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EXHIBIT 99.7
CISCO SYSTEMS, 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 Cisco Systems, Inc., a California corporation ("Cisco") and
Dagaz Technologies, Inc., a Delaware corporation ("Dagaz") and a wholly-owned
subsidiary of Integrated Network Corporation ("INC").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding non-qualified stock options to purchase shares of Dagaz common
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, upon the contribution by INC to Dagaz of all of the
properties, assets, rights and obligations related to certain INC technology
which occurred on this date but prior to the effectiveness of this Agreement
(the "Contribution"), Dagaz assumed all obligations of INC under certain
outstanding options under the Plans and issued to the holder of each such
specified option an agreement evidencing the assumption of that option by Dagaz
(the "Dagaz Assumption Agreement").
WHEREAS, Dagaz has this day been acquired by Cisco through the
purchase by Cisco of all the outstanding shares of Dagaz common stock (the
"Acquisition") pursuant to the Acquisition Agreement dated July 27, 1997, by
and between Cisco and INC (the "Acquisition Agreement").
WHEREAS, the provisions of the Acquisition Agreement require
Cisco to assume all obligations of Dagaz under designated outstanding options
under the Plans at the consummation of the Acquisition and to issue to the
holder of each such assumed option an agreement evidencing the assumption that
option.
WHEREAS, pursuant to the provisions of the Acquisition
Agreement, the exchange ratio in effect for purposes of such option assumption
is 0.1236 share of Cisco common stock ("Cisco Stock") for each outstanding
share of Dagaz common stock ("Dagaz Stock") subject to the assumed options (the
"Assumption Ratio").
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WHEREAS, this Agreement is to become effective immediately
following the Contribution and upon the consummation of the Acquisition (the
"Effective Time") in order to reflect certain adjustments to Optionee's
outstanding options under the applicable Plan 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 shares of Dagaz Stock subject to the
stock options held by Optionee under the applicable Plan immediately prior to
the Effective Time (the "Dagaz Options") and the exercise price payable per
share are set forth in Exhibit A hereto. Cisco hereby assumes, as of the
Effective Time, all the duties and obligations of Dagaz under each of the Dagaz
Options. In connection with such assumption, the number of shares of Cisco
Stock purchasable under each Dagaz 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 Dagaz Option
hereby assumed shall be as specified for that option in attached Exhibit A, and
the adjusted exercise price payable per share of Cisco Stock under the assumed
Dagaz Option shall be as indicated for that option in attached Exhibit A.
2. The intent of the foregoing adjustments to each
assumed Dagaz 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 Effective Time, be substantially equal (except for the
effects of rounding) to the spread which existed, immediately prior to the
Effective Time, between the then aggregate fair market value of the Dagaz Stock
subject to the Dagaz Option and the aggregate exercise price in effect at such
time under the Option Agreement, as modified by the Dagaz Assumption Agreement.
Such adjustments are also designed to preserve, immediately after the Effective
Time, on a per share basis, the same ratio of exercise price per option share
to fair market value per share which existed under the Option Agreement, as
modified by the Dagaz Assumption Agreement, immediately prior to the Effective
Time.
3. The following provisions shall govern each Dagaz
Option hereby assumed by Cisco, and each such provision shall apply to (a) the
Option Agreement, (b) the Dagaz Assumption Agreement and (c) the applicable
Plan, as incorporated into the Option Agreement (the "Option Documents"), where
applicable:
(a) Unless the context otherwise
requires, all references to the "Company" in the Option
Documents shall mean Cisco, all references to "Common Stock"
shall mean shares of Cisco Stock, all references to the "Board
of Directors" shall mean the Board of Directors of Cisco, and
all references 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 Dagaz Option and all other provisions
which govern either the exercise or the
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termination of the assumed Dagaz Option shall remain the same
as set forth in the applicable Option Documents and shall
accordingly govern and control Optionee's rights under this
Agreement to purchase Cisco Stock.
(c) Consistent with the terms of the
applicable Option Documents, no accelerated vesting of any
Dagaz Option shall be deemed to automatically occur by reason
of the Acquisition and each assumed Dagaz Option shall remain
exercisable in accordance with the same installment exercise
schedule in effect under the applicable Option Documents
immediately prior to the Effective Time, except that the
number of shares of Cisco Stock subject to each such
installment shall be adjusted to reflect the Exchange Ratio.
(d) For purposes of applying any and all
provisions of the applicable Option Documents relating to
Optionee's status as an employee, consultant or director of
Dagaz, 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 Cisco (or any present or future
Cisco subsidiary). Accordingly, the provisions of the
applicable Option Documents governing the termination of the
assumed Dagaz Options upon Optionee's cessation of service as
an employee, consultant or director of Dagaz shall hereafter
be applied on the basis of Optionee's cessation of employee,
consultant or director status with Cisco (or any Cisco
subsidiary), and each assumed Dagaz Option shall accordingly
terminate, within the designated time period in effect under
the applicable Option Documents, following such cessation of
service as an employee, consultant or director of Cisco (or
any Cisco subsidiary). In accordance with the applicable
Option Documents, a change in the status of Optionee's service
with Cisco (i.e., as 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 Cisco Stock subject to each assumed Dagaz Option shall
be payable in any of the forms authorized under the applicable
Option Documents. 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 Dagaz Stock prior to the Effective Time shall be
taken into account.
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(f) In order to exercise each assumed
Dagaz 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
Xxx Xxxx, XX 00000
Attention: Option 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 Effective Time (as
modified by the applicable Dagaz Assumption Agreement) 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 _____ day of ____________________, 1997.
CISCO SYSTEMS, 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 Dagaz Options hereby assumed by Cisco
Systems, Inc. are as set forth in the Option Agreement, the Dagaz Assumption
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 Dagaz
Technologies, Inc. Common Stock (Pre-Merger)
and
Optionee's Outstanding Options to Purchase Shares of
Cisco Systems, Inc. Common Stock (Post-Merger)
