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EXHIBIT 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
MONTEREY NETWORKS, INC.
1998 STOCK PLAN
OPTIONEE: <>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 29th day of
September, 1999 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 Monterey
Networks, Inc., a Delaware corporation ("Monterey"), which were granted to
Optionee under the Monterey Networks, Inc. 1998 Stock Plan (the "Plan") and are
each evidenced by a Stock Option Agreement (the "Option Agreement").
WHEREAS, Monterey has been acquired by Cisco through the merger
of Monterey with and into Cisco (the "Merger") pursuant to the Agreement and
Plan of Reorganization by and between Cisco and Monterey (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of Monterey under all outstanding options under the Plan
at the consummation of the Merger and to issue to the holder of each outstanding
option 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 0.24 shares of
Cisco common stock ("Cisco Stock") for each outstanding share of Monterey common
stock ("Monterey Stock").
WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options which have become necessary by
reason of the assumption of those options by Cisco in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Monterey Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "Monterey
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
Monterey under each of the Monterey Options. In connection with such assumption,
the number of shares of Cisco Stock purchasable under each Monterey 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 Monterey Option hereby assumed shall be as specified for that
option below, and the adjusted exercise
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price payable per share of Cisco Stock under the assumed Monterey Option shall
also be as indicated for that option below.
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MONTEREY STOCK OPTIONS CISCO ASSUMED OPTIONS
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# of Shares of Monterey Exercise Price per # of Shares of Adjusted Exercise Price
Common Stock Share Cisco Common Stock per Share
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2. The intent of the foregoing adjustments to each assumed
Monterey 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 not less than the spread
which existed, immediately prior to the Merger, between the then aggregate fair
market value of the Monterey Stock subject to the Monterey 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 Monterey Option immediately prior
to the Merger.
3. The following provisions shall govern each Monterey Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all
references in each Option Agreement and, in the Plan (i) to the
"Company" shall mean Cisco, (ii) to "Common Stock","Stock"or
"Share" shall mean shares of Cisco Stock, (iii) to the "Board"
shall mean the Board of Directors of Cisco and (iv) 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 Monterey Option and all other provisions which govern
either the exercise or the termination of the assumed Monterey
Option shall remain the same as set forth in the Option Agreement
applicable to that option, and the provisions of the Option
Agreement shall accordingly govern and control Optionee's rights
under this Agreement to purchase Cisco Stock.
(c) Pursuant to the Plan, none of your options assumed
by Cisco in connection with the transaction will vest and become
exercisable on an accelerated basis upon the consummation of the
Merger. Each Monterey Option shall be assumed by Cisco as of the
Effective Time. Each such assumed Monterey Option shall
thereafter continue to vest for any remaining unvested shares of
Cisco Stock subject to that option in accordance with the same
installment vesting schedule in effect under 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.
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(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 Monterey, 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 Cisco
subsidiary. Accordingly, the provisions of the Option Agreement
governing the termination of the assumed Monterey Options upon
Optionee's cessation of service as an employee or a consultant of
Monterey shall hereafter be applied on the basis of Optionee's
cessation of employee or consultant status with Cisco and its
subsidiaries, and each assumed Monterey Option shall accordingly
terminate within the designated time period in effect under the
Option Agreement for that option.
(e) The adjusted exercise price payable for the Cisco
Stock subject to each assumed Monterey 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
Monterey Stock prior to the Merger shall be taken into account.
(f) In order to exercise each assumed Monterey 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.
000 Xxxx Xxxxxx Xxxxx
XX 00-0
Xxx Xxxx, XX 00000
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.
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IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 29th day of September, 1999.
CISCO SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Corporate Secretary
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 Monterey Options hereby assumed by Cisco are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
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<>, OPTIONEE
DATED: , 1999
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