<PAGE> 1
As filed with the Securities and Exchange Commission on May 2, 2000
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
COMPATIBLE SYSTEMS CORPORATION
1993 STOCK OPTION PLAN
---------------------
(Full title of the Plans)
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share Price Fee
---------- ------------- --------- ----- ---
<S> <C> <C> <C> <C>
Compatible Systems Corporation
1993 Company Stock Option Plan 509,430 shares $5.48(2) $2,788,342.38(2) $737
Common Stock, par value $0.01
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Compatible
Systems Corporation 1993 Stock Option Plan by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the Registrant's receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Cisco Systems, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended July 31, 1999, filed with the Commission on September 28,
1999, as amended on Form 10-K405/A filed with the Commission on
February 3, 2000, pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the " 1934 Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 30, 1999, filed with the Commission on
December 14, 1999, as amended on Form 10-Q/A filed with the
Commission on February 3, 2000, and the Registrant's Quarterly
Report for the fiscal quarter ended January 29, 2000 filed with
the Commission on March 14, 2000;
(c) The Registrant's Current Reports on Form 8-K filed with the
Commission on March 16, 2000, March 27, 2000, March 28, 2000 and
April 3, 2000;
(d) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with the Commission on January 11, 1990, together with
Amendment No. 1 on Form 8-A/A filed with the Commission on
February 15, 1990, and including any other amendments or reports
filed for the purpose of updating such description, in which
there is described the terms, rights and provisions applicable
to the Registrant's Common Stock, and;
(e) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with the Commission on June 11, 1998, including any
amendments or reports filed for the purpose of updating such
description, in which there is described the terms, rights and
provisions applicable to the Registrant's Preferred Stock
Purchase Rights.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which de-registers all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
II-1
<PAGE> 3
Item 6. Indemnification of Directors and Officers
Section 317 of the California Corporations Code authorizes a
court to award, or a corporation's Board of Directors to grant indemnity to
directors and officers in terms sufficiently broad to permit indemnification
(including reimbursement of expenses incurred) under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended, (the "1933
Act"). The Registrant's Restated Articles of Incorporation, as amended, and
Amended and Restated Bylaws provide for indemnification of its directors,
officers, employees and other agents to the maximum extent permitted by the
California Corporations Code. In addition, the Registrant has entered into
Indemnification Agreements with each of its directors and officers.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statements No. 000-18225 on
Form 8-A, together with the amendments and exhibits thereto,
which are incorporated herein by reference pursuant to Items
3(d) and 3(e).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Compatible Systems Corporation 1993 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Option Assumption Agreement.
99.4 Form of Option Assumption Agreement-Acceleration.
</TABLE>
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Compatible
Systems Corporation 1993 Company 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 this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 4
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California on this
2nd day of May, 2000.
CISCO SYSTEMS, INC.
By: /s/ John T. Chambers
---------------------------------
John T. Chambers
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints John T. Chambers and Larry R.
Carter, and each of them, as such person's true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for such person and
in such person's name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John T. Chambers President, Chief Executive May 2, 2000
- --------------------------------- Officer and Director
John T. Chambers (Principal Executive Officer)
/s/ Larry R. Carter Senior Vice President, Finance May 2, 2000
- --------------------------------- and Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting
Officer)
/s/ John P. Morgridge Chairman of the Board and May 2, 2000
- --------------------------------- Director
John P. Morgridge
/s/ Donald T. Valentine Vice Chairman of the Board and May 2, 2000
- --------------------------------- Director
Donald T. Valentine
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ James F. Gibbons Director May 2, 2000
- ---------------------------------
James F. Gibbons
/s/ Steven M. West Director May 2, 2000
- ---------------------------------
Steven M. West
/s/ Edward R. Kozel Director May 2, 2000
- ---------------------------------
Edward R. Kozel
Director May ___, 2000
- ---------------------------------
Carol A. Bartz
/s/ James C. Morgan Director May 2, 2000
- ---------------------------------
James C. Morgan
/s/ Mary Cirillo Director May 2, 2000
- ---------------------------------
Mary Cirillo
Director May ___, 2000
- ---------------------------------
Arun Sarin
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statements No. 000-18225 on
Form 8-A, together with the amendments and exhibits thereto,
which are incorporated herein by reference pursuant to Items
3(d) and 3(e).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Compatible Systems Corporation 1993 Stock Option Plan.
99.2 Form of Stock Option Agreement.
99.3 Form of Option Assumption Agreement.
99.4 Form of Option Assumption Agreement-Acceleration.
</TABLE>
<PAGE> 1
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
May 2, 2000
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134-1706
Re: Cisco Systems, Inc. - Registration Statement for Offering of
Shares of 509,430 Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to Cisco Systems, Inc., a California
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
an aggregate of 509,430 shares of common stock (the "Shares") and related stock
options under the Compatible Systems Corporation 1993 Stock Option Plan (the
"Plan")
This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the assumption of
the Plan. Based on such review, we are of the opinion that if, as and when the
Shares are issued and sold (and the consideration therefor received) pursuant to
the provisions of option agreements duly authorized under the Plan, and in
accordance with the Registration Statement, such Shares will be duly authorized,
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to
the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Plan, or the Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Cisco Systems, Inc. of our report dated August 10, 1999
relating to the consolidated financial statements, which appears in Cisco
Systems, Inc.'s 1999 Annual Report to Shareholders, which is incorporated by
reference in its Annual Report on Form 10-K/A for the year ended July 31, 1999.
We also consent to the incorporation by reference of our report dated August 10,
1999 relating to the financial statement schedule, which appears in such Annual
Report on Form 10-K/A. We also consent to the incorporation by reference of our
report dated August 10, 1999, except as to the pooling of interest transactions
as described in Note 3b which is as of November 24, 1999, relating to the
supplementary consolidated financial statements of Cisco Systems, Inc. which
appears in the Current Report on Form 8-K/A dated February 3, 2000.
