SAN JOSE, Calif., Oct. 24, 1994 -- Cisco Systems Inc. and Kalpana, Inc. today jointly announced the signing of an agreement whereby Cisco will acquire Kalpana, a privately held company that is the leading provider of Ethernet switches worldwide.

Under the terms of the agreement, Cisco has agreed to acquire all of the outstanding stock and assume all the outstanding employee stock options and warrants of Kalpana in exchange for 7,480,114 shares of Cisco common stock. The closing sale price for Cisco's common stock on NASDAQ on October 21, 1994 was $27.25 per share. The transaction, approved by the board of directors of both Cisco and Kalpana, is subject to several conditions including approval of Kalpana shareholders and receipt of an opinion that the transaction will be accounted for as a pooling of interests.

"The complementary nature of our products and distribution channels, coupled with cultural compatibility, make this an extraordinary partnership. Combining Kalpana's switches and Cisco's internetworking products provides a comprehensive, first-class offering to our customers," said Jim Jordan, president of Kalpana.

"Kalpana provides great value because their products are both cost-effective and high-in-performance. Additionally, because Kalpana markets and supports products worldwide through distributors, value-added resellers and systems integrators, their well-established, indirect channels of distribution complement Cisco's existing sales channels," said John Chambers, Cisco's executive vice president.

Kalpana presently has approximately 150 employees and is based in Sunnyvale, California with regional offices in the U.S. and distributors in Europe and Asia. Kalpana is considered to be the inventor of Ethernet switching, and designs and manufactures internetworking products that increase the throughput of Ethernet networks. This technology enables Kalpana's Ethernet switching products to significantly extend the usability and data-carrying capacity of existing Ethernet local area networks. The company's product line consists of modular and stackable platforms which are managed through SwitchVison, an SNMP management solution.

Kalpana pioneered the Ethernet switching industry with innovative technology such as low-latency, cut-through switching and full-duplex Ethernet.

Cisco Systems, Inc., headquartered in San Jose, Calif., is the leading global supplier of internetworking products, including routers, bridges, workgroup systems, ATM and Ethernet switches, dial-up access servers, software routers and router management software. These products are used to build enterprise-wide internetworks linking an unlimited number of geographically dispersed LANs, WANs and IBM SNA networks. Cisco's Internetwork Operating System (IOS) technology, found in more than 250,000 installed Cisco units and in the products of over 20 partners, is the de facto industry standard for data transmission. In the U.S., Cisco is traded over the counter under the NASDAQ symbol CSCO. A member of the S&P 500 and Fortune 500, Cisco in fiscal 1994 logged sales of $1.2 billion.