of the Plan should terminate as provided therein, then following exercise of the
Option, the Optionee agrees to notify the Company promptly of any subsequent
sale of the Option Shares if the sale occurs within two years after the date of
this Agreement or within one year after exercise.
13. Acknowledgment.
The Optionee's signature on this Agreement also constitutes his
or her acknowledgment that he or she has received a copy of the Plan and the
Company's Summary Plan Description of the Plan dated September 26, 1996.
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company, and shall be binding upon
and inure to the benefit of the Optionee's executors, administrators, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LIGHTSPEED INTERNATIONAL, INC.
By:_______________________________
Its: President & CEO
------------------------------
----------------------------------
EMPLOYEE_NAME~ (Optionee)
10
<PAGE> 11
FIRST AMENDMENT TO INDIVIDUAL STOCK OPTION AGREEMENT
This First Amendment to Individual Stock Option Agreement (the
"Amendment") is made and entered into effective as of the ____ day of
_______________, 1997, by and between LightSpeed International, Inc. (the
"Company") and _______________________ (the "Optionee").
WHEREAS, the Company and the Optionee entered into an Individual Stock
Option Agreement dated __________________, 19___ (the "Agreement"); and
WHEREAS, the Company and the Optionee now desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to amend the Agreement
as follows:
1. Section 3(a) of the Agreement is hereby amended to provide that, upon
a "change in control" as defined below, the Optionee's vesting schedule, as set
forth in Section 3(a) of the Agreement, will be accelerated by a period of one
(1) year. To illustrate the effect of this provision, assume the Optionee
received his or her Stock Options on January 1, 1997. If a change in control
occurs on January 1, 1998, the Optionee would be 50% instead of 25% vested as of
that date. The remaining 50% of the Optionee's Stock Options would vest monthly
at the rate of 2.0833%, for a period of 24 months beginning in 1998.
2. Sections 3(b) and (c) of the Agreement shall be deleted in their
entireties and replaced with the following:
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted
under this Agreement shall vest 100% immediately upon the occurrence of
any of the following events: (i) the termination of the Optionee's
employment with the Company due to the Optionee's death or permanent
disability (physical or mental); (ii) the termination by the Company of
the Optionee's employment with the Company for any reason other than
"for cause" as defined in Paragraph 3(c) below; (iii) a bona fide
decision by the Company's Board and shareholders to terminate its
business, dissolve and liquidate its assets; (iv) the termination by the
Optionee of the Optionee's employment with the Company following: (A) a
permanent relocation by the Company of the Optionee's place or location
of employment to an area outside the greater Washington D.C.
metropolitan area; (B) a material change by the Company in the
Optionee's functions, duties or responsibilities; or (C) a material
change in the Optionee's compensation or terms of employment by the
Company to the detriment of the Optionee.
(c) Notwithstanding any provisions to the contrary contained in
this Agreement, an Optionee's employment with the Company shall be
deemed terminated "for cause" only if terminated because of: (i) the
Optionee's material
<PAGE> 12
breach of an employment agreement, agreement not to compete,
confidentiality agreement or other agreement with the Company; (ii) the
Optionee's theft of Company property; (iii) the Optionee's conviction of
a felony or of a misdemeanor which materially impairs the Optionee's
ability to perform his or her duties with the Company; or (iv) willful
and continued misconduct by the Optionee which is demonstrably and
materially injurious to the Company, monetarily or otherwise.
3. This Amendment shall only become effective in the event of a "change
in control," which shall mean: (i) the sale of the Company or substantially all
of its assets to a single purchaser or to a group of associated purchasers; (ii)
the sale, exchange, or other disposition, in one transaction, of two-thirds of
the outstanding corporate shares of the Company; or (iii) the merger or
consolidation of the Company in a transaction in which the shareholders of the
Company receive or hold less than 50% of the outstanding voting shares of the
new or surviving corporation.
4. Except as amended hereby, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the day
and year first above written.
By:
--------------------------------------
Its:
--------------------------------------
______________________________________
____________________________(Optionee)
2.
<PAGE> 13
EXHIBIT B
Sentences to be added at the end of Paragraph (8)(g)(ii) of the Company's 1996
Stock Option Plan.
For purposes of this Plan, a Participant's Company Relationship shall be
terminated "for cause" only if terminated because of (A) the Participant's
material breach of an employment agreement, consulting agreement, agreement not
to compete, confidentiality agreement or other agreement with the Company, (B)
the Participant's theft of Company property, (C) the Participant's conviction of
a felony or of a misdemeanor which materially impairs the Participant's ability
to perform his duties with the Company, (D) the willful and continued failure by
the Participant to substantially perform his duties with the Company, (E) a
material misrepresentation in or omission from a Participant's job application
or job interview, (F) unlawful possession or use of drugs, or (G) willful and
continued conduct by the Participant which is demonstrably and materially
injurious to the Company, monetarily or otherwise. Notwithstanding anything
herein contained to the contrary, if a Participant's Stock Option Agreement
contains a separate definition of "for cause," then such definition shall
control instead of the definition contained in the foregoing sentence.
<PAGE> 1
EXHIBIT 99.5
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
This Agreement is made this ___th day of ________, 1997, between
LightSpeed International, Inc. (the "Company"), a Virginia corporation, and
NAME~, an employee of the Company (the
"Optionee").