PricewaterhouseCoopers LLC
San Jose, California
April 28, 2000
<PAGE> 1
EXHIBIT 99.1
Prepared May 15, 1993
COMPATIBLE SYSTEMS CORPORATION
1993 STOCK OPTION PLAN
1. Introduction. This 1993 Stock Option Plan (the "Plan") is
established for the purpose of providing key employees and those associated with
Compatible Systems Corporation, a Colorado corporation (the "Corporation"), the
opportunity to participate in the growth of the Corporation through the purchase
of $.001 par value Common Stock of the Corporation (the "Common Stock"). The
Board of Directors believes that the Plan affords an appropriate means of
rewarding key employees, consultants and directors for their past and future
contributions to the Corporation's growth, and of encouraging such employees,
consultants and directors to remain in or enter the service of the Corporation.
The options granted under the Plan are intended to qualify as incentive stock
options under the Internal Revenue Code of 1986, as amended (the "Code"), unless
designated as non-qualified stock options. Any incentive stock option which for
any reason is no longer eligible to be treated as an incentive stock option
shall be deemed to be a non-qualified stock option effective as to the date of
grant of such option.
2. Administration of the Plan. The Plan shall be administered by
the Board of Directors of the Corporation (the "Board") or a committee of the
Board consisting of not less than two members appointed by the Board and serving
at the Board's pleasure (the "Committee"). Any vacancy occurring in the
membership of the Committee shall be filled by appointment by the Board. As used
herein, the term Board shall also mean the Committee of the Board.
The Board may from time to time adopt such rules and regulations
as it may deem advisable for the administration of the Plan, and may alter,
amend or rescind any such rules and regulations in its discretion. The Board
shall have the power to interpret or amend or discontinue the Plan, except that
any amendment which increases the aggregate number of shares for which options
may be granted under the Plan, or which alters the class of employees to whom
options may be granted, shall take effect only upon approval of the shareholders
of the Corporation holding a majority of the voting stock of the Corporation as
such requirement is set forth in the Code (and, if applicable, such additional
voting requirements set forth in the Colorado Corporation Code, Articles of
Incorporation, or by agreement); and further provided that without the written
consent of an optionee, no amendment or suspension of the Plan shall alter or
impair any option previously granted to optionee under the Plan, subject to any
provisions otherwise in the Plan. All decisions made by the Board in the
administration and interpretation of the Plan shall be binding and conclusive
for all purposes. No member of the Board shall be liable for any action taken or
decisions made by him or her in good faith with respect to the Plan or any
option granted under it. The Board may delegate the grant of options to a
committee of management of the Corporation so long as the Board ratifies by
formal Board actions all options granted by such committee of management.
<PAGE> 2
3. Grant of Options. Except as provided in Section 7 hereof,
options may be granted under the Plan for a total of One Million (1,000,000)
shares of Common Stock to one or more key employees and, with respect to
non-qualified stock options, to key employees, directors and consultants of the
Corporation selected by the Board in the Board's sole discretion. The grant of
an option hereunder shall be evidenced by written notice of the grant (which may
be in the form of a stock option agreement), of the terms and conditions of the
option granted, and whether the option is an incentive stock option or
non-qualified stock option, which notice shall be delivered to the individual to
whom the option is granted. No stock option may be granted under the Plan more
than 10 years after the adoption of the Plan by the Board.
4. Terms and Conditions of Options. The type of option, the
number of shares which may be purchased under each option and the purchase price
per share, shall be designated by the Board at the time the option is granted.
The purchase price per share of an incentive stock option shall in no event be
less than 100% of the fair market value of each share at the time the incentive
stock option is granted, provided, however, that incentive stock options may not
be granted to any holder of the voting rights of 10% or more of the total
combined voting power of all classes of stock of the Corporation at the time of
grant, unless the purchase price shall be at least 110% of the fair market value
of the shares at the time of grant. "Fair market value" shall be determined as
set forth in Section 6 below. An option granted under the Plan shall not be
transferable by the individual to whom it is granted otherwise than by will or
the laws of descent and distribution, and shall be exercisable, during the
lifetime of such individual, only by optionee; provided, however, that if such
individual becomes legally disabled, his or her legal representative may
exercise the option on optionee's behalf, and upon the death of an optionee, the
estate or other person who acquired the right to exercise the option by bequest
or inheritance may exercise the option. No incentive stock options shall be
granted under the Plan to any employee where the aggregate fair market value
(determined at the time the option is granted) of the stock with respect to
which incentive stock options are exercisable for the first time by such
employee during any calendar year (under all such plans of the Corporation and
its parent and subsidiary corporations) shall exceed $100,000. Options may be
granted under the Plan which are non-qualified stock options, including options
exceeding the previously stated limits. All options shall be exercisable even
though there may be outstanding any other option(s) which was or were granted
before the granting of such option. The Board may impose on any option any
additional terms and conditions which it deems advisable and which are not
inconsistent with the Plan.
5. Exercise of Options. Unless otherwise determined by the Board
and set forth in Optionee's Non-Qualified Stock Option Agreement or Incentive
Stock Option Agreement, as applicable, in the forms attached hereto and
incorporated herein, options granted hereunder shall mature and become
exercisable as follows:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Percentage of
Period of Time Shares for
After Date of Which Option May
Grant Be Exercised
---------------------- ----------------------
<S> <C>
12 months 25%
Every month thereafter 2.083%
48 months 100%
</TABLE>
An optionee may exercise less than all the matured portion of the
option, in which case such unexercised, matured portion shall continue to remain
exercisable, subject to the terms of the Plan, until the option terminates as
provided below.
Unless otherwise specified by the Board, incentive and
non-qualified stock options granted hereunder shall be exercisable by an
optionee for a period of three months after optionee's employment by the
Corporation terminates, other than a termination for cause, but only to the
extent such optionee was entitled to exercise such option at the date of
termination. If optionee's employment with the Corporation is terminated "for
cause" (which shall include (i) a material failure by optionee, as determined
solely in the discretion of the Board, to carry out the responsibilities and
requirements of optionee's position with the Corporation, or (ii) the commission
by optionee, as determined solely in the discretion of the Board, of any act
performed other than pursuant to optionee's duties to the Corporation, which has
or may have a material adverse effect on the business or reputation of the
Corporation), the option shall not be exercisable at any time after such
termination. If an optionee dies at a time when such optionee could have
exercised an incentive or non-qualified stock option or any part thereof, then
the option shall remain exercisable for a period of twelve months from the date
of such individual's death, and may be exercised by the optionee's estate or by
a person who acquired the right to exercise the option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of the optionee's death. Notwithstanding any other provision of this
section or of any other section of the Plan, no stock option granted hereunder
shall be exercisable after the expiration of eight years from the date such
option is granted, provided however, that no incentive stock option granted to a
10% stockholder (as referenced in Section 4 hereof) shall be exercisable after
the expiration of 5 years from the date such option is granted. Any option which
is no longer exercisable pursuant to the terms of this paragraph shall
terminate, and the shares underlying such unexercised option shall again be
available for grant under this Plan.
