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EXHIBITI 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
ARDENT COMMUNICATIONS CORPORATION
1996 STOCK OPTION PLAN
OPTIONEE: 1~
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 25th day of
July, 1997 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 Ardent
Communications Corporation, a California corporation ("Ardent"), which were
granted to Optionee under the Ardent Communications Corporation 1996 Stock
Option Plan (the "Plan") and are evidenced by a Notice of Stock Option Grant and
Stock Option Agreement (together, the "Option Agreement") between Ardent and
Optionee.
WHEREAS, Ardent has this day been acquired by Cisco through
the merger of Ardent with and into Cisco (the "Merger") pursuant to the
Agreement of Merger dated July 25, 1997, by and between Cisco and Ardent (the
"Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco
to assume all obligations of Ardent 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 0.150916
of a share of Cisco common stock ("Cisco Stock") for each outstanding share of
Ardent common stock ("Ardent 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.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Ardent Stock subject to the stock
options held by Optionee under the Plan immediately prior to the Effective Time
(the "Ardent 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 Ardent under each of
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the Ardent Options. In connection with such assumption, the number of shares of
Cisco Stock purchasable under each Ardent 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 Ardent 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
Ardent Option shall be as indicated for that option in attached Exhibit B.
2. The intent of the foregoing adjustments to each assumed
Ardent 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 Ardent Stock subject to the Ardent Option and the aggregate
exercise price in effect at such time under the 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 Ardent Option immediately prior
to the Merger.
3. The following provisions shall govern each Ardent
Option hereby assumed by Cisco:
(a) Unless the context otherwise requires,
all references to the "Company" in each Option Agreement and
in the Plan (as incorporated into such Option Agreement) shall
mean Cisco, all references to "Common Stock," "Shares" or
"Optioned 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 Ardent Option and all other provisions which
govern either the exercisability or the termination of the
assumed Ardent Option shall remain the same as set forth in
the Option Agreement applicable to that option and shall
accordingly govern and control Optionee's rights under this
Agreement to purchase Cisco Stock.
(c) Pursuant to the terms of the Plan and
the Option Agreement, the installment exercise schedule in
effect under each Ardent Option will automatically convert, as
of the Effective Time, from a five (5)- year exercise schedule
to a four (4)-year exercise schedule, so that, as of such
Effective Time, each such Ardent Option will become
exercisable for the option shares as follows: (i) twenty-five
percent (25%) of the option shares upon Optionee's completion
of one (1) year of service measured from the
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Optionee's vesting commencement date and (ii) the balance of
the option shares in a series of thirty-six (36) successive
equal monthly installments upon the Optionee's completion of
each additional month of service over the thirty-six (36)
month period measured from the first anniversary of the
Optionee's vesting commencement date. Each Ardent Option, as
so converted, will be assumed by Cisco as of the Effective
Time, adjusted in accordance with the provisions of paragraph
1 above.
(d) For purposes of applying any and all
provisions of the Option Agreement relating to Optionee's
status as an employee or a consultant of Ardent, 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 Ardent
Options upon Optionee's cessation of service as an employee or
a consultant of Ardent shall hereafter be applied on the basis
of Optionee's cessation of employee or consultant status with
Cisco and its subsidiaries, and each assumed Ardent Option
shall accordingly terminate, within the designated time period
in effect under the Option Agreement for that option,
following such cessation of service as an employee or a
consultant of Cisco and its subsidiaries. In accordance with
the Plan and the Option Agreement, a change in status from an
employee to a consultant or from a consultant to an employee
will not constitute an interruption of continuous status as an
employee or a consultant.
(e) The adjusted exercise price payable for
the Cisco Stock subject to each assumed Ardent 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 Ardent Stock prior
to the Merger shall be taken into account.
(f) In order to exercise each assumed Ardent
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
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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 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 ____________________, 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 Ardent Options hereby assumed by Cisco are as set
forth in the Option Agreement, the Plan and such Stock Option Assumption
Agreement.
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1~, OPTIONEE
DATED: , 199_
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EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of Ardent Communications Corporation
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)
