As filed with the Securities and Exchange Commission on August 13, 1999
File No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
VIDEOSERVER, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-3114212
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
63 Third Avenue, Burlington, MA 01803
(Address of Principal Executive Offices) (Zip Code)
VideoServer, Inc. 1995 Employee Stock Purchase Plan
(Full Title of the Plan)
Khoa D. Nguyen
President and Chief Executive Officer
VIDEOSERVER, INC.
63 Third Avenue
Burlington, MA 01803
(Name and Address of Agent for Service)
(781) 229-2000
Telephone Number, Including Area Code, of Agent for Service
Copies to:
David L. Engel, Esq.
BINGHAM DANA LLP
150 Federal Street
Boston, Massachusetts 02110-1726
(617) 951-8000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
------------------------------------ ------------------ ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Proposed Proposed
Amount Maximum Maximum Amount Of
Title Of To Be Offering Price Aggregate Registration
Securities To Be Registered Registered Per Share (1) Offering Price (1) Fee
------------------------------------ ------------------ ------------------- ------------------- ------------------
==================================== ================== =================== =================== ==================
Common Stock,
$.01 par value per share......... 300,000 $7.8125 $2,343,750 $651.57
==================================== ================== =================== =================== ==================
</TABLE>
(1) The proposed maximum offering price has been estimated pursuant to
Rule 457(h) solely for the purpose of calculating the registration
fee. It is not known how many shares will be purchased under the Plan
or at what price such shares will be purchased. The proposed maximum
offering price per share and the proposed maximum aggregate offering
price have been calculated assuming the issuance of shares of Common
Stock upon exercise of options granted or to be granted under the
Plan, at an assumed exercise price of $7.8125 per share, which was the
average of the high and low prices of the Common Stock reported on
August 10, 1999.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by VideoServer, Inc. (the "Registrant")
with the Securities and Exchange Commission (the "SEC") are hereby incorporated
by reference in this Registration Statement: (1) the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998; (2) all reports filed
by the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since the end of the Registrant's
1998 fiscal year; and (3) the description of the Common Stocks contained in the
Registrant's registration statement on Form 8-A filed with the SEC under section
12(g) of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all of such 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.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts or Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons to
the extent and under the circumstances set forth therein.
The Amended and Restated Certificate of Incorporation and the Amended
and Restated By-Laws of the Company provide for advancement of expenses and
indemnification of officers and directors of the Registrant and certain other
persons against liabilities and expenses incurred by any of them in certain
stated proceedings and under certain stated conditions to the fullest extent
permissible under Delaware law.
The Company maintains insurance for the benefit of its directors and
officers insuring such persons against certain liabilities, including
liabilities under the securities laws.
Item 7. Exemption from Registration Claimed
Not applicable.
<PAGE>
Item 8. Exhibits
The following exhibits are filed as part of this Registration
Statement:
5 Opinion of Bingham Dana LLP with respect to the legality of
the shares being registered.
10 VideoServer, Inc. 1995 Employee Stock Purchase Plan, as amended.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney (included in signature page to Registration
Statement).
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 Securities 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. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high and
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(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 paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities 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.
<PAGE>
(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 offering.
(B) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act each filing
of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in 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) The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Exchange Act; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
(D) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities 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 Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
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 Town of Burlington, Commonwealth of Massachusetts, on
this 9th day of August, 1999.
VIDEOSERVER, INC.
By: /s/ Khoa D. Nguyen
-------------------------------------
Khoa D. Nguyen
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Khoa D.