Incentive stock options may be granted only to employees
(including officers) of the Corporation. A director of the Corporation shall not
be eligible to be granted an incentive stock option unless the director is also
an employee of the Corporation. An optionee may, if he or she is otherwise
eligible, be granted additional options. Employment with the Corporation shall
include employment with any parent or subsidiary as defined in Section 425 of
the Code.
The manner of exercise shall be by written notice sent by the
holder of the option (including any holder upon death of optionee) to the
Corporation, setting forth the number 0! shares desired to be purchased, stating
whether the optionee is exercising an incentive stock
-3-
<PAGE> 4
option or non-qualified stock option and accompanied by cash or check in the
amount equal to the full purchase price of the shares being purchased; provided,
however, that the Corporation may in its discretion allow the optionee to pay
the purchase price in whole or' in part by transferring to the Corporation
shares of Common Stock held by optionee or by being credited by the Corporation
for shares which optionee has a right to acquire in the option being exercised,
in which case such certificate shall reflect the number of shares after payment
of the exercise price. Notice of exercise shall be addressed to the Corporation
at its principal place of business; Attention: President; shall be signed by the
holder of the option (including any holder upon death of optionee); and shall,
at the option of the Corporation, contain a representation, in the form provided
by the Corporation, that the shares are being purchased for investment only and
not for resale or distribution and such other representations and agreements as
the Corporation may reasonably require, as well as (if requested by the
Corporation) any Stockholders Agreement which is applicable to holders of 67% or
more of the outstanding Common Stock. The Corporation may place any legend on
any certificate issued hereunder which it deems necessary to comply with any
applicable law. Within a reasonable time after receipt of notice in the form
specified above, the Corporation shall cause to be issued and delivered to the
holder of the option a certificate for the number of shares of Common Stock
which the holder has purchased, provided, however, that the Corporation may in
its discretion allow the optionee to elect to pay any withholding taxes payable,
in whole or in part, by transferring to the Corporation shares of Common Stock
of the Corporation owned by optionee or by being credited by the Corporation for
shares he or she has a right to acquire in the option being exercised, in which
case such certificate shall reflect the number of shares after payment of the
taxes. All documentary stamp taxes payable on account of such issue shall be
paid for by the Corporation. In no event shall the Corporation be required to
issue fractional shares upon the exercise of an option.
No person shall have any rights as a stockholder with respect to
any shares covered by an option until the date of the issuance of a stock
certificate(s) for the shares for which the option has been exercised. No
adjustments shall be made for dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued,
except as provided in Section 7. Nothing in this Plan or in any option agreement
shall confer upon any optionee any right to continue in the employ of the
Corporation or interfere in any way with any right of the Corporation to
terminate the optionee's employment at any time. The adoption of the Plan of
itself, shall not be deemed to entitle any employee to any rights to be granted
options.
6. Definition of Fair Market Value. For the purposes of this
Plan, "fair market value" shall mean either the exercise price per share
established in the discretion of the Board of Directors or, in the event the
Company's stock is publicly traded: (i) the average of the closing bid and asked
prices per share of Common Stock of the Company on the date preceding the date
of grant, as reported by the National Association of Securities Dealers
Automated Quotation System, (ii) the average of the closing bid and asked prices
per share of Common Stock of the Company on the date preceding the date of
grant, as reported by the National Quotation Bureau, Inc.'s "pink sheets," or
National Bulletin Board or (iii) if the Company's Common Stock is listed on a
national securities exchange, fair market value shall mean the closing price on
such preceding date as reported by the Wall Street Journal.
-4-
<PAGE> 5
7. Stock Splits; Mergers. etc. In case of any stock split, stock
dividend, combination or similar transaction which increases or decreases the
number of outstanding shares of the Corporation's Common Stock, appropriate
adjustment will be made to both the number of shares which may be purchased
under the Plan and the number and price per share of Common Stock which may be
purchased under any outstanding options. In the case of any merger, liquidation,
sale of all or substantially all of the assets of the Corporation or other
transaction which results in the replacement of the Corporation's Common Stock
with the stock of another corporation, the Board may provide for the
acceleration of the exercise date of some or all of the non-exercisable portion
of any outstanding option to the day immediately preceding the closing day of
such event, and/or may provide for the replacement of any options with
comparable options to purchase the stock of such other corporation.
8. Effective Date. The Plan shall take effect upon the adoption
of the Plan by the Board, being 5/7, 1993. If the Corporation's shareholders
have not approved the adoption of the Plan by 5/27, 1994, all incentive stock
options granted hereunder shall no longer be incentive stock options and shall
instead be deemed non-qualified stock options effective as of their date of
grant.
The following exhibits are incorporated herein by reference:
A - Stock Option Exercise Notice
B - Non-Qualified Stock Option Agreement
C - Incentive Stock Option Agreement
THE FOREGOING IS THE PLAN ADOPTED BY THE BOARD OF DIRECTORS OF
COMPATIBLE SYSTEMS CORPORATION ON 5/27, 1993
Signatory:
-----------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
-5-
<PAGE> 1
Exhibit 99.2
May 11, 1993
STOCK OPTION EXERCISE NOTICE
(Exhibit A to Plan)
COMPATIBLE SYSTEMS CORPORATION
Attention: President
Sir or Madam:
The undersigned elects to exercise the option to purchase _____ shares of Common
Stock ("Shares") of COMPATIBLE SYSTEMS CORPORATION (the "Corporation") under and
pursuant to the incentive stock option _____ or non-qualified stock option _____
(check one) granted to the undersigned by the Corporation on ____________,
l9___, pursuant to the Corporation's 1993 Stock Option Plan (the "Plan").
