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EXHIBIT 99.7
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
FOR VERSIONS 1.1, 2.1 AND 2.1 OF
INDIVIDUAL STOCK OPTION AGREEMENT
LIGHTSPEED INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the ____day of
________, 1998 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 LightSpeed
International, Inc., a Virginia corporation ("LightSpeed"), which were granted
to Optionee under the LightSpeed International, Inc. 1996 Stock Option Plan (the
"Plan") and are each evidenced by the following set of agreements between
LightSpeed and Optionee: (i) an Individual Stock Option Agreement (version 1.1,
2.1 or 2.1a) (the "Option Agreement"), (ii) that certain First Amendment to
Individual Stock Option Agreement dated August 27, 1997 (the "First Amendment")
and (iii) that certain letter agreement dated [MERGE DATE CODE] (the "Letter
Agreement"), amending the First Amendment. The Option Agreement, as amended by
the First Amendment and the Letter Agreement, shall be referred to in this
document as the "Modified Option Agreement."
WHEREAS, LightSpeed has this day been acquired by Cisco through
the merger of LightSpeed with and into Cisco (the "Merger") pursuant to the
Agreement of Merger dated ________, 1998, by and between Cisco and LightSpeed
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of LightSpeed 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. of a share
of Cisco common stock ("Cisco Stock") for each outstanding share of LightSpeed
common stock ("LightSpeed Stock").
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WHEREAS, this Agreement is to become effective immediately upon
the consummation of the Merger (the "Effective Time") in order to reflect
certain adjustments to Optionee's outstanding options under the Plan 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 LightSpeed Stock subject to the
options issued to Optionee pursuant to the Modified Option Agreement and held by
Optionee immediately prior to the Effective Time (the "LightSpeed 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
LightSpeed under each of the LightSpeed Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each
LightSpeed 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 LightSpeed Option hereby assumed shall be as
specified for that option in attached Exhibit B, and the adjusted exercise price
payable per share of Cisco Stock under the assumed LightSpeed Option shall be as
indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
LightSpeed 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, equal the spread which
existed, immediately prior to the Merger, between the then aggregate fair market
value of the LightSpeed Stock subject to the LightSpeed Option and the aggregate
exercise price in effect at such time under the Modified Option Agreement. Such
adjustments are also designed 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 LightSpeed Option immediately
prior to the Merger.
3. The following provisions shall govern each LightSpeed Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all
references to the "Company" in each Modified Option Agreement and
in the Plan shall mean Cisco, all references to "Common Stock"
and "Shares" shall mean shares of Cisco Stock, all references to
"Option Shares" shall mean shares of Cisco Stock subject to the
assumed LightSpeed Option, and all references to the "Board of
Directors" shall mean the Board of Directors of Cisco.
(b) The grant date and the expiration date of each
assumed LightSpeed Option and all other provisions which govern
either the exercise or the
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termination of the assumed LightSpeed Option shall remain the
same as set forth in the Modified Option Agreement applicable to
that option, and the provisions of the Modified Option Agreement
shall accordingly govern and control Optionee's rights under this
Agreement to purchase Cisco Stock.
(c) Pursuant to the terms of the Modified Option
Agreement, the installment vesting schedule in effect for each
assumed LightSpeed Option shall automatically accelerate by one
(1) year upon the consummation of the Merger. Each LightSpeed
Option, as so accelerated and as adjusted in accordance with the
provisions of paragraph 1 above, shall be assumed by Cisco as of
the Effective Time. The remaining shares subject to each such
assumed LightSpeed Option shall thereafter continue to be
exercisable in accordance with the same installment exercise
schedule in effect under the applicable Modified Option Agreement
immediately prior to the Effective Time (after giving effect to
the one year of accelerated vesting), with the number of shares
of Cisco Stock subject to each such installment adjusted to
reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions
of the Modified Option Agreement and the Plan relating to
Optionee's status as an employee or a consultant of LightSpeed,
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 Modified
Option Agreement governing the termination of the assumed
LightSpeed Options upon Optionee's cessation of service as an
employee or a consultant of LightSpeed shall hereafter be applied
on the basis of Optionee's cessation of employee or consultant
status with Cisco and its subsidiaries, and each assumed
LightSpeed Option shall accordingly terminate, within the
designated time period in effect under the Modified Option
Agreement for that option, 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 LightSpeed Option shall be
payable in any of the forms authorized under the Modified 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 LightSpeed Stock prior to the Merger
shall be taken into account.
(f) In order to exercise each assumed LightSpeed
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
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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 Option
Assumption Agreement, all of the terms and conditions of each Modified 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.
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 , 1998.
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 LightSpeed Options hereby assumed by Cisco are as
set forth in the Modified Option Agreement, the Plan and such Stock Option
Assumption Agreement.
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1~, OPTIONEE
DATED: __________________, 1998
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EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of LightSpeed International, Inc.
Common Stock (Pre-Merger)
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EXHIBIT B
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