Nyuyen, Stephen J. Nill, Paul L. Criswell and each of them severally, acting
alone and without the other, his/her true and lawful attorney-in-fact with the
authority to execute in the name of each such person, and to file with the
Securities and Exchange Commission, together with any exhibits thereto and other
documents therewith, any and all amendments (including without limitation
post-effective amendments) to this Registration Statement on Form S-8 necessary
or advisable to enable the Registrant to comply with the Securities Act of 1933,
as amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission in respect thereof, which amendments may make such other
changes in the Registration Statement as the aforesaid attorney-in-fact
executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
/s/ Khoa D. Nguyen Chief Executive Officer, August 9, 1999
--------------------- President and Director
Khoa D. Nguyen (Principal Executive Officer)
/s/ Stephen J. Nill Vice President, Finance August 9, 1999
--------------------- and Chief Financial Officer (Principal
Stephen J. Nill Financial and Accounting Officer)
Chairman
---------------------
Robert L. Castle
/s/ Paul J. Ferri Director August 13, 1999
---------------------
Paul J. Ferri
/s/ William E. Foster Director August 9, 1999
---------------------
William E. Foster
/s/ Steven C. Walske Director August 13, 1999
---------------------
Steven C. Walske
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
5 Opinion of Bingham Dana LLP with respect to the legality of the
shares being registered.
10 VideoServer, Inc. 1995 Employee Stock Purchase Plan, as amended.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney (included in signature page to Registration
Statement).
Exhibit 5
August 13, 1999
VideoServer, Inc.
63 Third Avenue
Burlington, MA 01803
Dear Sir/Madam:
We have acted as counsel for VideoServer, Inc., a Delaware corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-8 proposed to be filed with the Securities and Exchange Commission on or about
August 13, 1999 (the "Registration Statement").
The Registration Statement covers the registration of 300,000 shares of
common stock, $.01 par value per share, of the Company (the "Shares"), which are
to be issued by the Company pursuant to the Company's 1995 Employee Stock
Purchase Plan, as amended (the "Plan").
We have reviewed the corporate proceedings of the Company with respect
to the authorization of the Plan and the issuance of the Shares thereunder. We
have also examined and relied upon originals or copies, certified or otherwise
identified or authenticated to our satisfaction, of such corporate records,
instruments, agreements or other documents of the Company, and certificates of
officers of the Company as to certain factual matters, as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed. In
our examination, we have assumed the genuineness of all signatures, the
conformity to the originals of all documents reviewed by us as copies, the
authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document.
Subject to the limitations set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
This opinion is limited solely to the Delaware General Corporation Law as
applied by courts located in Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, when issued and delivered upon the exercise of options pursuant to the
Plan and against the payment of the purchase price therefor, will be validly
issued, fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Bingham Dana LLP
BINGHAM DANA LLP
Exhibit 10
VIDEOSERVER, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
(as amended on May 12, 1999)
1. Definitions. As used in this 1995 Employee Stock Purchase Plan of
VideoServer, Inc., the following terms have the respective meanings ascribed to
them below:
(a) Base Compensation means annual or annualized base compensation,
exclusive of overtime, bonuses, contributions to employee benefit plans, and
other fringe benefits.
(b) Beneficiary means, with respect to any Participating Employee, the
person designated as beneficiary on such Participating Employee's Membership
Agreement or other form provided by the Company for such purpose, or if no such
beneficiary is named, the person to whom the Option is transferred by will or
under the applicable laws of descent and distribution.
(c) Board means the board of directors of the Company, except that if
and for so long as the board of directors of the Company has delegated its
authority with respect to the Plan to the Committee pursuant to Section 4, then
all references in this Plan to the Board will be deemed to refer to the
Committee acting in such capacity.
(d) Code means the Internal Revenue Code of 1986, as amended.
(e) Company means VideoServer, Inc., a Delaware corporation.
(f) Committee means the Compensation Committee of the Board.
(g) Effective Date means the effective date of the Company's
registration statement on Form S-1, File No. 33-91132, under the Securities Act
of 1933, as amended.
(h) Eligible Employee means a person who is eligible under the
provisions of Section 7 to receive an Option as of a particular Offering
Commencement Date.
(i) Employer means, as to any particular Offering Period, the Company
and any Related Corporation that is designated by the Board as a corporation
whose Eligible Employees are to receive Options as of that Period's Offering
Commencement Date.
