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EXHIBIT 99.5
FORM OF OPTION ASSUMPTION LETTER
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CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
AMERICAN INTERNET CORPORATION
THIRD AMENDED 1996 STOCK PLAN
OPTIONEE: <<1>>
STOCK OPTION ASSUMPTION AGREEMENT issued as of the 30th day of
September, 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 American
Internet Corporation, a Delaware corporation ("AIC"), which were granted to
Optionee under the American Internet Corporation Third Amended 1996 Stock Plan
(the "Plan") and are each evidenced by the following agreements between AIC and
Optionee: (i) a Stock Option Agreement (the "Option Agreement") and (ii) that
certain letter agreement dated September 10, 1998 (the "Letter Agreement")
amending the Option Agreement. The Option Agreement shall be referred to in this
document as the "Amended Option Agreement."
WHEREAS, AIC has this day been acquired by Cisco through the
merger of AIC with and into Cisco (the "Merger") pursuant to the Agreement of
Merger dated September 30, 1998, by and between Cisco and AIC (the "Merger
Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of AIC 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 .06257019 of a
share of Cisco common stock ("Cisco Stock") for each outstanding share of AIC
common stock ("AIC 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 AIC Stock subject to the options held
by Optionee immediately prior to the Effective Time (the "AIC 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 AIC under
each of the AIC Options. In connection with such assumption, the number of
shares of Cisco Stock purchasable under each AIC 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 AIC
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 AIC Option shall also be as indicated for that option in attached
Exhibit A.
2. The intent of the foregoing adjustments to each assumed AIC
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, be not less than the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the AIC Stock subject to the AIC Option and the aggregate exercise price in
effect at such time under the Amended Option Agreement. Such adjustments are
also intended 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 AIC Option immediately prior to the Merger.
3. The following provisions shall govern each AIC Option hereby
assumed by Xxxxx:
(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
AIC Option and all other provisions which govern either the
exercise or the termination of the assumed AIC 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.
(c) Pursuant to the terms of the Amended Option Agreement,
only twenty-five percent (25%) of the otherwise unvested AIC
Options shall vest and become exercisable on an accelerated basis
upon the consummation of the
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Merger. Each AIC 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. Each such assumed AIC
Option shall thereafter continue to vest and become exercisable
for any remaining unvested shares of Cisco Stock subject to that
option in accordance with the same installment exercise schedule
in effect under the applicable Amended Option Agreement
immediately prior to the Effective Time; provided, however, that
the number of shares subject to each such installment shall be
adjusted to reflect the Exchange Ratio.
(d) Pursuant to the terms of the Amended Option Agreement,
upon termination of Optionee's employment without cause (as
defined in the Amended Option Agreement) within twelve (12)
months of the Merger, Optionee shall be entitled to receive a
cash payment for any remaining unvested portion of those shares
subject to each assumed AIC Option which did not vest on an
accelerated basis at the time of the Merger by reason of the
Letter Agreement. The cash payment shall be equal to the excess
of (i) the closing selling price per share of Cisco common stock
on the closing date of the Merger over (ii) the exercise price
payable per share.
(e) For purposes of applying any and all provisions of the
Amended Option Agreement and the Plan relating to Optionee's
status as an employee or a consultant of AIC, 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 Amended Option Agreement
governing the termination of the assumed AIC Options upon
Optionee's cessation of service as an employee or a consultant of
AIC shall hereafter be applied on the basis of Optionee's
cessation of employee or consultant status with Cisco and its
subsidiaries, and each assumed AIC 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 or a consultant of Cisco and
its subsidiaries.
(f) The adjusted exercise price payable for the Cisco Stock
subject to each assumed AIC 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 AIC
Stock prior to the Merger shall be taken into account.
(g) In order to exercise each assumed AIC 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
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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 AIC 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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1, OPTIONEE
DATED: __________________, 1998
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EXHIBIT A
Optionee's Outstanding Options to Purchase Shares
of American Internet Corporation
Common Stock (Pre-Merger)
and
Optionee's Outstanding Options to Purchase Shares
of Cisco Systems, Inc.
Common Stock (Post-Merger)
