EXHIBIT 99.4
Form of Stock Option Assumption Agreement used in connection
with the Netlink, Inc. 1993 Stock Plan
1993 STOCK PLAN
CABLETRON SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
---------------------------------
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 10th day of December,
1996 by Cabletron Systems, Inc., a Delaware corporation ("Cabletron").
WHEREAS, _____________ ("Optionee") holds one or more outstanding options
to purchase shares of the common stock of Netlink, Inc., a Delaware corporation
("Netlink"), which were granted to Optionee under the Netlink, Inc. 1993 Stock
Plan (the "Plan"), and are evidenced by a Stock Option Agreement (the "Option
Agreement") between Netlink and Optionee.
WHEREAS, Netlink has this day been acquired by Cabletron through merger of
a wholly-owned Cabletron subsidiary, Cabletron Merger, Inc. ("Merger Sub"), with
and into Netlink (the "Merger") pursuant to the Agreement and Plan of Merger
dated as of September 26, 1996 by and among Cabletron, Netlink and Merger Sub
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cabletron to assume
all obligations of Netlink under all options outstanding under the Plan at the
consummation of the Merger and to issue to the holder of each outstanding option
a notice setting forth such holder's rights after consummation of the Merger.
WHEREAS, pursuant to the provisions of the Merger Agreement, the exchange
ratio in effect for the Merger is .29201 of a share of Cabletron common stock
("Cabletron Stock") for each outstanding share of Netlink common stock (the
"Exchange Ratio").
WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Cabletron in
connection with the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Netlink common stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Netlink Options") and the exercise price payable per share are set forth
in Exhibit A hereto. Cabletron hereby assumes, as of the Effective Time, all
the duties and obligations of Netlink under each of the Netlink Options. In
connection with such assumption, the number of shares of Cabletron Stock
purchasable under each Netlink Option hereby assumed and the exercise price
payable thereunder have been adjusted to reflect the Exchange Ratio at which
shares of Netlink common stock were converted into shares of Cabletron Stock in
consummation of the Merger. Accordingly, the number of shares of Cabletron Stock
subject to each Netlink Option hereby assumed, and the adjusted exercise price
payable per share of Cabletron Stock under the assumed Netlink Option, shall be
as indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed Netlink Option
is to assure that the spread between the aggregate fair market value of the
shares of Cabletron Stock purchasable under that option and the aggregate
exercise price as adjusted hereunder will, immediately after the consummation of
the Merger, equal the spread which existed, immediately prior to the Merger,
between the then aggregate fair market value of the Netlink common stock subject
to the Netlink Option and the aggregate exercise price in effect at such time
under the Option Agreement. Such adjustments are also designed to preserve, on
a per share basis immediately after the Merger, the same ratio of exercise price
per option share to fair market value per share which existed under the Netlink
Option immediately prior to the Merger.
3. The following provisions shall govern each Netlink Option hereby
assumed by Cabletron:
- Unless the context otherwise requires, all references to the "Company"
in each Option Agreement and in the Plan (as incorporated into such Option
Agreement) shall mean Cabletron, all references to "Common Stock" shall mean
shares of Cabletron Stock, and all
references to the "Committee" shall mean the Incentive Compensation Committee of
the Board of Directors of Cabletron.
- The grant date and the expiration date of each assumed Netlink Option
and all other provisions which govern either the exercisability or the
termination of the assumed Netlink Option shall remain the same as set forth in
the Option Agreement applicable to that option and shall accordingly govern and
control Optionee's rights under this Agreement to purchase Cabletron Stock.
- Each assumed Netlink Option, upon the consummation of the Merger, became
exercisable in full, with the number of shares of Cabletron Stock subject to
each such Netlink Option adjusted to reflect the Exchange Ratio.
- For purposes of applying any and all provisions of the Option Agreement
relating to Optionee's status as an employee with the Company, Optionee shall be
deemed to continue in such employee status for so long as Optionee renders
services as an employee to Cabletron or any present or future Cabletron
subsidiary, including (without limitation) Netlink. Accordingly, the provisions
of the Option Agreement governing the termination of the assumed Netlink Option
upon the Optionee's cessation of employee status with Netlink shall hereafter be
applied on the basis of the Optionee's cessation of employee status with
Cabletron and its subsidiaries, and each assumed Netlink Option shall
accordingly terminate, within the designated time period in effect under the
Option Agreement for that option, following such cessation of employment with
Cabletron and its subsidiaries.
- The adjusted exercise price payable for the Cabletron Stock subject to
each assumed Netlink 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 Cabletron Stock delivered in
payment of such adjusted exercise price, the period for which such shares were
held as Netlink common stock prior to the Merger shall be taken into account.
- In order to exercise each assumed Netlink Option, Optionee must deliver
to Cabletron a written notice of exercise in which the number of shares of
Cabletron Stock to be purchased thereunder must be indicated. The exercise
notice should be delivered to Cabletron at the following address:
Cabletron Systems, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
4. Except to the extent specifically modified by this Stock 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, Cabletron Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 10th day of December, 1996.
CABLETRON SYSTEMS, INC.
By:______________________________
EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of Netlink, Inc.
Common Stock (Pre-Merger)
EXHIBIT B
Optionee's Outstanding Options to Purchase Shares of Cabletron Systems, Inc.
Common Stock (Post-Merger)