WHEREAS, the Company has adopted and maintains the LightSpeed
International, Inc. 1996 Stock Option Plan (the "Plan") for the benefit of its
officers, employees, consultants and advisors; and
WHEREAS, the Plan provides that the Company's Board of Directors (the
"Board"), may grant options to purchase shares of the Company's common stock to
its officers, employees, consultants and advisors; and
WHEREAS, the Board has determined that the Optionee should be given the
opportunity to acquire a stock ownership interest in the Company pursuant to the
Plan, in order to provide the Optionee with additional incentive and motivation
to contribute to the Company's future growth and continued success, and to
encourage the Optionee to continue to provide services to the Company.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
Pursuant to the provisions of the Plan, the Company
1
<PAGE> 2
hereby grants to the Optionee the right and option (the "Option") to purchase
from the Company, on the terms and conditions hereinafter provided, up to a
maximum number of OPTIONS_~ shares of the Company's no par value common stock
(the "Option Shares"). This Option shall be an "Incentive Stock Option" as
defined in the Plan and in Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Exercise Price.
The exercise or purchase price to be paid by the Optionee for the
Option Shares shall be One dollar ($1.00)per share. The Board has determined
that the fair market value of the Company's common stock on the date of the
grant of this option is One dollar ($1.00)per share.
3. Schedule of Exercise.
(a) Except as provided in Paragraph 3(b) below, the Optionee
shall have the right to exercise the Option granted under this Agreement as
follows: (i) 25% of the Option Shares shall be eligible for exercise after
VESTING~; and (ii) an additional 2.0833% of the Option Shares shall be eligible
for exercise at the end of each month, for a period of 36 months, beginning
MONTHLY~.
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) a bona fide
2
<PAGE> 3
decision by the Company's Board and shareholders to terminate its business,
dissolve and liquidate its assets; or (ii) the termination of the Optionee's
employment with the Company due to the Optionee's death or permanent disability
(physical or mental).
4. Method of Exercise.
Subject to the schedule provided in Paragraph (3) of this
Agreement, the Option granted under this Agreement may be exercised by the
Optionee in whole or in part, and from time to time, by written notice signed by
the Optionee (or by such other person as may be entitled to exercise the option)
and delivered to the Company's president or secretary at the Company's principal
executive offices. The written notice shall state the number of shares with
respect to which the Option is being exercised, and shall be accompanied by the
payment of the total exercise or purchase price for that number of shares. The
exercise or purchase price for the Option Shares shall be paid in cash
(including certified check or bank cashier's check), or in the discretion of the
Company's Board of Directors with shares of the Company's common stock or any
other property, or in any combination thereof. Any shares of the Company's
common stock that may be delivered in payment of the exercise or purchase price
shall be valued at their fair market value, as determined by the Board pursuant
to the provisions of the Plan, as of the date of delivery of the shares to the
Company. Upon payment of
3
<PAGE> 4
the full exercise or purchase price, the Option Shares shall be fully paid and
nonassessable, outstanding shares of the Company's common stock. No partial
exercise of the option may be made for less than 1,000 shares, and the Company
shall not be required to issue any fractional shares.
5. Termination of Option.
(a) Subject to the provisions of Subparagraph (5)(b) hereof, the
Option and all rights granted under this Agreement, to the extent that those
rights have not been exercised, shall terminate on the earliest of: (i) the date
the Optionee's employment with the Company is terminated "for cause" as defined
in Paragraph (8)(g) of the Plan; (ii) the date which is 90 days from the date
that the Optionee is discharged or terminates his employment with the Company
for any reason, other than "for cause" as defined above or by reason of the
Optionee's death or permanent disability; or (iii) the date which is 10 years
from the date of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while
serving as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
Option granted under this Agreement, for a period of 12 months following the
Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided
4
<PAGE> 5
services to the Company as an employee.
6. Transferability.
The Option and all rights granted under this Agreement shall not
be transferred, assigned, pledged or otherwise encumbered in any manner (whether
by operation of law or otherwise) except, in the event of the Optionee's death,
by will or by the applicable laws of descent or distribution. Upon any attempt
to transfer, assign, pledge, encumber or otherwise dispose of this Option
contrary to the provisions of this Agreement, or upon the levy of any attachment
or similar process upon this Option, the Option shall immediately become null
and void. The Option and all rights granted under this Agreement shall be
exercisable during the Optionee's lifetime only by the Optionee, or if
permissible under applicable law, by the Optionee's guardian or legal
representative.
7. Adjustment to Option Shares.
(a) In the event that at any time prior to the
termination date of this Option and prior to the exercise thereof, the Company
issues common stock by way of stock dividend or other distribution, or
subdivides or combines its outstanding shares of common stock, the number of
shares subject to this Option and the exercise price shall be adjusted to be
consistent with such change or changes. In the event that at any time prior to
the termination date of this Option and prior to the exercise thereof, there is
any reclassification, capital reorganization or
5
<PAGE> 6
other change of outstanding shares of the Company's common stock, or in case of
any consolidation or merger of the Company with or into another corporation, or
in case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Optionee shall have the right
thereafter, by exercising this Option, to purchase the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance. The determination of the Board as to any adjustments or
provisions to be made under this paragraph shall be final, binding and
conclusive.
(b) Except as provided above, the grant of the Option herein
shall not affect in any manner the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or to issue bonds,
debentures, preferred or prior preference stock ahead of or affecting the common
stock of the Company or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the Company's assets
or business.
8. Effect of Agreement on Status of Optionee.
(a) The fact that the Board has granted an Option to
6
<PAGE> 7
the Optionee pursuant to the Plan, shall not confer on the Optionee any right to
employment with the Company or to a position as an officer or director of the
Company, nor shall it limit the right of the Company to terminate or remove the
Optionee from any position held by him at any time; provided, however, nothing
contained in this Paragraph (8)(a) shall be deemed to affect any rights or
obligations of the Company or the Optionee contained in any separate employment
agreement or similar agreement.
