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EXHIBIT 99.3
CROSSROADS SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: _________________,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 21st day of
March, 2000 by Crossroads Systems, Inc., a Delaware corporation ("Crossroads").
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Polaris
Communications, Inc., an Oregon corporation ("Polaris"), which were granted to
Optionee (the "Option Agreements").
WHEREAS, Polaris has been acquired by Crossroads through the merger of
Polaris with NorthStar Acquisition Corp., an Oregon corporation ("Merger Sub")
and a wholly-owned subsidiary of Crossroads (the "Merger") pursuant to the
Agreement and Plan of Merger and Reorganization, by and between Crossroads,
Merger Sub and Polaris (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require the
obligations of Polaris under each outstanding option to be assumed by Crossroads
at the consummation of the Merger, and the holder of each such outstanding
option to be issued 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 225 shares of
Crossroads common stock, par value $0.001 par value per share ("Crossroads
Stock"), for each outstanding share of Polaris common stock ("Polaris Stock").
WHEREAS, the purpose of this Agreement is to evidence the assumption
by Crossroads 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 Crossroads.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Polaris Stock subject to the options held
by Optionee immediately prior to the Effective Time (the "Polaris Options") and
the exercise price payable per share are set forth below. Crossroads hereby
assumes, as of the Effective Time, all the duties and obligations of Polaris
under each of the Polaris Options. In connection with such assumption, the
number of shares of Crossroads Stock purchasable under each Polaris Option
hereby assumed and the exercise price payable thereunder have been adjusted to
reflect the
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Exchange Ratio. Accordingly, the number of shares of Crossroads Stock subject to
each Polaris Option hereby assumed shall be as specified for that option below,
and the adjusted exercise price payable per share of Crossroads Stock under the
assumed Polaris Option shall also be as indicated for that option below.
POLARIS STOCK OPTIONS CROSSROADS ASSUMED OPTIONS
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# of Shares of Polaris Exercise Price # of Shares of Adjusted Exercise
Common Stock per Share Crossroads Common Price per Share
Stock
Polaris Shares $1,125 Crossroads Shares $5.00
2. The intent of the foregoing adjustments to each assumed Polaris
Option is to assure that the spread between the aggregate fair market value of
the shares of Crossroads 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) than the spread which existed, immediately prior
to the Merger, between the then aggregate fair market value of the Polaris Stock
subject to the Polaris 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
Polaris Option immediately prior to the Merger.
3. The following provisions shall govern each Polaris Option hereby
assumed by Crossroads:
(a) Unless the context otherwise requires, all references in the
Option Agreements shall be adjusted as follows; (i) all references to the
"Company" shall mean Crossroads, (ii) all references to "Share" shall mean
shares of Crossroads Stock, (iii) all references to "Common Stock" shall
mean Crossroads Stock, (iv) all references to the "Board" shall mean the
Board of Directors of Crossroads and (v) all references to the "Committee"
shall mean the Compensation Committee of the Crossroads Board of Directors.
(b) The grant date and the expiration date of each assumed
Polaris Option and all other provisions which govern either the exercise or
the termination of the assumed Polaris Option shall remain the same as set
forth in the Option Agreements applicable to that option, and the
provisions of the Option Agreements shall accordingly govern and control
Optionee's rights to purchase Crossroads Stock under the assumed Polaris
Option.
(c) For purposes of applying any and all provisions of the Option
Agreements relating to Optionee's status as an employee or a consultant of
Polaris, 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 Crossroads or any present or future majority-owned
Crossroads subsidiary.
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Accordingly, the provisions of the Option Agreements governing the
termination of the assumed Polaris Options shall hereafter be applied on
the basis of Optionee's cessation of employee or consultant status with
Crossroads and its majority-owned subsidiaries. Each assumed Polaris 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 or a consultant of Crossroads and its majority-owned
subsidiaries.
(d) The adjusted exercise price payable for the Crossroads Stock
subject to each assumed Polaris Option shall be payable in any of the forms
authorized under the Option Agreement. For purposes of determining the
holding period of any shares of Crossroads Stock delivered in payment of
such adjusted exercise price, the period for which such shares were held as
Polaris Stock prior to the Merger shall be taken into account.
(e) In order to exercise each assumed Polaris Option, Optionee
must deliver to Crossroads a written notice of exercise in which the number
of shares of Crossroads 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 Crossroads Stock and should be
delivered to Crossroads at the following address:
Crossroads Systems, Inc.
0000 Xxxxx XxXxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxx
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.
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IN WITNESS WHEREOF, Crossroads Systems, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 21st day of March, 2000.
CROSSROADS SYSTEMS, INC.
By:
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Name:
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Title:
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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 Polaris Options hereby assumed by Crossroads are
as set forth in the Option Agreement and this Stock Option Assumption Agreement.
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, OPTIONEE
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DATED: , 2000
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