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EXHIBIT 99.4
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
NETSPEED, INC.
1996 STOCK OPTION PLAN
OPTIONEE: [ ]
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 10th day of
April, 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 NetSpeed, Inc., a
Texas corporation ("NetSpeed"), which were granted to Optionee under the
NetSpeed, Inc. 1996 Stock Option Plan (the "Plan") and are each evidenced by
the following agreements between NetSpeed and Optionee: (i) a Stock Option
Agreement (the "Option Agreement") and (ii) that certain letter agreement (the
"Letter Agreement") amending the Plan and the Option Agreement. The Option
Agreement, including the incorporated provisions of the Plan as amended by the
Letter Agreement, shall be referred to in this document as the "Amended Option
Agreement."
WHEREAS, NetSpeed has this day been acquired by Cisco through the
merger of NetSpeed with and into Cisco (the "Merger") pursuant to the Agreement
of Merger dated March 9, 1998, by and between Cisco and NetSpeed (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of NetSpeed 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 .5526 of a
share of Cisco common stock ("Cisco Stock") for each outstanding share of
NetSpeed common stock ("NetSpeed Stock").
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.
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NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of NetSpeed Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "NetSpeed
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 NetSpeed under each of the NetSpeed Options. In connection with
such assumption, the number of shares of Cisco Stock purchasable under each
NetSpeed 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 NetSpeed 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 NetSpeed Option shall also be
as indicated for that option in attached Exhibit A.
2. The intent of the foregoing adjustments to each assumed NetSpeed
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, substantially equal the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the NetSpeed Stock subject to the NetSpeed Option and the aggregate exercise
price in effect at such time under the Amended 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 NetSpeed Option immediately prior
to the Merger.
3. The following provisions shall govern each NetSpeed Option hereby
assumed by Cisco:
(a) Unless the context otherwise requires, all
references in each Amended Option Agreement and in the Plan (as
incorporated into such Amended Option Agreement) (i) to the
"Company" shall mean Cisco, (ii) to "Common Stock" 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 NetSpeed Option and all other provisions which govern either
the exercise or the termination of the assumed NetSpeed Option shall
remain the same as set forth in the Amended Option Agreement
applicable to that option, and the provisions of the Amended Option
Agreement shall accordingly govern and control Optionee's rights
under this Agreement to purchase Cisco Stock.
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(c) Pursuant to the terms of the Amended Option
Agreement, the four (4) year annual installment vesting schedule in
effect for each assumed NetSpeed Option shall be revised to be a
four (4) year schedule with twenty-five percent (25%) of the shares
vesting upon the completion of one (1) year of employment and the
balance of the shares vesting in thirty-six (36) equal successive
monthly installments over the thirty-six (36) months of employment
thereafter, all measured from the original grant date of the
NetSpeed Option. In addition, Optionee was credited with twelve (12)
months of vesting service at the time of the Merger. Optionee's
additional twelve (12) months of vesting service shall be based on
this revised vesting schedule. Each NetSpeed Option, as so revised
and accelerated and as adjusted in accordance with the provisions of
paragraph 1 above, shall be assumed by Cisco as of the Effective
Time. Each such assumed NetSpeed Option shall thereafter continue to
become exercisable for any remaining unvested shares of Cisco stock
subject to that option in accordance with the revised vesting
schedule, after giving effect to the twelve (12) months of
accelerated vesting service, and 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 Amended Option Agreement and the Plan relating to Optionee's
status as an employee of NetSpeed, Optionee shall be deemed to
continue in such status as an employee for so long as Optionee
renders services as an employee to Cisco or any present or future
Cisco subsidiary. Accordingly, the provisions of the Amended Option
Agreement governing the termination of the assumed NetSpeed Options
upon Optionee's cessation of service as an employee of NetSpeed
shall hereafter be applied on the basis of Optionee's cessation of
employee status with Cisco and its subsidiaries, and each assumed
NetSpeed Option shall accordingly terminate, within the designated
time period in effect under the Amended Option Agreement for that
option, following such cessation of service as an employee of Cisco
and its subsidiaries.
(e) The adjusted exercise price payable for the Cisco
Stock subject to each assumed NetSpeed Option shall be payable in
any of the forms authorized under the Amended 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 NetSpeed Stock prior to the Merger shall be taken into account.
(f) In order to exercise each assumed NetSpeed 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
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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, Xxxxxxxx X
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 Amended 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 ___ 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 NetSpeed Options hereby assumed by Cisco are as
set forth in the Amended Option Agreement, the Plan and such Stock Option
Assumption Agreement.
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[ ], OPTIONEE
DATED: __________________, 1998
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EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of NetSpeed, Inc.
Common Stock (Pre-Merger)
and
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