<PAGE>
(j) Market Value means, as of the Offering Commencement Date of the
first Offering Period under this Plan, the initial public offering price at
which shares of Stock are offered to the public, as specified in the Company's
registration statement on Form S-1 referred to above, and as of any other
particular date, (i) if the Stock is listed on a national securities exchange,
the closing price of the Stock on such exchange on such date, (ii) if the Stock
is not listed on a national securities exchange but is quoted through the
National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
National Market System or any successor thereto, the last sale price of the
Stock so quoted on such date, and (iii) if the Stock is not listed on a national
securities exchange or quoted through the NASDAQ National Market System or any
successor thereto, but is quoted through NASDAQ other than through the National
Market System, or is otherwise publicly traded, the average of the closing bid
and asked prices of the Stock so quoted or otherwise reported on such date.
(k) Membership Agreement means an agreement whereby a Participating
Employee authorizes an Employer to withhold payroll deductions from his or her
Base Compensation.
(l) Offering Commencement Date means the first business day of an
Offering Period on which Options are granted to Eligible Employees.
(m) Offering Period means (i) in the case of the initial Offering
Period hereunder, the period running from the Effective Date to January 31,
1996, and (ii) in the case of each subsequent Offering Period, a semi-annual
period running from February 1 to the next following July 31 or from August 1 to
the next following January 31; during which options will be offered under the
Plan pursuant to a determination by the Board.
(n) Offering Termination Date means the last business day of an
Offering Period, on which Options must, if ever, be exercised.
(o) Option means an option to purchase shares of Stock granted under
the Plan.
(p) Option Shares means shares of Stock purchasable under an Option.
(q) Participating Employee means an Eligible Employee to whom an Option
is granted.
(r) Plan means this 1995 Employee Stock Purchase Plan of the Company,
as amended from time to time.
<PAGE>
(s) Related Corporation means any corporation that is or during the
term of the Plan becomes a parent corporation of the Company, as defined in
Section 424(e) of the Code, or a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
(t) Stock means the common stock, $0.01 par value per share, of the
Company, to be authorized upon stockholder approval of certain amendments to the
Company's Amended and Restated Certificate of Incorporation, authorized by the
Board on April 12, 1995, authorizing a one-for-two reverse stock split and
setting the par value of the Company's Common Stock at $0.01, and the filing
with the Delaware Secretary of State of an appropriate certificate of amendment
to such Amended and Restated Certificate of Incorporation effecting such
changes.
2. Purpose of the Plan. The Plan is intended to encourage ownership of
Stock by employees of the Company and any Related Corporations and to provide an
additional incentive for the employees to promote the success of the business of
the Company and any Related Corporations. It is intended that the Plan qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
3. Term of the Plan. The Plan will become effective on the Effective
Date. No Option may be granted under the Plan after January 31, 2005.
4. Administration of the Plan. The Plan will be administered by the
Board. The Board will determine which semi-periods will be Offering Periods in
accordance with Section 8, and which (if any) Related Corporations will be
Employers as to each Offering Period. The Board will have authority to interpret
the Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, to determine the terms of Options granted under the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
All determinations of the Board under the Plan will be final and binding as to
all persons having or claiming any interest in or arising out of the Plan. The
Board may delegate all or any portion of its authority with respect to the Plan
to the Committee, and thereafter until such delegation is revoked by the Board
all powers under the Plan delegated to the Committee will be exercised by the
Committee.
5. Termination and Amendment of Plan. The Board may terminate or amend
the Plan at any time; provided, however, that the Board may not, without
approval by the holders of a majority of the outstanding shares of Stock,
increase the maximum number of shares of Stock purchasable under the Plan or
change the description of employees or classes of employees eligible to receive
<PAGE>
Options. Without limiting the generality of the foregoing, but subject to the
foregoing proviso, the Board may amend the Plan from time to time to increase or
decrease the length of any future Offering Periods and to make all required
conforming changes to the Plan. No termination or amendment of the Plan may
adversely affect the rights of a Participating Employee with respect to any
Option held by the Participating Employee prior to such termination or
amendment.
