CISCO SYSTEMS, INC. STOCK OPTION ASSUMPTION AGREEMENT
Exhibit 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
Dear :
As you know, on October 31, 2008, (the “Closing Date”) Cisco Systems, Inc. (“Cisco”) acquired Xxxxxx.xxx, Inc. (“Jabber”) (the “Acquisition”) pursuant to the Agreement and Plan of Reorganization by and among Cisco Systems, Inc., Jakarta Acquisition Corp., Jabber and the Stockholders’ Agent dated as of September 18, 2008, as amended by the First Amendment to Agreement and Plan of Merger dated October 29, 2008, and the Second Amendment to Agreement and Plan of Merger dated October 31, 2008 (the “Merger Agreement”). On the Closing Date you held one or more outstanding options to purchase shares of Jabber common stock granted to you under the 2000 Stock Option Plan of Jabber (the “Plan”). Pursuant to the Merger Agreement, on the Closing Date, Cisco assumed all obligations of Jabber under your outstanding option (or options). This Stock Option Assumption Agreement (the “Agreement”) evidences the terms of Cisco’s assumption of an option (or options) to purchase Jabber common stock granted to you under the Plan (the “Jabber Option(s)”), and documented by a stock option agreement (or stock option agreements) and any amendment(s) and/or option assumption agreements entered into by and between you and Jabber (the “Option Agreement(s)”), including the necessary adjustments for assumption of the Jabber Option(s) that are required by the Acquisition.
The table below summarizes your Jabber Option(s) immediately before and after the Acquisition:
| JABBER OPTION |
ASSUMED OPTION | |||||||||
| Grant Date |
Option |
No. of Jabber Shares |
Exercise Price per Share |
No. of Cisco Shares |
Exercise Price per Share | |||||
The post-Acquisition adjustments are based on the Option Exchange Ratio of 0.1573298101 as determined in accordance with the terms of the Merger Agreement, and are intended to: (i) assure that the total spread of your assumed Jabber Option(s) (i.e., the difference between the aggregate fair market value and the aggregate exercise price) does not exceed the total spread that existed immediately prior to the Acquisition; and (ii) to preserve, on a per share basis, the ratio of exercise price to fair market value that existed immediately prior to the Acquisition. If applicable, and to the extent allowable by law, the adjustments are also intended to retain “incentive stock option” status under U.S. tax laws. The number of shares of Cisco common stock subject to your assumed Jabber Option(s) was determined by multiplying the Option Exchange Ratio by the number of shares remaining subject to your Jabber Option(s) on the Closing Date and rounding the resulting product down to the next whole number of shares of Cisco common stock. The exercise price per share of your assumed Jabber Option(s) was determined by dividing the exercise price per share of your Jabber Option(s) by the Option Exchange Ratio and rounding the resulting quotient up to the next whole cent.
Unless the context otherwise requires, any references in the Plan and the Option Agreement(s) to: (i) the “Company” or the “Corporation” means Cisco, (ii) “Stock,” “Common Stock” or “Shares” means shares of Cisco common stock, (iii) the “Board of Directors” or the “Board” means the Board of Directors of Cisco and (iv) the “Committee” means the Compensation and Management Development Committee of the Board of Directors of Cisco. All references in the Option Agreement(s) and the Plan relating to your status as an employee or consultant of Jabber will now refer to your status as an employee of Cisco or any present or future Cisco subsidiary.
The vesting commencement date, vesting schedule and expiration date of your assumed Jabber Option(s) remain the same as set forth in the Option Agreement(s) (in this respect, please note that any discussion of option terms (including vesting acceleration) in any employment offer letter (whether from Cisco, Jabber, or any other related employer) is explanatory in nature and will not result in duplication of benefits (including vesting) with respect to your assumed Jabber Option(s)) but with the number of shares subject to each vesting installment and the exercise price per share adjusted to reflect the effect of the Acquisition. Vesting of your assumed Jabber Option(s) will be suspended during all leaves of absence in accordance with Cisco’s policies and, the only permissible methods to exercise your assumed Jabber Option(s) are cash, check, wire transfer, or through a cashless exercise program with a Cisco-designated broker. All other provisions which govern either the exercise or the termination of your assumed Jabber Option(s) remain the same as set forth in the Option Agreement(s), and the provisions of the Option Agreement(s) will govern and control your rights under this Agreement to purchase shares of Cisco common stock, except (i) no assumed Jabber Option(s) may be “early exercised” (i.e., an assumed Jabber Option may be exercised for shares of Cisco common stock only to the extent the assumed Jabber Option is vested at the time of exercise pursuant to the applicable vesting schedule) and (ii) as expressly modified by this Agreement, the Merger Agreement or otherwise in connection with the Acquisition. Upon termination of your employment with Cisco or any present or future Cisco subsidiary, you will have the applicable limited post-termination exercise period specified in your Option Agreement(s) for your assumed Jabber Option(s) to the extent vested and outstanding at the time of termination after which time your assumed Jabber Option(s) will expire and NOT be exercisable for Cisco common stock.
To exercise your assumed Jabber Option(s), you must utilize one of Cisco’s preferred brokers, the Xxxxxxx Xxxxxx Corporation (telephone number is __________) or Xxxxx Xxxxxx (telephone number is ___________).
-2-
Nothing in this Agreement or the Option Agreement(s) interferes in any way with your right and your employer’s right, which rights are expressly reserved, to terminate your employment at any time for any reason. Future options, if any, you may receive from Cisco will be governed by the terms of the Cisco stock option plan under which such options are granted, and such terms may be different from the terms of your assumed Jabber Option(s), including, but not limited to, the time period in which you have to exercise vested options after your termination of employment.
Until Cisco’s Stock Administration Department is in receipt of your understanding and acceptance of this Agreement (which can be accomplished electronically by following the instructions under the heading of Acknowledgment below) your Cisco account will not be activated and your assumed Jabber Option(s) will not be exercisable. If you have any questions regarding this Agreement or your assumed Jabber Option(s), please contact __________ at ______________.
| CISCO SYSTEMS, INC. | ||
| By: | /s/ Xxxx Xxxxxxxx | |
| Xxxx Xxxxxxxx | ||
| Corporate Secretary | ||
ACKNOWLEDGMENT
acknowledges that clicking on the I Agree button constitutes acceptance and agreement to be bound by the terms of this Agreement, as well as an understanding and agreement that all rights and liabilities with respect to the assumed Jabber Option(s) listed on the table above are hereby assumed by Cisco and are as set forth in the Option Agreement(s) for such assumed Jabber Option(s), the Plan and this Stock Option Assumption Agreement.
ATTACHMENTS
Exhibit A – Form S-8 Prospectus
-3-