Prior to issuance of said Shares, I will make full payment of the purchase price
for the Shares in cash, if permitted by the Corporation by tender of stock of
the Corporation having a fair market value not less than the purchase price, or
as otherwise approved by the Corporation's Board of Directors.
I represent and agree that I am over twenty-one (21) years of age, that I am
acquiring the Shares for investment and that I have no intention to transfer,
sell or otherwise dispose of such Shares, except as permitted pursuant to the
Plan and in compliance with applicable securities laws.
I understand I may be required or requested, from time to time, to sign
additional documents concerning or related to my investment and compliance with
other laws, and will do so. I understand I must sign a Stockholders' Agreement
if requested to do so by the Corporation, if that agreement is applicable to
holders of 67% or more of the outstanding Common Stock.
I further acknowledge and understand that the Shares must be held indefinitely
unless they are subsequently registered under the Securities Act of 1933 or an
exemption from such registration is available. I further acknowledge and
understand that the Corporation is under no obligation to register the Shares
and that, in the absence of registration, the Shares may not be transferred. I
understand that the instrument evidencing the Shares will be imprinted with
legends which prohibit the transfer of the Shares unless they are registered or
such registration is not required in the opinion of counsel satisfactory to the
Corporation. I do not have any contract, agreement or arrangement with any
persons to sell, transfer or grant participations to such person or to any third
person with respect to any of the Shares.
THE FOLLOWING PARAGRAPH APPLIES PRIMARILY IF THE CORPORATION IS A PUBLIC
COMPANY:
I am aware of the adoption of Rule 144 by the Securities and Exchange
Commission, promulgated under the Securities Act of 1933, which permits limited
public resale of securities acquired on a non-public offering subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain public information about the Corporation, the
<PAGE> 2
resale occurring not less than two years after the party has purchased and paid
for the securities to be sold, the sale being through a broker in an unsolicited
"brokers' transaction," and the amount of securities being sold during any
three-month period not exceeding specified limitations (generally, 1% of the
total amount outstanding).
I agree further that said Shares are being acquired by me in accordance with and
subject to the terms, provisions and conditions of the Plan and the Stock Option
Agreement, to all of which I hereby expressly assent. These statements shall
bind and inure to the benefit of my heirs, legal representatives, successors and
assigns.
My address of record is:
------------------------------
------------------------------
and my Social Security Number is:
-------------
Very truly yours,
Signature:
-----------------------------
Name Printed:
--------------------------
Receipt of the above is hereby acknowledged:
COMPATIBLE SYSTEMS CORPORATION
By:
--------------------------
Title:
------------------------
Dated:
------------------------
-2-
<PAGE> 3
May 11, 1993
COMPATIBLE SYSTEMS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
(EXHIBIT B TO PLAN)
COMPATIBLE SYSTEMS CORPORATION (the "Corporation"), a Colorado
corporation, hereby grants to _____________________ (the "Optionee"), a
non-qualified stock option to purchase a total of _______ shares of common stock
("Common Stock") of the Corporation, at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of this
Agreement and the 1993 Stock Option Plan (the "Plan") adopted by the
Corporation, which is incorporated herein by reference.
1. Option Price.
The option price is $_______ for each share.
2. Exercise of Option.
The option shall be exercisable in accordance with provisions of
the Plan as follows:
(i) Right to Exercise.
The Board of Directors has determined that Optionee's
options shall be exercisable in accordance with the
following formula:
(a) 25% of such shares will become exercisable after 12
months from the date of grant;
(b) 2.083% of such shares will become exercisable every
month thereafter (on the monthly anniversary of the
option grant date); and
(c) 100% of such shares will be exercisable after 48
months from the date of grant.
(ii) Method of Exercise.
This option shall be exercisable by written notice in the
form attached hereto which shall state the election to
exercise the option, the number of shares in respect of
which the option is being exercised, and such other
representations and agreements as to the holder's
investment intent and other matters with respect to such
shares as may be required by the Corporation pursuant to
the provisions of the Plan including Exhibits thereto.
Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the
President of the Corporation
<PAGE> 4
prior to the expiration of the term of the option as set
forth in Section 4 below, accompanied by full payment of
the purchase price in cash, by tender of stock of the
Corporation having a fair market value not less than the
purchase price, or as otherwise approved by the
Corporation's Board of Directors. The certificate or
certificates for the shares as to which the option shall
be exercised shall be registered in the name of the person
or persons exercising the option.
(iii) Restrictions on Exercise.
This option may not be exercised if the issuance of such
shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other
law or regulations. As a condition to the exercise of this
option, the Corporation may require the Optionee to make
any representation, warranty or agreement to the
Corporation as may be required by any applicable law or
regulation or as the Corporation may reasonably require.
3. Non-Transferability of Option.
This option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be
exercised during the lifetime of the Optionee only by Optionee;
provided, however, that if Optionee becomes legally disabled,
Optionee's legal representative may exercise the option on his or
her behalf, and if Optionee dies, the estate or other person who
acquired the right to exercise the option by bequest or
inheritance may exercise the option. The terms of this option
shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
4. Term of Option.
This option may not be exercised after eight years from the date
of grant of this option, as set forth below, and may be exercised
during such term only in accordance with the Plan and the terms
of this agreement.
5. Right of First Refusal.
Before any shares of Common Stock issued upon the exercise of
this Option or securities of the Corporation issued by the
Corporation in respect thereof or as a result thereof, may be
sold or transferred (including transfer by operation of law) such
securities shall first be offered to the Corporation.
(a) The Optionee shall deliver a notice ("Notice") to the
Corporation stating (i) Optionee's bona fide intention to
sell or transfer such securities, (ii) the number of such
securities to be sold or transferred, (iii) the price for
which he or she proposes to sell or transfer such
securities, and (iv) the name of the proposed purchaser or
transferee.
-2-
<PAGE> 5
(b) Within thirty (30) days after receipt of the Notice, the
Corporation or its assignee may elect to purchase any or
all securities to which the Notice refers, at the price
per security and on the terms specified in the Notice.
(c) If all the securities to which the Notice refers are not
elected to be purchased, as provided in subparagraph 5(b)
hereof, the Optionee may sell the remaining securities to
any person named in the Notice at the price specified in
the Notice or at a higher price, provided that such sale
or transfer is consummated within three (3) months of the
date of said Notice to the Corporation, and provided,
further, that any such sale is materially in accordance
with all the terms and conditions hereof. Any securities
not sold or transferred within such three (3) month period
will be subject to the provisions of this Section 5 upon
any subsequent transfer.