(b) The Optionee shall not be or have any of the rights or
privileges of a shareholder of the Company with respect to the Option Shares,
unless and until the Option has been exercised, the exercise or purchase price
fully paid, certificates representing such shares endorsed, transferred and
delivered to the Optionee, and the Optionee's name entered as a shareholder of
record on the books of the Company.
9. Securities Laws.
Notwithstanding anything to the contrary contained in this
Agreement, this Option shall not be exercisable by the Optionee except for
shares of the Company's common stock which at the time of such exercise are
registered, exempt, or the subject matter of an exempt transaction, under both
federal and applicable state securities laws. By accepting and executing this
Option Agreement, the Optionee acknowledges and represents to the Company that
any and all shares of the Company's common
7
<PAGE> 8
stock purchased under this Agreement will be acquired by the Optionee as an
investment, and not with a view towards subsequent distribution.
10. Taxes.
The Optionee agrees to pay all federal, state and local taxes,
including withholding taxes, if any, resulting from the exercise of this Option
and the subsequent sale of the Option Shares.
11. Conditions.
This Option is governed by the terms of this Agreement and the
Plan, the provisions of which are incorporated herein and made a part hereof.
12. Restrictions on Transfer.
The Optionee agrees that the Option Shares shall be subject to
the restrictions on transfer, repurchase option and other conditions of
Paragraph (9) of the Plan. In addition, if the restrictions and other conditions
contained in Paragraph (9) of the Plan should terminate as provided therein,
then following exercise of the Option, the Optionee agrees to notify the Company
promptly of any subsequent sale of the Option Shares if the sale occurs within
two years after the date of this Agreement or within one year after exercise.
13. Acknowledgment.
The Optionee's signature on this Agreement also
constitutes his or her acknowledgment that he or she has received
8
<PAGE> 9
a copy of the Plan and the Company's Summary Plan Description of the Plan.
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company, and shall be binding upon
and inure to the benefit of the Optionee's executors, administrators, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LIGHTSPEED INTERNATIONAL, INC.
By:_______________________________
Lev Volftsun
Its: President & CEO
-----------------------------
----------------------------------
Name~(Optionee)
9
<PAGE> 1
EXHIBIT 99.6
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
This Agreement is made this 18th day of December, 1997, between
LightSpeed International, Inc. (the "Company"), a Virginia corporation, and
NAME~, an employee of the Company (the
"Optionee").
WHEREAS, the Company has adopted and maintains the LightSpeed
International, Inc. 1996 Stock Option Plan (the "Plan") for the benefit of its
officers, employees, consultants and advisors; and
WHEREAS, the Plan provides that the Company's Board of Directors (the
"Board"), may grant options to purchase shares of the Company's common stock to
its officers, employees, consultants and advisors; and
WHEREAS, the Board has determined that the Optionee should be given the
opportunity to acquire a stock ownership interest in the Company pursuant to the
Plan, in order to provide the Optionee with additional incentive and motivation
to contribute to the Company's future growth and continued success, and to
encourage the Optionee to continue to provide services to the Company.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
Pursuant to the provisions of the Plan, the Company
1
<PAGE> 2
hereby grants to the Optionee the right and option (the "Option") to purchase
from the Company, on the terms and conditions hereinafter provided, up to a
maximum number of OPTIONS~ shares of the Company's no par value common stock
(the "Option Shares"). This Option shall be an "Incentive Stock Option" as
defined in the Plan and in Section 422 of the Internal Revenue Code of 1986, as
amended. In the event any shares purchased under the Option are held for the
requisite period to qualify a subsequent sale of those shares as a qualifying
disposition under Section 422(a)(1) of the Internal Revenue Code (a sale
effected more than two years after the December 18, 1997 grant date of the
Option and more than one year after the date the Option is exercised for those
shares) and the Internal Revenue Service disallow the status of the Option as an
incentive stock option under Internal Revenue Code Section 422 so that the
excess of the fair market value of those shares on the exercise date over the
exercise price paid for such shares is taxed as ordinary income in the year of
exercise rather than capital gain in the year of sale, then Cisco Systems, Inc.
("Cisco") hereby agrees, effective upon the assumption of the Option in
connection with the merger of the Company with and into Cisco, to indemnify the
Optionee for any of the following expenses incurred by the Optionee as a result
of such disallowance: (i) the incremental tax liability (based on the difference
between the ordinary income tax rate in effect for the Optionee for the year or
years in which the Option is
2
<PAGE> 3
exercised for the shares and the capital gain tax rate applicable to the
Optionee's holding period for those shares) incurred by Optionee as a result of
the recognition of such ordinary income, (ii) any additional FICA, FUTA or
Medicare taxes incurred by the Optionee on that ordinary income and (iii) any
interest and penalties imposed by the Internal Revenue Service upon the Optionee
by reason of such additional tax liabilities.
2. Exercise Price.
The exercise or purchase price to be paid by the Optionee for the
Option Shares shall be One dollar ($1.00)per share. The Board has determined
that the fair market value of the Company's common stock on the date of the
grant of this option is One dollar ($1.00)per share.
3. Schedule of Exercise.
(a) Except as provided in Paragraph 3(b) below, the Optionee
shall have the right to exercise the Option granted under this Agreement as
follows: (i) 25% of the Option Shares shall be eligible for exercise after
VESTING_DATE~; and (ii) an additional 2.0833% of the Option Shares shall be
eligible for exercise at the end of each month, for a period of 36 months,
beginning MONTHLY~.
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the Optionee's right to exercise the Option granted under this
Agreement shall vest immediately upon the occurrence of any of the following
events: (i) a bona fide
3
<PAGE> 4
decision by the Company's Board and shareholders to terminate its business,
dissolve and liquidate its assets; or (ii) the termination of the Optionee's
employment with the Company due to the Optionee's death or permanent disability
(physical or mental). Optionee hereby agrees and acknowledges that the merger of
the Company with and into Cisco pursuant to the terms of the December 1997
Merger Agreement between the parties shall not be deemed to constitute such a
termination, dissolution or liquidation of the Company and that this Option
shall not vest or otherwise accelerate by reason of such merger.