6. Shares of Stock Subject to the Plan. No more than an aggregate of
600,000 shares of Stock may be issued or delivered pursuant to the exercise of
Options granted under the Plan (such maximum number of shares taking into
account the effects of the one-for-two reverse stock split referred to above,
and subject to automatic proportionate adjustment in the event of any other
stock dividend, stock split, stock combination, recapitalization, or other
similar event affecting the Common Stock and to adjustments made in accordance
with Section 9.7). Shares to be delivered upon exercise of Options may be either
shares of Stock that are authorized but unissued or shares of Stock held by the
Company in its treasury. If an Option expires or terminates for any reason
without having been exercised in full, the unpurchased shares subject to the
Option will become available for other Options granted under the Plan. At all
times during which Options are outstanding, the Company will reserve and keep
available sufficient shares of Stock to cover the exercise in full of such
Options, and will pay all fees and expenses incurred by the Company in
connection therewith.
7. Persons Eligible to Receive Options. Each employee of an Employer
will be granted an Option on each Offering Commencement Date on which such
employee meets all of the following requirements:
(a) The employee is customarily employed by an Employer for more than
twenty hours per week and for more than five months per calendar year.
(b) The employee will not, after grant of the Option, own Stock
possessing five percent or more of the total combined voting power or value of
all classes of stock of the Company or of any Related Corporation. For purposes
of this paragraph (b), the rules of Section 424(d) of the Code will apply in
determining the Stock ownership of the employee, and Stock that the employee may
purchase under outstanding options will be treated as Stock owned by the
employee.
(c) Upon grant of the Option, the employee's rights to purchase Stock
under all employee stock purchase plans (as defined in Section 423(b) of the
Code) of the Company and its Related Corporations will not accrue at a rate
exceeding $25,000 of Market Value of Stock (determined as of the grant date) for
<PAGE>
each calendar year in which such Option is outstanding at any time. The accrual
of rights to purchase Stock will be determined in accordance with Section
423(b)(8) of the Code.
8. Offering Commencement Dates. Options will be granted on the first
business day of the period running from the Effective Date to January 31, 1996,
and of each semi-annual period running from February 1 to the next following
July 31 or from August 1 to the next following January 31, that is designated by
the Board as an Offering Period. Following the initial Offering Period under the
Plan (i.e., the period running from the Effective Date to January 31, 1996), all
succeeding semi-annual periods described above will be deemed Offering Periods
without need of further Board action unless and until contrary action will have
been taken by the Board prior to the beginning of what would otherwise be an
Offering Period.
9. Terms and Conditions of Options.
9.1 General. All Options granted on a particular Offering Commencement
Date will comply with the terms and conditions set forth in Sections 9.2 through
9.11. Subject to Sections 7(c) and 9.9, each Option granted on a particular
Offering Commencement Date will entitle the Participating Employee to purchase
that number of shares of Stock equal to the result of $12,500 (or such lesser
amount as is selected by the Board, prior to the applicable Offering
Commencement Date, and applied uniformly during the Offering Period then
beginning) divided by the Market Value of one such share on the Offering
Commencement Date and then rounded down, if necessary, to the nearest whole
number.
9.2 Purchase Price. The purchase price of each Option Share will be 85%
of the lesser of (a) the Market Value of a share of Stock as of the Offering
Commencement Date or (b) the Market Value of a share of Stock as of the Offering
Termination Date.
9.3 Restrictions on Transfer.
(a) Options may not be transferred otherwise than by will or pursuant
to applicable laws of descent and distribution. During the lifetime of a
Participating Employee, such Participating Employee's Options may not be
exercised by anyone other than such Participating Employee.