(d) Optionee's obligations under this paragraph 5 shall
terminate upon (i) the merger, reorganization or
consolidation of the Corporation in which the holders of
the outstanding voting securities of the Corporation
immediately prior to such merger, reorganization or
consolidation do not hold a majority of the voting
securities of the surviving entity outstanding immediately
after such merger, reorganization or consolidation, (ii)
the sale of all or substantially all of the Corporation's
assets, (iii) the initial public offering of the
Corporation's Common Stock pursuant to a registration
statement filed with and declared effective by the
Securities and Exchange Commission under the Securities
Act of 1933, as amended, or (iv) January 1, 2012.
(e) The provisions of subparagraphs 5(a), 5(b) and 5(c) shall
not apply to a transfer of any securities by Optionee,
either during his lifetime or on death by will or
intestacy to his ancestors, descendants or spouse, or any
custodian or trustee for the account of Optionee or
Optionee's ancestors, descendants or spouse; provided, in
each such case the transferee shall receive and hold such
securities subject to the provisions of this paragraph 5
and there shall be no further transfer of such securities
except in accordance herewith.
NOTWITHSTANDING THE FOREGOING, Optionee's transfer of securities
shall in addition to the foregoing, be subject to the terms of any Stockholders'
Agreement applicable to him or her.
6. Legends.
All certificates representing any shares of Common Stock or other
securities of the Corporation subject to the provisions of this
Agreement shall have endorsed thereon the following legends:
(i) "These securities have not been registered under
the Securities Act of 1933. They may not be sold,
offered for sale, pledged or
-3-
<PAGE> 6
hypothecated in the absence of an effective
registration statement as to the securities under
said Act or an opinion of counsel satisfactory to
the Corporation that such registration is not
required."
(ii) "The securities represented by this certificate are
subject to a right of first refusal obligation in
favor of the Corporation or its assignee set forth
in an agreement between the Corporation and the
registered holder, or his predecessor in interest,
a copy of which is on file at the principal office
of this corporation."
(iii) Such other or similar legends as the Corporation
may reasonably require.
7. Lock-Up Agreement.
The Optionee hereby agrees that in connection with the first two
public offerings of the Corporation's equity securities, if
requested by the Corporation or the underwriters managing the
offering of the Corporation's securities, Optionee will not sell,
make any short sale of, grant any option for the purchase of, or
otherwise dispose of or transfer any securities of the
Corporation, directly or indirectly acquired under the Plan or as
a result of holding securities under the Plan, except securities
included in the registration, if any, without the prior written
consent of the Corporation and such underwriter, for that period
of time agreed upon by the Corporation and such underwriter,
which shall not exceed the 30-day period ending, and the 90-day
period beginning, on the first date of the effectiveness of such
registration. Any transferee of Common Stock issued upon exercise
of this Option who becomes the holder of such stock, and any
security issued in respect or as a result thereof, prior to the
effective date of the Corporation's initial public offering shall
receive and hold such security subject to the provisions of this
Section 7.
8. Rights of Optionee.
The Corporation shall not be required (i) to transfer on its
books any securities of the Corporation which shall have been
sold or transferred in violation of any of the provisions of this
Agreement or (ii) to treat as owner of such securities or to
accord the right to vote as such owner or to pay dividends or
interest to any transferee to whom such securities have been so
transferred.
9. Condition to Issuance of Stock.
No exercise hereunder by Optionee is effective unless Optionee
executes and delivers to the Corporation the documents he or she
is required to deliver hereunder.
-4-
<PAGE> 7
10. Investment Representation; This Provision as a Restrictive
Legend. Prior to signing this Agreement Optionee has obtained
such information concerning the Corporation as Optionee has
sought. Optionee understands and acknowledges that the Option and
the Common Stock receivable on exercise of the Option have not
and will not be registered under the Securities Act of 1933 or
any state or other securities laws. Optionee understands that
Optionee must bear the economic risk of any investment in the
securities of the Corporation for an indefinite period of time
because the securities have not been so registered and therefore
cannot be sold unless they are subsequently registered under
applicable law or an exemption from such registration is
available. The Corporation may place stop transfer instructions
or make notations on its books with respect to the
non-transferability of securities acquired by Optionee except
upon compliance with applicable securities laws. The foregoing
also constitutes a restrictive legend imprinted on this document.
DATE OF GRANT:
-------------------
COMPATIBLE SYSTEMS CORPORATION
By:
-------------------------------------
Title:
----------------------------------
Optionee acknowledges receipt of a copy of the Plan with
Exhibits, a copy of which is annexed hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this option
subject to all the terms and provisions thereof. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan or this Agreement.
OPTIONEE:
Date:
-------------------- ----------------------------------------
Name printed:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
Social Security No.:
----------------------------------------
-5-
<PAGE> 8
May 11, 1993
COMPATIBLE SYSTEMS CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
(EXHIBIT C TO PLAN)
COMPATIBLE SYSTEMS CORPORATION, (the "Corporation"), a Colorado
corporation, hereby grants to _________________________ (the "Optionee"), an
incentive stock option to purchase a total of _______ shares of common stock
("Common Stock") of the Corporation, at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of this
Agreement and the 1993 Stock option Plan (the "Plan") adopted by the
Corporation, which is incorporated herein by reference.
1. Option Price.
The option price is $_______ for each share.
2. Exercise of Option.
The option shall be exercisable in accordance with provisions of
the Plan as follows:
(i) Right to Exercise.
The Board of Directors has determined that optionee's
options shall be exercisable in accordance with the
following formula:
(a) 25% of such shares will become exercisable after 12
months from the date of grant;
(b) 2.083% of such shares will become exercisable every
month thereafter (on the monthly anniversary of the
option grant date); and
(c) 100% of such shares will be exercisable after 48
months from the date of grant.
(ii) Method of Exercise.
This option shall be exercisable by written notice in the
form attached hereto which shall state the election to
exercise the option, the number of shares in respect of
which the option is being exercised, and such other
representations and agreements as to the holder's
investment intent and other matters with respect to such
shares as may be required by the Corporation pursuant to
the provisions of the Plan including Exhibits thereto.
Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the
president of the Corporation
<PAGE> 9
prior to the expiration of the term of the option as set
forth in Section 4 below, accompanied by full payment of
the purchase price in cash, by tender of stock of the
Corporation having a fair market value not less than the
purchase price, or as otherwise approved by the
Corporation's Board of Directors. The certificate or
certificates for the shares as to which the option shall
be exercised shall be registered in the name of the person
or persons exercising the option.
(iii) Restrictions on Exercise.
This option may not be exercised if the issuance of such
shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other
law or regulation. As a condition to the exercise of this
option, the Corporation may require the Optionee to make
any representation, warranty or agreement to the
Corporation as may be required by any applicable law or
regulation or as the Corporation may reasonable require.
3. Non-Transferability of Option.
This option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be
exercised during the lifetime of the Optionee only by optionee;
provided, however, that if Optionee becomes legally disabled,
Optionee's legal representative may exercise the option on his or
her behalf, and if optionee dies, the estate or other person who
acquired the right to exercise the option by bequest or
inheritance may exercise the option. The terms of this option
shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
4. Term of Option.
This option may not be exercised after eight years from the date
of grant of this option, as set forth below, and may be exercised
during such term only in accordance with the Plan and the terms
of this agreement.
5. Right of First Refusal.
Before any shares of Common Stock issued upon the exercise of
this option, or securities of the Corporation issued by the
Corporation in respect thereof or as a result thereof, may be
sold or transferred (including transfer by operation of law) such
securities shall first be offered to the Corporation.
(a) The optionee shall deliver a notice ("Notice") to the
Corporation stating (i) optionee's bona fide intention to
sell or transfer such securities, (ii) the number of such
securities to be sold or transferred, (iii) the price for
which he or she proposes to sell or transfer such
securities, and (iv) the name of the proposed purchaser or
transferee.
-2-
<PAGE> 10
(b) Within thirty (30) days after receipt of the Notice, the
Corporation or its assignee may elect to purchase any or
all shares to which the Notice refers, at the price per
share and on the terms specified in the Notice.
(c) If all the securities to which the Notice refers are not
elected to be purchased, as provided in subparagraph 5(b)
hereof, the Optionee may sell the remaining securities to
any person named in the Notice at the price specified in
the Notice or at a higher price, provided that such sale
or transfer is consummated within three (3) months of the
date of said Notice to the Corporation, and provided,
further, that any such sale is materially in accordance
with all the terms and conditions hereof. Any securities
not sold or transferred within such three (3) month period
will be subject to the provisions of this Section 5 upon
any subsequent transfer.
(d) optionee's obligations under this paragraph 5 shall
terminate upon (i) the merger, reorganization or
consolidation of the Corporation in which the holders of
the outstanding voting securities of the Corporation
immediately prior to such merger, reorganization or
consolidation do not hold a majority of the voting
securities of the surviving entity outstanding immediately
after such merger, reorganization or consolidation, (ii)
the sale of all or substantially all of the Corporation's
assets, (iii) the initial public offering of the
Corporation's Common Stock pursuant to a registration
statement filed with and declared effective by the
Securities and Exchange Commission under the Securities
Act of 1933, as amended, or (iv) January 1, 2012.
(e) The provisions of subparagraphs 5(a), 5(b) and 5(c) shall
not apply to a transfer of any securities by Optionee,
either during his lifetime or on death by will or
intestacy to his ancestors, descendants or spouse, or any
custodian or trustee for the account of optionee or
Optionee's ancestors, descendants or spouse; provided, in
each such case the transferee shall receive and hold such
securities subject to the provisions of this paragraph 5
and there shall be no further transfer of such securities
except in accordance herewith.
NOTWITHSTANDING THE FOREGOING, OPTIONEE'S TRANSFER OF SECURITIES
SHALL IN ADDITION TO THE FOREGOING, BE SUBJECT TO THE TERMS OF ANY STOCKHOLDERS'
AGREEMENT APPLICABLE TO HIM OR HER.
6. Legends.
All certificates representing any shares of Common Stock or other
securities of the Corporation subject to the provisions of this
Agreement shall have endorsed thereon the following legends:
(i) "These securities have not been registered under
the Securities Act of 1933. They may not be sold,
offered for sale, pledged or
-3-
<PAGE> 11
hypothecated in the absence of an effective
registration statement as to the securities under
said Act or an opinion of counsel satisfactory to
the Corporation that such registration is not
required."
(ii) "The securities represented by this certificate are
subject to a right of first refusal obligation in
favor of the Corporation or its assignee set forth
in an agreement between the Corporation and the
registered holder, or his predecessor in interest,
a copy of which is on file at the principal office
of this corporation.
(iii) Such other or similar legends as the Corporation
may reasonably require.
7. Lock-Up Agreement.
The Optionee hereby agrees that in connection with the first two
public offerings of the Corporation's Common Stock, if requested
by the Corporation or the underwriters managing the offering of
the Corporation's securities, Optionee will not sell, make any
short sale of, grant any option for the purchase of, or otherwise
dispose of or transfer any securities of the Corporation,
directly or indirectly acquired under the Plan or as a result of
holding securities under the Plan, except securities included in
the registration, if any, without the prior written consent of
the Corporation and such underwriter, for that period of time
agreed upon by the Corporation and such underwriter, which shall
not exceed the 30-day period ending, and the 90-day period
beginning, on the first date of the effectiveness of such
registration. Any transferee of Common Stock issued upon exercise
of this Option who becomes the holder of such stock prior to the
effective date of the Corporation's initial public offering shall
receive and hold such shares subject to the provisions of this
Section 7.
8. Rights of Optionee.
The Corporation shall not be required (i) to transfer on its
books any securities of the Corporation which shall have been
sold or transferred in violation of any of the provisions of this
Agreement or (ii) to treat as owner of such securities or to
accord the right to vote as such owner or to pay dividends or
interest to any transferee to whom such securities have been so
transferred.
9. Condition to Issuance of Stock.
No exercise hereunder by Optionee is effective unless optionee
executes and delivers to the Corporation, the documents he or she
is required to deliver hereunder.