4. Method of Exercise.
Subject to the schedule provided in Paragraph (3) of this
Agreement, the Option granted under this Agreement may be exercised by the
Optionee in whole or in part, and from time to time, by written notice signed by
the Optionee (or by such other person as may be entitled to exercise the option)
and delivered to the Company's president or secretary at the Company's principal
executive offices. The written notice shall state the number of shares with
respect to which the Option is being exercised, and shall be accompanied by the
payment of the total exercise or purchase price for that number of shares. The
exercise or purchase price for the Option Shares shall be paid in cash
(including certified check or bank cashier's check). Should the shares of Common
Stock subject to this Option (either the Common Stock of the Company or any
successor corporation) be
4
<PAGE> 5
registered under Section 12 of the Securities Exchange Act of 1934, as amended,
at the time the Option is exercised, then the exercise price may also be paid as
follows:
in shares of such Common Stock held by the Optionee (or any other
person or persons exercising the option) for the requisite period necessary to
avoid a charge to the earnings of the Company (or the successor corporation) for
financial reporting purposes and valued at fair market value on the exercise
date; or
through a special sale and remittance procedure pursuant to which
Optionee (or any other person or persons exercising the option) shall
concurrently provide irrevocable instructions (a) to a designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the Company
(or any successor corporation), out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Company (or the successor
corporation) by reason of such exercise and (b) to the Company (or the successor
corporation) to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.
Upon payment of the full exercise or purchase price, the Option Shares shall be
fully paid and nonassessable, outstanding shares
5
<PAGE> 6
of the Company's common stock. No partial exercise of the option may be made for
less than 1,000 shares, and the Company shall not be required to issue any
fractional shares.
5. Termination of Option.
(a) Subject to the provisions of Subparagraph (5)(b) hereof, the
Option and all rights granted under this Agreement, to the extent that those
rights have not been exercised, shall terminate on the earliest of: (i) the date
the Optionee's employment with the Company is terminated "for cause" as defined
in Paragraph (8)(g) of the Plan; (ii) the date which is 90 days from the date
that the Optionee is discharged or terminates his employment with the Company
for any reason, other than "for cause" as defined above or by reason of the
Optionee's death or permanent disability; or (iii) the date which is 10 years
from the date of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while
serving as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
Option granted under this Agreement, for a period of 12 months following the
Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided services to the Company as an employee.
6. Transferability.
6
<PAGE> 7
The Option and all rights granted under this Agreement shall not
be transferred, assigned, pledged or otherwise encumbered in any manner (whether
by operation of law or otherwise) except, in the event of the Optionee's death,
by will or by the applicable laws of descent or distribution. Upon any attempt
to transfer, assign, pledge, encumber or otherwise dispose of this Option
contrary to the provisions of this Agreement, or upon the levy of any attachment
or similar process upon this Option, the Option shall immediately become null
and void. The Option and all rights granted under this Agreement shall be
exercisable during the Optionee's lifetime only by the Optionee, or if
permissible under applicable law, by the Optionee's guardian or legal
representative.
7. Adjustment to Option Shares.
(a) In the event that at any time prior to the
termination date of this Option and prior to the exercise thereof, the Company
issues common stock by way of stock dividend or other distribution, or
subdivides or combines its outstanding shares of common stock, the number of
shares subject to this Option and the exercise price shall be adjusted to be
consistent with such change or changes. In the event that at any time prior to
the termination date of this Option and prior to the exercise thereof, there is
any reclassification, capital reorganization or other change of outstanding
shares of the Company's common stock, or in case of any consolidation or merger
of the Company with or
7
<PAGE> 8
into another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that the
Optionee shall have the right thereafter, by exercising this Option, to purchase
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance. The determination of the Board as to
any adjustments or provisions to be made under this paragraph shall be final,
binding and conclusive.
(b) Except as provided above, the grant of the Option herein
shall not affect in any manner the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or to issue bonds,
debentures, preferred or prior preference stock ahead of or affecting the common
stock of the Company or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the Company's assets
or business.
8. Effect of Agreement on Status of Optionee.
(a) The fact that the Board has granted an Option to
the Optionee pursuant to the Plan, shall not confer on the
Optionee any right to employment with the Company or to a
8
<PAGE> 9
position as an officer or director of the Company, nor shall it limit the right
of the Company to terminate or remove the Optionee from any position held by him
at any time; provided, however, nothing contained in this Paragraph (8)(a) shall
be deemed to affect any rights or obligations of the Company or the Optionee
contained in any separate employment agreement or similar agreement.
(b) The Optionee shall not be or have any of the rights or
privileges of a shareholder of the Company with respect to the Option Shares,
unless and until the Option has been exercised, the exercise or purchase price
fully paid, certificates representing such shares endorsed, transferred and
delivered to the Optionee, and the Optionee's name entered as a shareholder of
record on the books of the Company.
9. Securities Laws.
Notwithstanding anything to the contrary contained in this
Agreement, this Option shall not be exercisable by the Optionee except for
shares of the Company's common stock which at the time of such exercise are
registered, exempt, or the subject matter of an exempt transaction, under both
federal and applicable state securities laws. By accepting and executing this
Option Agreement, the Optionee acknowledges and represents to the Company that
any and all shares of the Company's common stock purchased under this Agreement
will be acquired by the Optionee as an investment, and not with a view towards
subsequent
9
<PAGE> 10
distribution.
