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EXHIBIT 99.3
DAGAZ TECHNOLOGIES, INC.
STOCK OPTION ASSUMPTION AGREEMENT
DESIGNATED OPTIONS UNDER
INTEGRATED NETWORK CORPORATION
1986 STOCK OPTION PLAN OR 1996 STOCK OPTION PLAN
OPTIONEE:
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 2nd day of
September, 1997 by Dagaz Technologies, Inc., a Delaware corporation ("Dagaz")
and a wholly-owned subsidiary of Integrated Network Corporation, Delaware
corporation ("INC").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding non-qualified stock options to purchase shares of INC common
stock ("INC Stock") which were originally granted to Optionee under either the
INC 1986 Stock Option Plan or the INC 1996 Stock Option Plan (individually, the
"Plan," and together, the "Plans") and are evidenced by a Non-Qualified Stock
Option Agreement (the "Option Agreement") originally between INC and Optionee.
WHEREAS, INC has this day contributed all of the properties,
assets, rights and obligations of INC related to certain INC technology (the
"Contribution") pursuant to the Acquisition Agreement dated July 27, 1997, by
and between Cisco Systems, Inc., a California corporation, and INC (the
"Acquisition Agreement").
WHEREAS, the provisions of the Acquisition Agreement require
Dagaz to assume all obligations of INC under designated outstanding options
under the Plans at the consummation of the Contribution and to issue to the
holder of each such option an agreement evidencing the assumption of that
option.
WHEREAS, pursuant to the provisions of the Acquisition
Agreement, the assumption ratio in effect for purposes of the option assumption
is 1.7143 shares of Dagaz common stock (the "Dagaz Stock") for each outstanding
share of INC Stock subject to the INC Options (the "Assumption Ratio").
WHEREAS, this Agreement is to become effective immediately
upon the consummation of the Contribution (the "Effective Time") in order to
reflect certain adjustments to Optionee's outstanding options under the Plans
which have become necessary by reason of the assumption of those options by
Xxxxx in connection with the Contribution.
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NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of INC Stock subject to the
stock options held by Optionee under the applicable Plan immediately prior to
the Effective Time (the "INC Options") and the exercise price payable per share
are set forth in Exhibit A hereto. Xxxxx xxxxxx assumes, as of the Effective
Time, all the duties and obligations of INC under each of the INC Options. In
connection with such assumption, the number of shares of Dagaz Stock
purchasable under each INC Option hereby assumed and the exercise price payable
thereunder have been adjusted to reflect the Assumption Ratio. Accordingly,
the number of shares of Dagaz Stock subject to each INC Option hereby assumed
shall be as specified for that option in attached Exhibit A, and the adjusted
exercise price payable per share of Dagaz Stock under the assumed INC Option
shall be as indicated for that option in attached Exhibit A.
2. The intent of the foregoing adjustments to each
assumed INC Option is to assure that the spread between the aggregate fair
market value of the shares of Dagaz Stock purchasable under each such option
and the aggregate exercise price as adjusted pursuant to this Agreement will,
immediately after the consummation of the Contribution, be substantially equal
(except for the effects of rounding) to the spread which existed, immediately
prior to the Contribution, between the then aggregate fair market value of the
INC Stock subject to the INC Option and the aggregate exercise price in effect
at such time under the Option Agreement. Such adjustments are also designed to
preserve, immediately after the Contribution, on a per share basis, the same
ratio of exercise price per option share to fair market value per share which
existed under the INC Option immediately prior to the Contribution.
3. The following provisions shall govern each INC Option
hereby assumed by Xxxxx:
(a) Unless the context otherwise
requires, all references to the "Company" in each Option
Agreement and in the applicable Plan (as incorporated into
such Option Agreement) shall mean Dagaz, all references to
"Common Stock" shall mean shares of Dagaz Stock, all
references to the "Board of Directors" shall mean the Board of
Directors of Dagaz, and all references to the "Committee"
shall mean the Compensation Committee of the Dagaz Board of
Directors.
(b) The grant date and the expiration
date of each assumed INC Option and all other provisions which
govern either the exercisability or the termination of the
assumed INC 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 Dagaz Stock.
(c) Each assumed INC Option shall remain
exercisable in accordance with the same installment exercise
schedule in effect under the applicable Option Agreement
immediately prior to the Effective Time, with the number of
shares of Dagaz Stock subject to each such installment
adjusted to
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reflect the Assumption Ratio. Accordingly, no accelerated
vesting of the INC Options shall be deemed to automatically
occur by reason of the Contribution.
(d) For purposes of applying any and all
provisions of the Option Agreement relating to Optionee's
status as an employee, consultant or director of INC, Optionee
shall be deemed to continue in such status as an employee,
consultant or director for so long as Optionee renders
services as such to Dagaz (or any present or future parent or
subsidiary of Dagaz). Accordingly, the provisions of the
Option Agreement governing the termination of the assumed INC
Options upon Optionee's cessation of service as an employee,
consultant or director of INC shall hereafter be applied on
the basis of Optionee's cessation of employee, consultant or
director status with Dagaz (or any Dagaz parent or
subsidiary), and each assumed INC 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, consultant or director of Dagaz (or
any Dagaz parent or subsidiary). In accordance with the Option
Agreement, a change in the status of service provided to Dagaz
(i.e., as either an employee, consultant or director) will not
constitute an interruption of continuous status as an
employee, consultant or director.
(e) The adjusted exercise price payable
for the Dagaz Stock subject to each assumed INC 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 Dagaz Stock
delivered in payment of such adjusted exercise price, the
period for which such shares were held as INC Stock prior to
the Contribution shall be taken into account.
(f) In order to exercise each assumed
INC Option, Optionee must deliver to Dagaz a written notice of
exercise in which the number of shares of Dagaz 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 Dagaz Stock and should be
delivered to Dagaz at the following address:
Dagaz Technologies, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Stock Plan Administrator
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.
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IN WITNESS WHEREOF, Dagaz Technologies, Inc. has caused this
Stock Option Assumption Agreement to be executed on its behalf by its
duly-authorized officer as of the _____ day of _______________________, 1997.
DAGAZ TECHNOLOGIES, INC.
By:
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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 INC Options hereby assumed by Dagaz
Technologies, Inc. are as set forth in the Option Agreement, the applicable
Plan and such Stock Option Assumption Agreement.
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OPTIONEE
DATED: __________________, 199_
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EXHIBIT A
Optionee's Outstanding Options to Purchase Shares of
Integrated Network Corporation Common Stock (Pre-Merger)
and
Optionee's Outstanding Options to Purchase Shares of
Dagaz Technologies, Inc. Common Stock (Post-Merger)