-4-
<PAGE> 12
10. Investment Representation; This Provision as a Restrictive
Legend. Prior to signing this Agreement Optionee has obtained
such information concerning the Corporation as Optionee has
sought. Optionee understands and acknowledges that the Option and
the Common Stock receivable on exercise of the option have not
and will not be registered under the Securities Act of 1933 or
any state or other securities laws. Optionee understands that
Optionee must bear the economic risk of any investment in the
securities of the Corporation for an indefinite period of time
because the securities have not been so registered and therefore
cannot be sold unless they are subsequently registered under
applicable law or an exemption from such registration is
available. The Corporation may place stop transfer instructions
or make notations on its books with respect to the
non-transferability of securities acquired by Optionee except
upon compliance with applicable securities laws. The foregoing
also constitutes a restrictive legend imprinted on this document.
DATE OF GRANT:
-------------------
COMPATIBLE SYSTEMS CORPORATION
By:
-------------------------------------
Title:
----------------------------------
-5-
<PAGE> 13
Optionee acknowledges receipt of a copy of the Plan with Exhibits, a copy of
which is annexed hereto, and represents that he or she is familiar with the
terms and provisions thereof, and hereby accepts this option subject to all the
terms and provisions thereof. optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan or this Agreement.
OPTIONEE:
Date:
------------------- ----------------------------------------
Name printed:
- -----------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
Social Security No.:
----------------------------------------
-6-
<PAGE> 1
EXHIBIT 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
COMPATIBLE SYSTEMS CORPORATION
1993 STOCK OPTION PLAN
OPTIONEE: <<First_Name>> <<Last_NaMe>>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 24th day
of March 2000 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 Compatible
Systems Corporation, a Colorado corporation ("Compatible"), which were granted
to Optionee under the Compatible 1993 Stock Option Plan (the "Plan").
WHEREAS, each outstanding Compatible option is evidenced by a
Stock Option Agreement the ("Option Agreement"), with any shares purchased under
such options to be subject to the terms and conditions of such Agreement.
WHEREAS, Compatible has been acquired by Cisco through the
merger of Compatible with Cisco (the "Merger") pursuant to the Agreement and
Plan of Reorganization, by and between Cisco and Compatible (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require the
obligations of Compatible under each outstanding option under the Plan to be
assumed by Cisco at the consummation of the Merger, and the holder of each such
outstanding option to be issued 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 0.4832569 of a
share of Cisco Common Stock ("Cisco Stock"), for each outstanding share of
Compatible common stock ("Compatible Stock").
WHEREAS, the purpose of this Agreement is to evidence the
assumption by Cisco of the outstanding options held by Optionee at the time of
the consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to Optionee's outstanding options which have become necessary in
connection with their assumption by Cisco.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Compatible Stock subject to the
options held by Optionee immediately prior to the Effective Time (the
"Compatible Options") and the exercise price payable per share are set forth
below. Cisco hereby assumes, as of the Effective Time, all the duties and
obligations of Compatible under each of the Compatible Options. In connection
with such assumption, the number of shares of Cisco Stock purchasable under each
Compatible Option hereby assumed and the exercise price payable thereunder have
been adjusted to reflect
<PAGE> 2
the Exchange Ratio. Accordingly, the number of shares of Cisco Stock subject to
each Compatible Option hereby assumed shall be as specified for that option
below, and the adjusted exercise price payable per share of Cisco Stock under
the assumed Compatible Option shall also be as indicated for that option below.
<TABLE>
<CAPTION>
COMPATIBLE STOCK OPTIONS CISCO ASSUMED OPTIONS
------------------------ ---------------------
<S> <C> <C> <C>
# of Shares of Exercise Price # of Shares of Cisco Adjusted Exercise
Compatible Common Stock per Share Common Stock Price per Share
Compatible Shares $Compatible Price Cisco Shares $Cisco Price
</TABLE>
2. The intent of the foregoing adjustments to each assumed
Compatible 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, be substantially the same as
(and in no event greater than) than the spread which existed, immediately prior
to the Merger, between the then aggregate fair market value of the Compatible
Stock subject to the Compatible Option and the aggregate exercise price in
effect at such time under the Option Agreement. Such adjustments are also
intended 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 Compatible Option immediately prior to the Merger.
3. The following provisions shall govern each Compatible Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all
references in the Option Agreement and, if applicable, in the Plan (as
incorporated into such Option Agreement) shall be adjusted as follows;
(i) all references to the "Corporation" shall mean Cisco, (ii) all
references to "Share" shall mean shares of Cisco Stock, (iii) all
references to "Common Stock" shall mean Cisco Stock, (iv) all references
to the "Board" shall mean the Board of Directors of Cisco and (v) all
references to the "Committee" shall mean the Compensation Committee of
the Cisco Board of Directors.
(b) The grant date and the expiration date of each
assumed Compatible Option and all other provisions which govern either
the exercise or the termination of the assumed Compatible Option shall
remain the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Plan and the Option Agreement shall
accordingly govern and control Optionee's rights to purchase Cisco Stock
under the assumed Compatible Option.
(c) Pursuant to the terms of the Option Agreement and
the Plan, none of the Compatible Options assumed by Cisco hereunder
shall vest as to any shares on an accelerated basis in connection with
the Merger. Accordingly, each assumed Compatible Option shall continue
to vest and become exercisable
2
<PAGE> 3
for the unvested shares of Cisco Stock subject to that option in
accordance with the same installment vesting schedule in effect for that
option, pursuant to the provisions of the applicable Option Agreement,
immediately prior to the Effective Time; provided, however, that the
number of shares subject to each such installment shall be adjusted to
reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions of
the Option Agreement and/or the Plan relating to Optionee's status as an
employee or a consultant of Compatible, 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 majority-owned Cisco subsidiary. Accordingly, the
provisions of the Option Agreements governing the termination of the
assumed Compatible Options shall hereafter be applied on the basis of
Optionee's cessation of employee or consultant status with Cisco and its
majority-owned subsidiaries. Each assumed Compatible Option shall
accordingly terminate, within the designated time period in effect under
the Option Agreement for that option, following such cessation of
service as an employee or a consultant of Cisco and its majority-owned
subsidiaries.