10. Taxes.
Except as otherwise provided in this Agreement, the Optionee
agrees to pay all federal, state and local taxes, including withholding taxes,
if any, resulting from the exercise of this Option and the subsequent sale of
the Option Shares.
11. Conditions.
This Option is governed by the terms of this Agreement and the
Plan, the provisions of which are incorporated herein and made a part hereof.
12. Restrictions on Transfer.
The Optionee agrees that the Option Shares shall be subject to
the restrictions on transfer, repurchase option and other conditions of
Paragraph (9) of the Plan. In addition, if the restrictions and other conditions
contained in Paragraph (9) of the Plan should terminate as provided therein,
then following exercise of the Option, the Optionee agrees to notify the Company
promptly of any subsequent sale of the Option Shares if the sale occurs within
two years after the date of this Agreement or within one year after exercise.
13. Acknowledgment.
The Optionee's signature on this Agreement also constitutes his
or her acknowledgment that he or she has received a copy of the Plan and the
Company's Summary Plan Description of the Plan.
10
<PAGE> 11
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company, and shall be binding upon
and inure to the benefit of the Optionee's executors, administrators, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LIGHTSPEED INTERNATIONAL, INC.
By:_______________________________
Lev Volftsun
Its: President & CEO
------------------------------
----------------------------------
Name~(Optionee)
11
<PAGE> 1
EXHIBIT 99.7
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
FOR VERSIONS 1.1, 2.1 AND 2.1 OF
INDIVIDUAL STOCK OPTION AGREEMENT
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ____day of
________, 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 LightSpeed
International, Inc., a Virginia corporation ("LightSpeed"), which were granted
to Optionee under the LightSpeed International, Inc. 1996 Stock Option Plan (the
"Plan") and are each evidenced by the following set of agreements between
LightSpeed and Optionee: (i) an Individual Stock Option Agreement (version 1.1,
2.1 or 2.1a) (the "Option Agreement"), (ii) that certain First Amendment to
Individual Stock Option Agreement dated August 27, 1997 (the "First Amendment")
and (iii) that certain letter agreement dated [MERGE DATE CODE] (the "Letter
Agreement"), amending the First Amendment. The Option Agreement, as amended by
the First Amendment and the Letter Agreement, shall be referred to in this
document as the "Modified Option Agreement."
WHEREAS, LightSpeed has this day been acquired by Cisco through
the merger of LightSpeed with and into Cisco (the "Merger") pursuant to the
Agreement of Merger dated ________, 1998, by and between Cisco and LightSpeed
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of LightSpeed under all outstanding options under the
Plan at the consummation of the Merger and to issue to the holder of each
outstanding option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 0. of a share
of Cisco common stock ("Cisco Stock") for each outstanding share of LightSpeed
common stock ("LightSpeed Stock").
<PAGE> 2
WHEREAS, this Agreement is to become effective immediately upon
the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan which have
become necessary by reason of the assumption of those options by Cisco in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of LightSpeed Stock subject to the
options issued to Optionee pursuant to the Modified Option Agreement and held by
Optionee immediately prior to the Effective Time (the "LightSpeed 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
LightSpeed under each of the LightSpeed Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each
LightSpeed 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 LightSpeed Option hereby assumed shall be as
specified for that option in attached Exhibit B, and the adjusted exercise price
payable per share of Cisco Stock under the assumed LightSpeed Option shall be as
indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
LightSpeed Option is to assure that the spread between the aggregate fair market
value of the shares of Cisco Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, equal the spread which
existed, immediately prior to the Merger, between the then aggregate fair market
value of the LightSpeed Stock subject to the LightSpeed Option and the aggregate
exercise price in effect at such time under the Modified 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 LightSpeed Option immediately
prior to the Merger.
3. The following provisions shall govern each LightSpeed Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all
references to the "Company" in each Modified Option Agreement and
in the Plan shall mean Cisco, all references to "Common Stock"
and "Shares" shall mean shares of Cisco Stock, all references to
"Option Shares" shall mean shares of Cisco Stock subject to the
assumed LightSpeed Option, and all references to the "Board of
Directors" shall mean the Board of Directors of Cisco.
(b) The grant date and the expiration date of each
assumed LightSpeed Option and all other provisions which govern
either the exercise or the
2.
<PAGE> 3
termination of the assumed LightSpeed Option shall remain the
same as set forth in the Modified Option Agreement applicable to
that option, and the provisions of the Modified Option Agreement
shall accordingly govern and control Optionee's rights under this
Agreement to purchase Cisco Stock.
(c) Pursuant to the terms of the Modified Option
Agreement, the installment vesting schedule in effect for each
assumed LightSpeed Option shall automatically accelerate by one
(1) year upon the consummation of the Merger. Each LightSpeed
Option, as so accelerated and as adjusted in accordance with the
provisions of paragraph 1 above, shall be assumed by Cisco as of
the Effective Time. The remaining shares subject to each such
assumed LightSpeed Option shall thereafter continue to be
exercisable in accordance with the same installment exercise
schedule in effect under the applicable Modified Option Agreement
immediately prior to the Effective Time (after giving effect to
the one year of accelerated vesting), with the number of shares
of Cisco Stock subject to each such installment adjusted to
reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions
of the Modified Option Agreement and the Plan relating to
Optionee's status as an employee or a consultant of LightSpeed,
Optionee shall be deemed to continue in such status as an
employee or a consultant for so long as Optionee renders services
as an employee or a consultant to Cisco or any present or future
Cisco subsidiary. Accordingly, the provisions of the Modified
Option Agreement governing the termination of the assumed
LightSpeed Options upon Optionee's cessation of service as an
employee or a consultant of LightSpeed shall hereafter be applied
on the basis of Optionee's cessation of employee or consultant
status with Cisco and its subsidiaries, and each assumed
LightSpeed Option shall accordingly terminate, within the
designated time period in effect under the Modified Option
Agreement for that option, following such cessation of service as
an employee or a consultant of Cisco and its subsidiaries.
