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EXHIBIT 99.5
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF SKYSTONE SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
OPTION ASSUMPTION AGREEMENT issued as of the __th day of July 1997 by
Cisco Systems, Inc., a California corporation ("Cisco").
WHEREAS, the undersigned Optionee is the holder of one or more
outstanding options to purchase shares of the common stock of Skystone Systems
Corporation, a corporation incorporated under the Canada Business Corporations
Act ("CBCA") ("Skystone"), which were granted to Optionee pursuant to the
Skystone Systems Corporation Employee Stock Option Plan (the "Option Plan") and
are evidenced by a Stock Option Grant Document (the "Option Grant Document")
between Skystone and Optionee.
WHEREAS, Skystone has this day been acquired by Cisco through merger of
Skystone with two wholly owned Cisco subsidiaries, Unlimco and 3381111 Canada
Inc., which resulted in the wholly owned Cisco subsidiary, Amalco/Unlimco (the
"Acquisition") pursuant to the Amended and Restated Acquisition Agreement dated
July __, 1997 (the "Acquisition Agreement").
WHEREAS, the provisions of the Acquisition Agreement require Cisco and
Amalco/Unlimco to assume the obligations of Skystone under the options
outstanding under the Option Plan at the time of the Acquisition and to issue an
agreement evidencing the assumption of each such option (the "Assumption
Agreement").
WHEREAS, pursuant to the provisions of the Acquisition Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Acquisition is the
equivalent of 0.237109 Exchangeable Shares of Amalco/Unlimco ("Exchangeable
Shares") for each share of Skystone common stock ("Skystone Stock"). Each
Exchangeable Share received on the exercise of the Assumed Options is
exchangeable by the holder for Cisco Stock on a one-for-one basis at any time.
WHEREAS, this Agreement is to be effective immediately upon the
consummation of the Acquisition (the "Effective Time") and shall reflect certain
adjustments to Optionee's outstanding options under the Option Plan which have
become necessary by reason of the assumption of those options by Cisco and
Amalco/Unlimco in connection with the Acquisition.
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NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Skystone Stock subject to the
stock options held by Optionee under the Option Plan immediately prior to the
Effective Time (the "Skystone Options") and the exercise price payable per share
are set forth below. Cisco and Amalco/Unlimco hereby assume, as of the Effective
Time, all the duties and obligations of Skystone under each of the Skystone
Options and hereby agree to issue up to the number of Exchangeable Shares of
Amalco/Unlimco indicated below for each such assumed option upon (i) exercise of
that option in accordance with the provisions of the Option Grant Document
applicable thereto (as supplemented hereby) and the Option Plan, and (ii)
payment of the adjusted exercise price per share set forth below.
SKYSTONE CISCO - AMALCO/UNLIMCO
STOCK OPTIONS ASSUMED OPTIONS
------------- ---------------
# of Shares # of Shares Adjusted
Common Stock Exercise Common Stock Exercise
Skystone Price/Share Cisco Price/Share
-------- ----------- ----- -----------
2~ $4~ 6~ $7~
2. The number of Exchangeable Shares purchasable under each
Skystone Option hereby assumed and the exercise price payable thereunder reflect
the Exchange Ratio at which shares of Skystone Stock were ultimately converted
into Exchangeable Shares of, Amalco/Unlimco, in consummation of the Acquisition.
The intent of such adjustments is to assure that the spread between the
aggregate fair market value of the Exchangeable Shares purchasable under each
assumed Skystone Option and the aggregate exercise price as adjusted hereunder
will, immediately after the consummation of the Acquisition, equal the spread
which existed, immediately prior to the Acquisition, between the then aggregate
fair market value of the Skystone Stock subject to the Skystone Option and the
aggregate exercise price in effect at such time under the Option Grant Document.
Such adjustments are also designed to preserve, on a per-share basis immediately
after the Acquisition, the same ratio of exercise price per option share to fair
market value per share which existed under the Skystone Option immediately prior
to the Acquisition. However, no fraction of an Exchangeable Share will be
issued, but in lieu thereof each holder of an assumed Skystone option who would
otherwise be entitled to a fraction of an Exchangeable Share shall receive from
Amalco/Unlimco an amount of cash (rounded to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) the average closing price
of a share of Cisco Stock for the ten most recent days that Cisco Stock has
traded ending on the trading day immediately prior to the Effective Time of the
Acquisition, as reported on the Nasdaq National Market (the "Closing Price").
3. The following provisions shall govern each Skystone
Option hereby assumed by Cisco and Amalco/Unlimco:
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- Unless the context otherwise requires, all references to
the "Corporation" in each Option Grant Document and the Option Plan shall mean
Cisco and Amalco/Unlimco, as appropriate, all references to "Common Stock,"
"Common Shares," "Option Shares," "Plan Shares" or "Shares" shall mean
Exchangeable Shares (as convertible into Cisco Stock), and all references to
"Board of Directors" or "Board" shall mean the Compensation Committee of the
Cisco Board of Directors.
- The grant date and the expiration date of each assumed
Skystone Option and all other provisions which govern the termination of each
such assumed Skystone Option shall remain the same as set forth in the Option
Grant Document applicable to such option and shall accordingly govern and
control the Optionee's rights under this Assumption Agreement to purchase
Exchangeable Shares.
- Each assumed Skystone Option shall vest in accordance
with the same installment vesting schedule in effect under the applicable Option
Grant Document immediately prior to the Effective Time, with the number of
Exchangeable Shares subject to each such installment adjusted to reflect the
Exchange Rate. Accordingly, no acceleration of vesting of the Skystone Options
shall be deemed to occur by reason of the Acquisition, and the vesting dates
under each applicable Option Grant Document shall remain the same.
- The adjusted exercise price payable for the Exchangeable
Shares subject to each assumed Skystone Option shall be payable in any of the
forms authorized under the Option Grant Document and/or the provisions of the
Option Plan incorporated by reference into that Option Grant Document.
- In order to exercise each assumed Skystone Option, the
Optionee must deliver to Cisco a written notice of exercise in which the number
of Exchangeable Shares to be purchased thereunder must be indicated. The
exercise notice must be accompanied by payment of the adjusted exercise price
payable for the Exchangeable Shares 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
- For purposes of applying the termination of employment
provisions of the Option Grant Document, the Optionee shall be deemed to
continue in employment and remain an employee for so long as the Optionee
remains employed by Cisco or any present or future parent or subsidiary of
Cisco, including (without limitation) Skystone or Amalco/Unlimco.
4. Except to the extent specifically modified by this
Assumption Agreement, all of the terms and conditions of each Option Grant
Document and the Option
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Plan 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 Assumption Agreement.
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IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Assumption
Agreement to be executed on its and Amalco/Unlimco's behalf by its
duly-authorized officer as of the __th day of July, 1997.
CISCO SYSTEMS, INC.
By:______________________________________
Title:___________________________________
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 Skystone Options hereby assumed by Cisco Systems,
Inc. and Amalco/Unlimco are as set forth in the Option Grant Document, the
Option Plan and such Stock Option Assumption Agreement.
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1~, OPTIONEE
DATED: __________________, 1997
[SIGNATURE PAGE TO STOCK OPTION ASSUMPTION AGREEMENT]