(b) The Optionee will agree in the Membership Agreement to notify the
Company of any transfer of Option Shares within two years of the Offering
Commencement Date for such Option Shares. The Company will have the right to
place a legend on all stock certificates representing Option Shares instructing
<PAGE>
the transfer agent to notify the Company of any transfer of such Option Shares.
The Company will also have the right to place a legend on all stock certificates
representing Option Shares setting forth or referring to the restriction on
transferability of such Option Shares.
9.4 Expiration. Each Option will expire at the close of business on the
Offering Termination Date or on such earlier date as may result from the
operation of Sections 9.5 or 9.6.
9.5 Termination of Employment of Optionee. If a Participating Employee
ceases for any reason (other than death) to be continuously employed by an
Employer, whether due to voluntary severance, involuntary severance, transfer,
or disaffiliation of a Related Corporation with the Company, his or her Option
will immediately expire, and the Participating Employee's accumulated payroll
deductions will be returned by the Company. For purposes of this Section 9.5, a
Participating Employee will be deemed to be employed throughout any leave of
absence for military service, illness, or other bona fide purpose that does not
exceed the longer of ninety days or the period during which the Participating
Employee's reemployment rights are guaranteed by statute (including without
limitation the Veterans Reemployment Rights Act or similar statute relating to
military service) or by contract. If the Participating Employee does not return
to active employment prior to the termination of such period, his or her
employment will be deemed to have ended on the ninety-first day of such leave of
absence (or such longer period guaranteed by statute or by contract as provided
above).
9.6 Death of Optionee. If a Participating Employee dies, his or her
Beneficiary will be entitled to withdraw the Participating Employee's
accumulated payroll deductions, or to purchase shares on the Offering
Termination Date to the extent that the Participating Employee would be so
entitled had he or she continued to be employed by an Employer. The number of
shares purchasable will be limited by the amount of the Participating Employee's
accumulated payroll deductions as of the date of his or her death. Accumulated
payroll deductions will be applied by the Company toward the purchase of shares
only if the Participating Employee's Beneficiary submits to the Employer not
later than the Offering Termination Date a written request that the deductions
be so applied. Accumulated payroll deductions not withdrawn or applied to the
purchase of shares will be delivered by the Company to the Beneficiary within a
reasonable time after the Offering Termination Date.
9.7 Capital Changes Affecting the Stock. In the event that, between
the Offering Commencement Date and the Offering Termination Date with respect
to an Option, a stock dividend is paid or becomes payable in respect of
<PAGE>
the Stock, or there occurs a split-up or contraction in the number of shares of
Stock, the number of shares of Stock for which the Option may thereafter be
exercised and the price to be paid for each such share will both be
proportionately adjusted. In the event that, after the Offering Commencement
Date, there occurs a reclassification or change of outstanding shares of Stock
or a consolidation or merger of the Company with or into another corporation or
a sale or conveyance, substantially as a whole, of the property of the Company,
the Participating Employee will be entitled on the Offering Termination Date to
receive shares of Stock or other securities equivalent in kind and value to the
shares of Stock he or she would have held if he or she had exercised the Option
in full immediately prior to such reclassification, change, consolidation,
merger, sale, or conveyance and had continued to hold such shares (together with
all other shares and securities thereafter issued in respect thereof) until the
Offering Termination Date. In the event that there is to occur a
recapitalization involving an increase in the par value of the Stock that would
result in a par value exceeding the exercise price under an outstanding Option,
the Company will notify the affected Participating Employee of such proposed
recapitalization immediately upon its being recommended by the Board to the
Company's shareholders, after which the Participating Employee will have the
right to exercise his or her Option prior to such recapitalization; if the
Participating Employee fails to exercise the Option prior to recapitalization,
the exercise price under the Option will be appropriately adjusted. In the event
that, after the Offering Commencement Date, there occurs a dissolution or
liquidation of the Company, except pursuant to a transaction to which Section
424(a) of the Code applies, each Option will terminate, but the Participating
Employee will have the right to exercise his or her Option prior to such
dissolution or liquidation.