(e) The adjusted exercise price payable for the
Cisco Stock subject to each assumed LightSpeed Option shall be
payable in any of the forms authorized under the Modified 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 LightSpeed Stock prior to the Merger
shall be taken into account.
(f) In order to exercise each assumed LightSpeed
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
3.
<PAGE> 4
payable for the purchased shares of Cisco Stock and should be
delivered to Cisco at the following address:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attention: Option Plan Administrator
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Modified Option
Agreement as in effect immediately prior to the Merger shall continue in full
force and effect and shall not in any way be amended, revised or otherwise
affected by this Stock Option Assumption Agreement.
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the day of , 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 LightSpeed Options hereby assumed by Cisco are as
set forth in the Modified Option Agreement, the Plan and such Stock Option
Assumption Agreement.
----------------------------------
1~, OPTIONEE
DATED: __________________, 1998
4.
<PAGE> 5
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of LightSpeed International, Inc.
Common Stock (Pre-Merger)
<PAGE> 6
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
<PAGE> 1
EXHIBIT 99.8
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
FOR VERSIONS 3.1 AND 4.1 OF
INDIVIDUAL STOCK OPTION AGREEMENT
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ___ day of
___, 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 LightSpeed
International, Inc., a Virginia corporation ("LightSpeed"), which were granted
to Optionee under the LightSpeed International, Inc. 1996 Stock Option Plan (the
"Plan") and are each evidenced by an Individual Stock Option Agreement (version
3.1 or 4.1) (the "Option Agreement"), as clarified by that certain letter
agreement dated [MERGE DATE CODE] (the "Letter Agreement"), between LightSpeed
and Optionee. The Option Agreement, as so clarified by the Letter Agreement,
shall be referred to in this document as the "Modified Option Agreement."
WHEREAS, LightSpeed has this day been acquired by Cisco through
the merger of LightSpeed with and into Cisco (the "Merger") pursuant to the
Agreement of Merger dated ____, 1998, by and between Cisco and LightSpeed (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of LightSpeed under all outstanding options under the
Plan at the consummation of the Merger and to issue to the holder of each
outstanding option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 0. of a share
of Cisco common stock ("Cisco Stock") for each outstanding share of LightSpeed
common stock ("LightSpeed 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 LightSpeed Stock subject to the
options issued to Optionee pursuant to the Modified Option Agreement and held by
Optionee immediately prior to the Effective Time (the "LightSpeed 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
LightSpeed under each of the LightSpeed Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each
LightSpeed 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 LightSpeed Option hereby assumed shall be as
specified for that option in attached Exhibit B, and the adjusted exercise price
payable per share of Cisco Stock under the assumed LightSpeed Option shall be as
indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
LightSpeed Option is to assure that the spread between the aggregate fair market
value of the shares of Cisco Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Merger, equal the spread which
existed, immediately prior to the Merger, between the then aggregate fair market
value of the LightSpeed Stock subject to the LightSpeed Option and the aggregate
exercise price in effect at such time under the Modified 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 LightSpeed Option immediately
prior to the Merger.
3. The following provisions shall govern each LightSpeed Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all
references to the "Company" in each Modified Option Agreement and
in the Plan shall mean Cisco, all references to "Common Stock"
and "Shares" shall mean shares of Cisco Stock, all references to
"Option Shares" shall mean shares of Cisco Stock subject to the
assumed LightSpeed Option, and all references to the "Board of
Directors" shall mean the Board of Directors of Cisco.
(b) The grant date and the expiration date of each
assumed LightSpeed Option and all other provisions which govern
either the exercise or the termination of the assumed LightSpeed
Option shall remain the same as set forth in the Modified Option
Agreement applicable to that option, and the provisions of the
Modified Option Agreement shall accordingly govern and control
Optionee's rights under this Agreement to purchase Cisco Stock.
2.
<PAGE> 3
(c) Pursuant to the terms of the Modified Option
Agreement, the Merger shall be deemed NOT to constitute a
termination, dissolution or liquidation of LightSpeed which would
trigger acceleration under the LightSpeed Options. Each assumed
LightSpeed Option shall therefore remain exercisable in
accordance with the same installment exercise schedule in effect
under the applicable Modified Option Agreement immediately prior
to the Effective Time, with the number of shares of Cisco Stock
subject to each such installment adjusted to reflect the Exchange
Ratio, and no accelerated vesting of the LightSpeed Options shall
be deemed to occur by reason of the Merger.
(d) For purposes of applying any and all provisions
of the Modified Option Agreement and the Plan relating to
Optionee's status as an employee or a consultant of LightSpeed,
Optionee shall be deemed to continue in such status as an
employee or a consultant for so long as Optionee renders services
as an employee or a consultant to Cisco or any present or future
Cisco subsidiary. Accordingly, the provisions of the Modified
Option Agreement governing the termination of the assumed
LightSpeed Options upon Optionee's cessation of service as an
employee or a consultant of LightSpeed shall hereafter be applied
on the basis of Optionee's cessation of employee or consultant
status with Cisco and its subsidiaries, and each assumed
LightSpeed Option shall accordingly terminate, within the
designated time period in effect under the Modified Option
Agreement for that option, following such cessation of service as
an employee or a consultant of Cisco and its subsidiaries.
(e) The adjusted exercise price payable for the
Cisco Stock subject to each assumed LightSpeed Option shall be
payable in any of the forms authorized under the Modified 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 LightSpeed Stock prior to the Merger
shall be taken into account.
