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EXHIBIT 99.3
FORM OF OPTION ASSUMPTION AGREEMENT
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EXHIBIT 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
INTERNET ENGINEERING GROUP, L.L.C.
1999 EQUITY OPTION/EQUITY ISSUANCE PLAN
OPTIONEE: __________,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 17th day of December,
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 Internet
Engineering Group, L.L.C., a Michigan limited liability company ("Internet
Engineering Group, L.L.C."), which were granted to Optionee under the Internet
Engineering Group, L.L.C. 1999 Equity Option/Equity Issuance Plan (the "Plan")
and are each evidenced by a Notice of Grant of Equity Option and a Equity Option
Award Agreement (collectively, the "Option Agreement").
WHEREAS, Internet Engineering Group, L.L.C. has been acquired by Cisco
through the merger of Internet Engineering Group, L.L.C. with and into Cisco
(the "Acquisition") pursuant to the Agreement and Plan of Reorganization, by and
between Cisco and Internet Engineering Group, L.L.C. (the "Acquisition
Agreement").
WHEREAS, the provisions of the Acquisition Agreement require Cisco to
assume all obligations of Internet Engineering Group, L.L.C. under all
outstanding options under the Plan at the consummation of the Acquisition 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 Acquisition Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the options assumed in the
Acquisition is 0.2097 of a share of Cisco common stock ("Cisco Stock") for each
Class A Unit subject to outstanding option of Internet Engineering Group, L.L.C.
("Internet Engineering Group, L.L.C. Units").
WHEREAS, this Agreement became effective immediately upon the consummation
of the Acquisition (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
Acquisition.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of units of Internet Engineering Group, L.L.C. Units
subject to the options held by Optionee immediately prior to the Effective Time
(the "Internet Engineering Group, L.L.C. 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 Internet Engineering Group, L.L.C. under
each of the Internet Engineering Group, L.L.C. Options. In
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connection with such assumption, the number of shares of Cisco Stock purchasable
under each Internet Engineering Group, L.L.C. 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 Internet
Engineering Group, L.L.C. Option hereby assumed shall be as specified for that
option below, and the adjusted exercise price payable per share of Cisco Stock
under the assumed Internet Engineering Group, L.L.C. Option shall also be as
indicated for that option below.
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INTERNET ENGINEERING GROUP, L.L.C. CISCO ASSUMED OPTIONS
STOCK OPTIONS
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# of Shares of Internet # of Shares
Engineering Group, L.L.C. Exercise Price of Cisco Adjusted Exercise
Common Stock per Share Common Stock Price per Share
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2. The intent of the foregoing adjustments to each assumed Internet
Engineering Group, L.L.C. 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 Aquisition, be not
less than the spread which existed, immediately prior to the Acquisition,
between the then aggregate fair market value of the Internet Engineering Group,
L.L.C. Units subject to the Internet Engineering Group, L.L.C. 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 Aquisition, on
a per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Internet Engineering Group,
L.L.C. Option immediately prior to the Aquisition.
3. The following provisions shall govern each Internet Engineering Group,
L.L.C. 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 "Units," "Class A Units" "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 and (v) to the "Administrator"
shall mean the Cisco Board of Directors or the Cisco Compensation
Committee, as appropriate.
(b) The award date and the expiration date of each assumed Internet
Engineering Group, L.L.C. Option and all other provisions which govern
either the exercise or the termination of the assumed Internet Engineering
Group, L.L.C. Option shall remain the same as set forth in the Option
Agreement applicable to that option, and the provisions of the Option
Agreement shall
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accordingly govern and control Optionee's rights under this Agreement to
purchase Cisco Stock.
(c) Pursuant to your Option Agreement, 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
Aquisition. Each Internet Engineering Group, L.L.C. Option shall be assumed
by Cisco as of the Effective Time. Each such assumed Internet Engineering
Group, L.L.C. 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 and service requirements 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.
(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 Internet Engineering Group, L.L.C., 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 Internet
Engineering Group, L.L.C. Options upon Optionee's cessation of service as
an employee or a consultant of Internet Engineering Group, L.L.C. shall
hereafter be applied on the basis of Optionee's cessation of employee or
consultant status with Cisco and its subsidiaries, and each assumed
Internet Engineering Group, L.L.C. Option shall accordingly terminate three
(3) months following such cessation of service as an employee or a
consultant of Cisco and its subsidiaries.
(e) The adjusted exercise price payable for the Cisco Stock subject
to each assumed Internet Engineering Group, L.L.C. 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 Internet Engineering Group,
L.L.C. Units prior to the Aquisition shall be taken into account.
(f) In order to exercise each assumed Internet Engineering Group,
L.L.C. 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:
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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 Acquisition 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, Cisco Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 17th day of December, 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 Internet Engineering Group, L.L.C. Options hereby
assumed by Cisco are as set forth in the Option Agreement, the Plan, as
applicable, and such Stock Option Assumption Agreement.
_______________________________________
_______________, OPTIONEE
DATED: __________________, _____
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