9.8 Payroll Deductions. A Participating Employee may purchase shares
under his or her Option during any particular Offering Period by completing and
returning to the Company at least 15 days prior to the beginning of such
Offering Period a Membership Agreement indicating a percentage (which will be a
full integer between two and ten, inclusive) of his or her Base Compensation
that is to be withheld each pay period (not to exceed an aggregate of $12,500 in
any Offering Period). No Participating Employee will be permitted to change the
percentage of Base Compensation withheld during an Offering Period. However, not
more than once per Offering Period the Participating Employee may cancel his or
her Agreement, and withdraw all (but not less than all) of his or her
accumulated payroll deductions, by submitting a written request therefor to the
Company not later than the close of business on the Offering Termination Date.
The percentage of Base Compensation withheld may be changed from one Offering
Period to another.
9.9 Exercise of Options. On the Offering Termination Date the
Participating Employee may purchase the number of shares purchasable by his
<PAGE>
or her accumulated payroll deductions, or if less, the maximum number of shares
subject to the Option as provided in Section 9.1, provided that:
(a) If the total number of shares that all Optionees elect to purchase,
together with any shares already purchased under the Plan, exceeds the total
number of shares that may be purchased under the Plan pursuant to Section 6, the
number of shares that each Optionee is permitted to purchase will be decreased
pro rata based on the Participating Employee's accumulated payroll deductions in
relation to all accumulated payroll deductions currently being withheld under
the Plan.
(b) If the number of shares purchasable includes a fraction, such
number will be adjusted to the next smaller whole number and the purchase price
will be adjusted accordingly.
Accumulated payroll deductions not withdrawn prior to the Offering Termination
Date will be automatically applied by the Company toward the purchase of Option
Shares, or to the extent in excess of the aggregate purchase price of the shares
then purchasable by the Participating Employee, refunded to the Participating
Employee, except that where such excess is less than the purchase price for a
single share of Stock on the Offering Termination Date, such excess will not be
refunded but instead will be carried over and applied to the purchase of shares
in the first following Offering Period (subject to the possibility of withdrawal
by the Participating Employee during such Offering Period in accordance with the
terms of the Plan).
9.10 Delivery of Stock. Except as provided below, within a reasonable
time after the Offering Termination Date, the Company will deliver or cause to
be delivered to the Participating Employee a certificate or certificates for the
number of shares purchased by the Participating Employee. A stock certificate
representing the number of Shares purchased will be issued in the participant's
name only, or if his or her Membership Agreement so specifies, in the name of
the employee and another person of legal age as joint tenants with rights of
survivorship. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises will require that
the Company or the Participating Employee take any action in connection with the
shares being purchased under the Option, delivery of the certificate or
certificates for such shares will be postponed until the necessary action will
have been completed, which action will be taken by the Company at its own
expense, without unreasonable delay. The Optionee will have no rights as a
shareholder in respect of shares for which he or she has not received a
certificate.
<PAGE>
9.11 Return of Accumulated Payroll Deductions. In the event that the
Participating Employee or the Beneficiary is entitled to the return of
accumulated payroll deductions, whether by reason of voluntary withdrawal,
termination of employment, or death, or in the event that accumulated payroll
deductions exceed the price of shares purchased, such amount will be returned by
the Company to the Participating Employee or the Beneficiary, as the case may
be, not later than within a reasonable time following the Offering Termination
Date applicable to the Option Period in which such deductions were taken.
Accumulated payroll deductions held by the Company will not bear interest nor
will the Company be obligated to segregate the same from any of its other
assets.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the VideoServer, Inc. 1995 Employee Stock Purchase Plan
of our report dated January 19, 1999, with respect to the consolidated financial
statements and schedule of VideoServer, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1998, filed with the Securities
and Exchange Commission
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
August 12, 1999