(f) In order to exercise each assumed LightSpeed
Option, Optionee must deliver to Cisco a written notice of
exercise in which the number of shares of Cisco Stock to be
purchased thereunder must be indicated. The exercise notice must
be accompanied by payment of the adjusted exercise price payable
for the purchased shares of Cisco Stock and should be delivered
to Cisco at the following address:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attention: Option Plan Administrator
3.
<PAGE> 4
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Modified Option
Agreement as in effect immediately prior to the Merger shall continue in full
force and effect and shall not in any way be amended, revised or otherwise
affected by this Stock Option Assumption Agreement.
IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the day of , 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 LightSpeed Options hereby assumed by Cisco are as
set forth in the Modified Option Agreement, the Plan and such Stock Option
Assumption Agreement.
------------------------------------
1~, OPTIONEE
DATED: __________________, 1998
4.
<PAGE> 5
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of LightSpeed International, Inc.
Common Stock (Pre-Merger)
<PAGE> 6
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
<PAGE> 1
EXHIBIT 99.9
MEMORANDUM
TO: Holder of LightSpeed International, Inc. Options
FROM: Cisco Systems, Inc.
DATE: February , 1998
RE: Assumption of Stock Options
- ------------------------------------------------------------------------------
As you know, LightSpeed International, Inc. ("LightSpeed") was
recently acquired by Cisco Systems, Inc. ("Cisco") through a merger effected on
_____________ , 1998. As a result of the transaction, LightSpeed has become a
division of Cisco.
In connection with the acquisition, Cisco has assumed all of your
outstanding LightSpeed stock options so that those options now cover shares of
Cisco common stock. Several additional changes to your options were also made as
part of the assumption process.
If you currently hold LightSpeed options granted prior to August
27, 1997 (the "Pre-August 27, 1997 Options"), you will find attached a Stock
Option Assumption Agreement for Version 1.1, 2.1 and 2.1a of Individual Stock
Option Agreement setting forth the changes to such options as a result of the
merger. If you currently hold LightSpeed options granted after August 26, 1997
(the "Post-August 26, 1997 Options"), you will find attached a Stock Option
Assumption Agreement for Version 3.1 and 4.1 of Individual Stock Option
Agreement setting forth the changes to those options as a result of the merger.
The applicable changes to both the Pre-August 27, 1997 Options and the
Post-August 26, 1997 Options can be summarized as follows:
1. The number of shares of Cisco common stock subject to each of
your Pre-August 27, 1997 Options and/or Post-August 26, 1997 Options has
been adjusted to reflect the ratio at which shares of LightSpeed common
stock were exchanged for shares of Cisco common stock in the merger.
That ratio was ____________ of a share of Cisco common stock for each
share of LightSpeed common stock (the "Exchange Ratio"). As a result,
the number of Cisco shares now subject to each such option is equal to
the number of shares of LightSpeed common stock subject to that option
immediately before the merger, multiplied by ________________ and
rounded down to the nearest whole share.
2. The aggregate exercise price under each of your Pre-August 27,
1997 and Post-August 26, 1997 Options remains the same as the aggregate
<PAGE> 2
exercise price in effect under that option immediately prior to the
merger. However, the exercise price per share for each such option has
been adjusted to reflect the Exchange Ratio. Accordingly, the exercise
price per share in effect under each of your Pre-August 27, 1997 Options
and/or Post-August 26, 1997 Options immediately before the merger has
been divided by . and rounded up to the nearest whole cent to establish
the price per share payable for the Cisco common stock now subject to
that option.
3. PRE-AUGUST 27, 1997 OPTIONS ONLY: At the time the merger was
completed, you received immediate credit for one (1) year of vesting
under each of your Pre-August 27, 1997 Options. Such accelerated vesting
was in accordance with the terms of the Individual Stock Option
Agreement applicable to such option, as amended by (i) the First
Amendment to Individual Stock Option Agreement and (ii) that certain
letter agreement dated [DATE CODE] (the "Letter Agreement"), between you
and LightSpeed (collectively, the "Modified Option Agreement").
Following the merger, the remaining shares subject to each of your
Pre-August 27, 1997 Options will continue to vest in accordance with the
same installment vesting schedule in effect for each such option under
the terms of the applicable Modified Option Agreement, with the number
of Cisco shares subject to each such installment adjusted to reflect the
Exchange Ratio. However, following the merger, you will now earn vesting
credit for the period you continue in employment or service with Cisco
(or any Cisco subsidiary).
4. POST-AUGUST 26, 1997 OPTIONS ONLY: Under the terms of your
Letter Agreement, the merger was deemed NOT to constitute a termination,
dissolution or liquidation of LightSpeed which would trigger accelerated
vesting under the Post-August 26, 1997 Options. Accordingly, none of
your Post-August 26, 1997 Options vested or otherwise accelerated by
reason of the merger, and no other change has been made to the vesting
schedule in effect for your Post-August 26, 1997 Options. Each such
option will therefore continue to vest in accordance with the same
installment vesting schedule in effect under that option, with the
number of Cisco shares subject to each such installment adjusted to
reflect the Exchange Ratio. However, following the merger, you will now
earn vesting credit for the period you continue in employment or service
with Cisco (or any Cisco subsidiary).
As noted, the assumption by Cisco of your Pre-August 27, 1997
Options (if any) is evidenced by the Stock Option Assumption Agreement for
Versions 1.1, 2.1 and 2.1a of Individual Stock Option Agreement, two (2) copies
of which are attached to this document (as applicable). In addition, the
assumption by Cisco of your Post-August 26, 1997 Options (if any) is evidenced
by the Stock Option Assumption Agreement for Versions 3.1 and 4.1 of Individual
Stock Option Agreement, two (2) copies of which are attached (as applicable).