(e) The adjusted exercise price payable for the Cisco
Stock subject to each assumed Compatible Option shall be payable in any
of the forms authorized under the Option Agreement applicable to that
option. For purposes of determining the holding period of any shares of
Cisco Stock delivered in payment of such adjusted exercise price, the
period for which such shares were held as Compatible Stock prior to the
Merger shall be taken into account.
(f) In order to exercise each assumed Compatible 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
MS 11-3
San Jose, CA 95134
Attention: Stock Administration
3
<PAGE> 4
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
IN WITNESS WHEREOF, Cisco, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 24th day of March 2000.
CISCO SYSTEMS, INC.
By:
---------------------------------
Title:
------------------------------
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 Compatible Options hereby assumed by Cisco are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
------------------------------------
<<FIRST_NAME>> <<LAST_NAME>>, OPTIONEE
DATED: _________________, 2000
4
<PAGE> 1
EXHIBIT 99.4
ACCELERATION
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
COMPATIBLE SYSTEMS CORPORATION
1993 STOCK OPTION PLAN
OPTIONEE: <<First_Name>> <<Last_NaMe>>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 24th day
of March 2000 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 Compatible
Systems Corporation, a Colorado corporation ("Compatible"), which were granted
to Optionee under the Compatible 1993 Stock Option Plan (the "Plan").
WHEREAS, each outstanding Compatible option is evidenced by a
Stock Option Agreement the ("Option Agreement"), with any shares purchased under
such options to be subject to the terms and conditions of such agreement.
WHEREAS, Compatible has been acquired by Cisco through the
merger of Compatible with Cisco (the "Merger") pursuant to the Agreement and
Plan of Reorganization, by and between Cisco and Compatible (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require the
obligations of Compatible under each outstanding option under the Plan to be
assumed by Cisco at the consummation of the Merger, and the holder of each such
outstanding option to be issued 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 0.4832569 of a
share of Cisco Common Stock ("Cisco Stock"), for each outstanding share of
Compatible common stock ("Compatible Stock").
WHEREAS, the purpose of this Agreement is to evidence the
assumption by Cisco of the outstanding options held by Optionee at the time of
the consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to Optionee's outstanding options which have become necessary in
connection with their assumption by Cisco.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Compatible Stock subject to the
options held by Optionee immediately prior to the Effective Time (the
"Compatible Options") and the exercise price payable per share are set forth
below. Cisco hereby assumes, as of the Effective Time, all the duties and
obligations of Compatible under each of the Compatible Options. In connection
<PAGE> 2
with such assumption, the number of shares of Cisco Stock purchasable under each
Compatible 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 Compatible Option hereby assumed shall be as
specified for that option below, and the adjusted exercise price payable per
share of Cisco Stock under the assumed Compatible Option shall also be as
indicated for that option below.
<TABLE>
<CAPTION>
COMPATIBLE STOCK OPTIONS CISCO ASSUMED OPTIONS
------------------------ ---------------------
<S> <C> <C> <C>
# of Shares of Exercise Price # of Shares of Cisco Adjusted Exercise
Compatible Common Stock per Share Common Stock Price per Share
Compatible Shares $Compatible Price Cisco Shares $Cisco Price
</TABLE>
2. The intent of the foregoing adjustments to each assumed
Compatible 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, be substantially the same as
(and in no event greater than) than the spread which existed, immediately prior
to the Merger, between the then aggregate fair market value of the Compatible
Stock subject to the Compatible Option and the aggregate exercise price in
effect at such time under the Option Agreement. Such adjustments are also
intended 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 Compatible Option immediately prior to the Merger.
3. The following provisions shall govern each Compatible Option
hereby assumed by Cisco:
(a)Unless the context otherwise requires, all references
in the Option Agreement and, if applicable, in the Plan (as incorporated
into such Option Agreement) shall be adjusted as follows; (i) all
references to the "Corporation" shall mean Cisco, (ii) all references to
"Share" shall mean shares of Cisco Stock, (iii) all references to
"Common Stock" shall mean Cisco Stock, (iv) all references to the
"Board" shall mean the Board of Directors of Cisco and (v) all
references to the "Committee" shall mean the Compensation Committee of
the Cisco Board of Directors.
(b)The grant date and the expiration date of each
assumed Compatible Option and all other provisions which govern either
the exercise or the termination of the assumed Compatible Option shall
remain the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Plan and the Option Agreement shall
accordingly govern and control Optionee's rights to purchase Cisco Stock
under the assumed Compatible Option.
(c)Pursuant to the terms of the Option Agreement, each
Compatible Option assumed by Cisco hereunder shall, by reason of the
Merger,
2
<PAGE> 3
immediately vest as to all of the shares for which that option was not
otherwise vested immediately prior to the Merger.
(d)For purposes of applying any and all provisions of
the Option Agreement and/or the Plan relating to Optionee's status as an
employee or a consultant of Compatible, 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 majority-owned Cisco subsidiary. Accordingly, the
provisions of the Option Agreement governing the termination of the
assumed Compatible Options shall hereafter be applied on the basis of
Optionee's cessation of employee or consultant status with Cisco and its
majority-owned subsidiaries. Each assumed Compatible Option shall
accordingly terminate, within the designated time period in effect under
the Option Agreement for that option, following such cessation of
service as an employee or a consultant of Cisco and its majority-owned
subsidiaries.
(e)The adjusted exercise price payable for the Cisco
Stock subject to each assumed Compatible Option shall be payable in any
of the forms authorized under the Option Agreement applicable to that
option. For purposes of determining the holding period of any shares of
Cisco Stock delivered in payment of such adjusted exercise price, the
period for which such shares were held as Compatible Stock prior to the
Merger shall be taken into account.
(f)In order to exercise each assumed Compatible 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
MS11-3
San Jose, CA 95134
Attention: Stock Administration
4. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option Agreement
as in effect immediately prior to the Merger shall continue in full force and
effect and shall not in any way be amended, revised or otherwise affected by
this Stock Option Assumption Agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, Cisco, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 24th of March 2000.
CISCO SYSTEMS, INC.
By:
---------------------------------
Title:
------------------------------
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 Compatible Options hereby assumed by Cisco are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
------------------------------------
<<First_Name>> <<Last_NaME>>, OPTIONEE
DATED: ___________, 2000
4
