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EXHIBIT 99.03
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
PIXSTREAM, INCORPORATED
KEY EMPLOYEE STOCK OPTION PLAN
OPTIONEE: <><>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 20th day of
December, 2000 by Cisco Systems, Inc., a California corporation ("Cisco").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of Class "A" Voting Common Shares of
PixStream, Incorporated, a corporation existing under the laws of Canada
("PixStream"), which were granted to Optionee pursuant to the PixStream,
Incorporated Key Employee Stock Option Plan (the "Plan") and are each evidenced
by a Stock Option Plan Option Agreement or a Memorandum of Agreement (the
"Option Agreement") with any shares purchased under such options to be subject
to the terms and conditions therein.
WHEREAS, PixStream has been acquired by Cisco (the "Merger")
pursuant to a Merger Agreement dated August 29, 2000 (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of PixStream under each outstanding option under the Plan
at the consummation of the Merger, and to issue to the holder of each such
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 assumption of options
under the Merger is 0.099537018 shares of Cisco common stock, par value
U.S.$0.001 ("Cisco Stock"), for each outstanding share of PixStream Class "A"
Voting Common Shares ("PixStream Stock").
WHEREAS, the purpose of this Agreement is to evidence the
assumption by Cisco of the outstanding options held by Optionee at the time of
the consummation of the Merger (the "Effective Time") and to reflect certain
adjustments to Optionee's outstanding options which have become necessary in
connection with their assumption by Cisco.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of PixStream Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "PixStream
Options") and the exercise price payable per share are set forth below. Cisco
hereby assumes, as of the Effective Time, all the duties and obligations of
PixStream under each of the PixStream Options. In connection with such
assumption, the number of shares of Cisco Stock purchasable under each PixStream
Option hereby assumed and the exercise price payable thereunder (as converted
into U.S. Dollars based upon a rate of 0.65707 Canadian Dollars per U.S.
Dollar), have been adjusted to reflect the Exchange Ratio. Accordingly, the
number of shares of Cisco Stock subject to each PixStream
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Option hereby assumed shall be as specified for that option below, and the
adjusted exercise price payable per share of Cisco Stock under the assumed
PixStream Option shall also be as indicated for that option below.
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PIXSTREAM STOCK OPTIONS CISCO ASSUMED OPTIONS
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Number of Shares of Exercise Price Number of Shares of Adjusted Exercise
PixStream Common Stock per Share Cisco Common Stock Price per Share
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<> U.S.$<> <> U.S.$<>
----------------------------- ---------------------- --------------------- --------------------------
2. The intent of the foregoing adjustments to each assumed
PixStream 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 substantially the same as
(and in no event greater than) the spread which existed, immediately prior to
the Merger, between the then aggregate fair market value of the PixStream Stock
subject to the PixStream Option and the aggregate exercise price in effect at
such time under the 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 PixStream Option immediately prior to the Merger.
3. The following provisions shall govern each PixStream Option
hereby assumed by Cisco:
(a) Unless the context otherwise requires, all references
in the Option Agreements and the Plan shall be adjusted as follows; (i)
all references to the "Company" or "Corporation" shall mean Cisco, (ii)
all references to "Plan" shall mean the PixStream, Incorporated Key
Employee Stock Option Plan assumed pursuant to the Merger Agreement and
this Assumption Agreement, (iii) all references to "Shares," "Option
Shares," or "Plan Shares" shall mean the common stock of Cisco, par
value U.S.$0.001 and (iv) all references to "Board" or "Board of
Directors" shall mean the Board of Directors of Cisco.
(b) The grant date and the expiration date of each assumed
PixStream Option and all other provisions which govern either the
exercise or the termination of the assumed PixStream Option shall remain
the same as set forth in the Option Agreement applicable to that option,
and the provisions of the Plan and the Option Agreement shall
accordingly govern and control Optionee's rights to purchase Cisco Stock
under the assumed PixStream Option.
(c) Pursuant to the terms of the Option Agreement and the
Plan, none of the assumed PixStream Options shall vest or become
exercisable on an accelerated basis upon the consummation of the Merger.
Accordingly, each PixStream Option assumed by Cisco shall continue to
vest and become
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exercisable for any unvested shares of Cisco Stock subject to that
option in accordance with the same installment vesting schedule in
effect under the applicable 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) Any unvested shares of Cisco Stock acquired upon the
exercise of the assumed PixStream Options shall remain subject to a
right of repurchase, exercisable by Cisco as the successor of PixStream
at the adjusted exercise price paid per share, upon Optionee's
termination of service with Cisco. The terms and provisions governing
the exercise of such repurchase right shall be as set forth in the
Option Agreements applicable to the assumed PixStream Option under which
those unvested shares are acquired.
(e) For purposes of applying any and all provisions of the
Option Agreement and/or the Plan relating to Optionee's status as an
employee of PixStream, 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 majority-owned Cisco
subsidiary. Accordingly, the provisions of the Option Agreements
governing the termination of the assumed PixStream Options or the
exercise of Cisco's repurchase rights with respect to any unvested Cisco
Stock purchased under such options and unvested at the time of
Optionee's cessation of service as an employee of PixStream shall
hereafter be applied on the basis of Optionee's cessation of employee
status with Cisco and its majority-owned subsidiaries. Each assumed
PixStream Option shall accordingly terminate, within the designated time
period in effect under the Option Agreements for that option following
such cessation of service as an employee of Cisco and its majority-owned
subsidiaries.
(f) The adjusted exercise price payable for the Cisco
Stock subject to each assumed PixStream 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 PixStream Stock prior to the
Merger shall be taken into account.
(g) In order to exercise each assumed PixStream 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:
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Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
XX 00-0
Xxx Xxxx, XX 00000
Attention: Stock Administration
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 20th day of December, 2000.
CISCO SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Corporate Secretary
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 PixStream Options hereby assumed by Cisco are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
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<><>, OPTIONEE
DATED: __________________, 2001
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