Each such Stock Option Assumption Agreement contains the adjustments to the
terms of your LightSpeed options discussed above. Please review the enclosed
agreement(s) carefully so that you understand your
<PAGE> 3
rights under those options to acquire Cisco shares. You should contact Robert
Turner at Cisco at (408) 527-2098 if you have any questions.
After you have reviewed the attached agreement(s), please sign
one copy of each version (as applicable) and return the executed agreement(s) to
Mr. Turner in the pre-addressed envelope enclosed. You should attach the
remaining copy of each version to the appropriate LightSpeed option agreement so
that you will have a complete record of all the terms and provisions applicable
to your options as now assumed by Cisco. As noted above, the Stock Option
Assumption Agreement for Versions 1.1, 2.1 and 2.1a of Individual Stock Option
Agreement relates to each of your Pre-August 27, 1997 Options (if any) and
should accordingly be attached to each of your existing stock option agreements
for those options. The Stock Option Assumption Agreement for Versions 3.1 and
4.1 of Individual Stock Option Agreement relates to each of your Post-August 26,
1997 Options (if any) and should therefore be attached to each stock option
agreement for those grants.
<PAGE> 1
EXHIBIT 99.10
[LIGHTSPEED LETTERHEAD]
1~
c/o LightSpeed International, Inc.
100 Carpenter Drive, Suite 105
Sterling, VA 20164
Dear 2~:
As you know, Cisco Systems, Inc. is in the process of acquiring
LightSpeed International, 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, such as yourself, provided
certain changes are made to those options prior 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:
<TABLE>
<CAPTION>
Number of
Outstanding
Grant Date Exercise Price Option Shares
---------- -------------- -------------
<S> <C> <C>
3~ 4~ 5~
</TABLE>
FOR EACH OF YOUR PRE-AUGUST 27, 1997 OPTIONS, the terms of the
applicable stock option agreement (the "Option Agreement") provide that the
shares subject to those Options will accelerate as to one (1) year of vesting
upon a "change in control." Cisco's acquisition of the Company will constitute
such a change in control. Accordingly, we are pleased to inform you that upon
the closing of the Acquisition, you will immediately receive an additional one
(1) year of vesting credit under each of your pre-August 27, 1997 Options.
In order for the Company to complete the Acquisition, the terms
of your existing Options must be modified with respect to certain acceleration
provisions currently in effect for those Options.
<PAGE> 2
PRE-AUGUST 27, 1997 OPTIONS
For your pre-August 27, 1997 Options, the acceleration provisions
are set forth in Paragraph 2 of that certain First Amendment to Individual Stock
Option Agreement which you executed for each of your Options (the "Acceleration
Amendment").
As a condition to closing the Acquisition which will generate the
one year of accelerated vesting under your pre-August 27, 1997 Option, you
hereby agree that Paragraph 2 of the Acceleration Amendment for each of your
pre-August 27, 1997 Options is hereby amended to read in its entirety as
follows:
"(b) The Optionee's right to exercise the Option granted under
this Agreement shall vest 100% immediately upon the occurrence of any of
the following events: (i) the termination of Optionee's employment with
the Company (or Cisco following the Acquisition) due to the Optionee's
death or permanent disability (physical or mental) or (ii) the
termination by the Company (or Cisco following the Acquisition) of the
Optionee's employment as part of a reduction in force or other
involuntary layoff of Cisco's employees following the Acquisition or
(iii) the termination by the Company (or Cisco following the
Acquisition) of the Optionee's employment for any other reason other
than "for cause" (as defined in Paragraph 3(c) below) without the
consent of Mr. Lev Volftsun, the Company's current Chief Executive
Officer, or his successor or (iv) the termination by the Optionee of the
Optionee's employment with the Company (or any successor entity)
following (A) a permanent relocation by the Company of the Optionee's
place or location of employment to an area outside the greater
Washington D.C. metropolitan area, (B) a material reduction in the level
and scope of the Optionee's duties, responsibilities or job requirements
or (C) a material reduction in the level of compensation in effect for
the Optionee immediately prior to any change in control of the Company
by merger or stock or asset sale."
POST-AUGUST 26, 1997 OPTIONS
To the extent any of your Options were granted after August 26,
1997, those Options provide for full and immediate vesting in the event of "a
bona fide decision by the Company's Board and shareholders to terminate its
business, dissolve and liquidate its assets."
<PAGE> 3
You hereby agree that the Acquisition will NOT be deemed to constitute such a
termination, dissolution or liquidation of the Company and that none of your
post-August 26, 1997 Options will vest or otherwise accelerate by reason of the
Acquisition.
Finally, you agree that you will not exercise any of your Options
(including your pre-August 27, 1997 Options and any post-August 26, 1997
Options) during the interim between the date of this letter agreement and the
effective date of the merger (or such earlier date on which it is announced that
the merger will not be consummated). The merger 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.
To indicate your agreement with the foregoing revisions to your
Options and to confirm the one-year of accelerated vesting you will receive
under your pre-August 27, 1997 options at the time the Acquisition closes,
please sign and date the Acknowledgement section below. 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 terms of your Option(s) effected by this letter
agreement.
Very truly yours,
LIGHTSPEED INTERNATIONAL, INC.
By:
Title:
ACKNOWLEDGEMENT
In consideration of the additional one (1) year of vesting credit
I will receive under each of my pre-August 27, 1997 Options upon the closing of
the Acquisition, I hereby (i) agree to the foregoing revision to the
Acceleration Amendment in effect for each of my pre-August 27, 1997 Options and
(ii) acknowledge and agree that the Acquisition will not constitute an
acceleration event under any of my post-August 26, 1997 Options which would
result in the full and immediate vesting of those options.
Signature:
1~
Date:
